Crisis Management-Are we prepared for it

Information about Crisis Management-Are we prepared for it

Published on July 16, 2014

Author: yturzaeta

Source: authorstream.com

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PowerPoint Presentation: CRISIS MANAGEMENT: ARE WE PREPARED? CARLOS H. YTURZAETA, CPA DIRECTOR for EAST ASIA – ROTARY Action Group on Microfinance and Community Development (RAGM) for RY 2012 - 2015 ASSISTANT GOVERNOR – RI DISTRICT 3830 for RY 2013 – 2014 PAST PRESIDENT – ROTARY CLUB MAKATI EDSA for RY 2010 – 2011 Email address: [email protected] Telephone nos. + 63 917 536 0937 REGULAR MEETING OF ROTARY CLUB PASAY CITY – DISTRICT 3810 MIDAS HOTEL, PASAY CITY SEPTEMBER 11, 2013 PowerPoint Presentation: A CRISIS (from the Greek κρίσις - krisis ; [1] plural: "crises"; adjectival form : "critical") >is any event that is, or is expected to lead to, an unstable and dangerous situation affecting an individual, group , community , or whole society . (from Wikepedia) PowerPoint Presentation: CRISIS are deemed to be negative changes in the: security , economic , political , societal , or environmental affairs , especially when they occur abruptly, with little or no warning . More loosely, it is a term meaning 'a testing time' or an 'emergency event '. (from Wikepedia) PowerPoint Presentation: Character of a CRISIS Unexpected (i.e., a surprise) 2. Creates uncertainty 3. Is seen as a threat to important goals 4. The need for change (from Wikepedia) PowerPoint Presentation: I 4 MAJOR AREAS OF CRISIS EWRM MANAGEMENT MANAGEMENT CRISIS Physical damage Personnel Consequential Criminal Contracts Statutory Liability Tort Liability Product Liability War Sabotage &Terrorism State Action Regulations Securities/Investments Credit/Trade Receivables Interest Rate/Loans Currency/Cash Inventories Financial/Market Operational Legal Political Environment CAPITAL/EQUITY Occupation Health & Safety K and R PRICING Intellectual Property Info & Comm. Tech SPECIFIC EFFECTS OF CRISIS: SPECIFIC EFFECTS OF CRISIS LOSS OF LIFE/INJURY – employees and 3 rd parties DAMAGE TO PROPERTIES – employees and 3 rd parties NON-DELIVERY OF SERVICES – customers and public FINANCIAL IMPACT – own and others LEGAL/PUBLIC LIABILITY (Environment, Health, Safety) SOURCE OR ORIGIN OF A CRISIS: SOURCE OR ORIGIN OF A CRISIS Natural Man Made – Errors/Negligence/Fraud Employees/Contractors Stakeholders Third Parties Organized Elements/Terrorists Technical – design and construction errors POST CRISIS OBJECTIVES: POST CRISIS OBJECTIVES SURVIVAL CONTINUITY OF OPERATIONS STABILITY OF EARNINGS GROWTH POTENTIALS HUMANITARIAN CONDUCT/CSR ENVIRONMENTAL IMPACT ESTABLISHING A CRISIS MANAGEMENT PROGRAM: ESTABLISHING A CRISIS MANAGEMENT PROGRAM Formulate a CRISIS Management Policy approved by Board Set the Goals of the CRISIS MGNT Program Organize the Program & all those involved Document and communicate the Process Define roles and responsibilities Control/Administer the CRISIS MGNT Program NOTE: MAY BE INITIATED IN HOUSE OR OUTSOURCED OR COMBINED RESPONSIBILITIES IN CRISIS MANAGEMENT: RESPONSIBILITIES IN CRISIS MANAGEMENT Board of Directors/Top Management Line Management/CFO Risk Manager/Compliance Officer Committees --CRISIS MGNT Committee --OHSE Committee --Investment Committee --Audit Committee NOTE: MAY ALSO BE OUTSOURCED TO 3 rd PARTY or OWN SUBSIDIARY KEY SUCCESS FACTORS OF CRISIS MANAGEMENT : KEY SUCCESS FACTORS OF CRISIS MANAGEMENT Support of Board of Directors & Top Management Good Corporate Governance - Ethics. Centrally Managed CRISIS Mgnt Program with a Strong driver Comprehensive CRISIS MGNT Program (policies, guidelines, & procedures) at all levels. Continuing Training and Education Networking and benchmarking NOTE: CRISIS MANAGEMENT IS A DAY-TO-DAY ENDEAVOR PowerPoint Presentation: ENTERPRISE-WIDE RISK MANAGEMENT The Total Approach to the protection of assets , earnings , liabilities , reputation , and personnel against predictable and unpredictable losses in order to achieve the maximum efficiency at minimum cost. THE BASIC FRAMEWORK WHERE CRISIS MANAGEMENT BELONGS PowerPoint Presentation: COVERAGE OF EWRM Emergency Preparedness Disaster Response Business Recovery Business Continuity CRISIS Management - Crisis Management Team - Crisis Communication/Spoke person - Media, Government and Public Liaison THE BASIC FRAMEWORK WHERE CRISIS MANAGEMENT BELONGS PowerPoint Presentation: THE EWRM MANAGEMENT PROCESS PowerPoint Presentation: FIVE STEPS OF RISK MANAGEMENT 1. IDENTIFICATION/PROFILING 2. MEASUREMENT/ANALYSIS 3. RISK MANAGEMENT TECHNIQUES 4. SELECTION & IMPLEMENTATION OF THE CHOSEN TECHNIQUEs 5. MONITORING & IMPROVEMENT OF EWRM PROGRAM (Risk Administration) PowerPoint Presentation: RISK IDENTIFICATION METHODS Survey or questionnaire Going through the Company’s financial records Review of contracts, audit reports and surveys Flowcharting of operations Consulting/Engaging 3 rd party experts Ocular and physical inspection Table top discussion/interview with key personnel Group Discussion/Brainstorming session The 1 ST STEP PowerPoint Presentation: RISK MEASUREMENT/ANALYSIS Frequency - probability or chance/likelihood - Workshop/Brainstorming - Loss History - Forecasting Severity - impact of losses/adverse effects - Workshop/Brainstorming - PML, EML, mathematical models - Impact on 3rd parties - Simulation models The 2 nd Step PowerPoint Presentation: RISK MEASUREMENT/ANALYSIS Improbable Regular Negligible Catastrophic RETENTION LOSS CONTROL and PREVENTION INSURANCE Bus. Continuity P. Disaster Mgnt Emergency Mgnt CRISIS MGMNT Good Governance Bus Continuity Plan Disaster Recovery S e v e r i t y F r e q u e n c y The 2 nd Step PowerPoint Presentation: RISK MANAGEMENT TECHNIQUES RISK CONTROL – Stop losses from happening or if it happens, reduce the effects and impact of the loss. or/and RISK FINANCE - Provides fund if and when loss occurs. THE 3 RD STEP PowerPoint Presentation: 1. Risk Avoidance 2. Loss Prevention 3. Loss Reduction 4. Segregation of Risks 5. Combine/Consolidate 6. Diversification 1. Retention through - Deductibles - Reserve/Funds - Current Expensing - Borrowing - Self-Insurance - Captive Insurance 2. Transfer through - Insurance - Hold Harmless/Outsource RISK CONTROL RISK FINANCING : SELECTION OF THE RISK MANAGEMENT TECHNIQUES THE 4 TH STEP CONTROL (Avoid, Prevent, Reduce): CONTROL (Avoid, Prevent, Reduce) FINANCE (Retained or Transfer) CONTROL OR FINANCE: STRIKE A PERFECT BALANCE NOTE: IT COULD BE A COMBINATION OF BOTH. RETAINED/FUNDED RISK: RETAINED/FUNDED RISK TRANSFERRED RISKS RETENTION OR TRANSFER: A BALANCING ACT NOTE: IT COULD BE A COMBINATION OF BOTH. : ACKNOWLEDGEMENTS/REFERENCE MATERIALS Risk and Insurance Management Association of the Phils (RIMAP)– various annual conferences from 1991-1993. Risk and Insurance Management Society of North America (RIMS)-various annual conferences in Winnipeg, Florida and San Francisco from 1992-1995. International Federation of Risk and Insurance Management Association of Asia and Pacific (IFRIMA) discussion meetings in Florida, Cologne, San Francisco from 1994 - 1995 Federation of Asia Pacific Association of Risk Management Organizations (PAFARMO) annual conferences – Malaysia, Singapore, Sydney, Philippines from 1993-1997. Books written by George Head of Insurance Institute of USA and Prakash A. Shimpi of Swiss Re New Markets. 5-Day Training with 13 Selected Electric Coops thru the sponsorship of NEA, UP-NEC and ECAP-USAID, Feb-March 2008 5-Day Training with Mactan Cebu International Airport, June 30-July 4, 2008 CARLOS “CALOY” YTURZAETA: CARLOS “CALOY” YTURZAETA Certified Public Accountant (CPA) ‏ Lecturer , Insurance Institute of Asia & the Pacific/Marine Asso of the Phils (MUAP)/Phil. Institute of Certified Public Accountant (PICPA). Consultant/Speaker , Enterprise Wide Risk Management/Captive Insurance/ Accounting, Audit and Tax/Property Management/Estate Planning, Reinsurance, Disaster Management, Crisis Management, Emergency Management, Claims Administration, Business Continuity Planning, etc. Established the first Philippine Captive in Bermuda (Overseas Ventures Insurance Corp.or OVINCOR), reinsurer of Petrogen /Petron. Established /Gen. Manager of-the first “controlled” Phil. Insurer ( Petrogen Insurance Corporation), a fronting company for OVINCOR. 25 years in the largest energy conglomerate in the Philippines consisting of Petron, PNOC , PNOC-Energy Development Corp, PNOC-Shipping & Transport Corp., PNOC-Coal Corp, PNOC-Exploration Corp, PNOC-Tankers Corp—in various capacities. Social work and community development, thru, Jose Carlo P. Yturzaeta Memorial Foundation, Inc and Rotary Club of Makati EDSA-RI District 3830. PowerPoint Presentation: Thank You! CARLOS H. YTURZAETA, CPA Director for East Asia – Rotary Action Group on Microfinance and Community Development (RY – 2012 to 2015) Assistant Governor – RI District 3830 (RY 2013-2014) Past President – RC Makati EDSA (RY 2010 – 2011) Email Address: [email protected] Cellphone Nos. +63 917 536 09 37 SOME INITIATIVES ON EWRM: SOME INITIATIVES ON EWRM CORPORATE GOOD GOVERNANCE – GGAPP, ICD INDEPENDENT DIRECTORS SARBANES OXLEY 2002 COSO FRAMEWORK, IIA Standards BASEL 1 AND BASEL 2 for Banks & Financial Institutions IFRS, PFRS, PICPA, GACPA, ACPAPP SEC, PSE, CENTRAL BANK, IC, GCGoccs, INDUSTRY STANDARDS-National & Global Anti terrorism laws, anti money laundering, etc. Professional Ethical Standards-various Gov’t Boards Best Practices – Integrity Initiative, Transparency International, GOPAC, OECD, ASEAN, APEC PowerPoint Presentation: PURE RISK – where an event results at best in no change in the situation, though more likely, result in a loss with no possibility of a gain. Ex. Fire, explosion, earthquake, robbery, piracy, arson, sabotage and terrorism. SPECULATIVE RISK – where the outcome may either be a loss , a profit or remains status quo-no loss and no gain. Financial risks fall under this category. Ex. Stock market, equity funds, credit without security, RISK EXPOSURES (According to result/outcome) PowerPoint Presentation: THE LOSS PYRAMID Some hazards will lead to accidents. Some accidents can lead to financial losses. Some losses are small. But huge losses can cripple the operation and even the whole organization. RISK CONTROL AVOIDANCE: RISK CONTROL AVOIDANCE Proper planning/design; feasibility studies Abandonment of existing project. Education and training-in & out of org Use of experts—in and out of the organization Hiring of capable personnel, managers Passing on of liability to 3 rd parties Physical Ocular Inspection Key-less entry/CCTV Use of non-related 3 rd parties to perform hazardous tasks or outsourcing RISK CONTROL LOSS PREVENTION (Reduce Frequency/Likelihood): RISK CONTROL LOSS PREVENTION (Reduce Frequency/Likelihood) Pre-audit /Post Audit Proper matching of expertise and job functions Training and Education-in and out Proper hiring procedures—psycho tests Suppliers Accreditation Performance review Third party engagements Use of receptionists/security guards/K-9 Color coding of vehicles, uniforms, markers & signs Reinforced fences and walls, proper lighting Note : We can use historical and statistical data to anticipate and prepare for natural perils RISK CONTROL LOSS REDUCTION (Lower Severity/Impact): RISK CONTROL LOSS REDUCTION (Lower Severity/Impact) Approvals Manual/Limits of Authorities Orientation, seminars and trainings-in & out Minimum Cash Balance-PCF and RF Drills, simulations, emergency exercises Contractual Limits Duplication of key facilities Firewall/Fire escape/Safety Deposit Vaults Benchmark with others. Dedicated Fire Marshalls/Fire Drills Dedicated Fire Department Auxiliary fire fighting support—LGU,NGO,etc Protective Personnel Equipment SEGREGATION OF LOSS EXPOSURE: SEGREGATION OF LOSS EXPOSURE Separation – dispersal of particular activity Duplication – “Back-ups” or Spares Outsourcing Subcontracting Segregation of flammable with the rest Duplication of key facilities Off-site back up files “Firewall”/Vault RISK CONTROL RISK CONTROL DIVERSIFICATION: RISK CONTROL DIVERSIFICATION “ DO NOT PUT ALL YOUR EGGS IN ONE BASKET” “TOO MANY COOKS SPOIL THE BROTH” CONSOLIDATION/COMBINATION RISK FINANCING RETENTION: RISK FINANCING RETENTION Deductibles Reserves-investment in bonds & stocks Current expensing of losses-treat as they come Borrowings-standby credit lines; pledging of TR Self-insurance Captive companies Note: Retain only those small and frequent predictable losses. RISK FINANCING TRANSFER: RISK FINANCING TRANSFER Insurance (bonds, prof. indemnity, guarantee) Reinsurance Non-insurance transfers -contractual transfers -hold harmless -outsourcing or subcontracting-use of 3 rd party experts. Note: DO NOT ABSORB THOSE HIGH & UNPREDICTABLE LOSSES. RISK MANAGEMENT ADMINISTRATION: RISK MANAGEMENT ADMINISTRATION Policy IRR & Guidelines & Procedures Risk Management Organization Manuals and records RM Surveys/Audit/Compliance and Certifications External Conferences, education and training Internal Coordination meetings and forum Reports and Updates; monitor effectiveness Review of Contractual Obligation Incentives and motivation schemes Set standards and compare actual results Networking and benchmarking THE 5 TH STEP

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