These include insurance programs, external/internal contacts and continuity planning for the business or entity. This will aid in the ultimate goal of minimizing losses and recovering as quickly as possible.

RISK TRANSFER

While the ideal is to prevent an entity's losses from occurring altogether, events such as hurricanes will happen and the best plan is to mitigate their impact.

An important part of crisis planning, therefore, is reviewing property and liability coverage before an event occurs to make sure any potential exposures are covered. While it sounds simple, this is a part of crisis planning that is often overlooked.

Furthermore, understanding the full extent of the exposure can be a challenge that requires a cross-disciplinary approach within the entity–even before attempting any coverage analysis.

Depending upon the nature of the crisis, coverage lines that may be impacted include:

? Property and business interruption, including extra expense.

? Contingent business interruption.

? Workers' compensation.

? Commercial general and professional liability.

? Disability and life insurance coverage, if applicable.

Entities that are exposed to catastrophes such as hurricanes or floods must be prepared for the likelihood of an event and maintain the appropriate coverage.

But what happens when, for example, an organization's legal system introduces a new theory of liability such as “lack of emergency preparedness?”

This development poses several issues for the risk manager:

? An entity, such as a hospital, must ensure that appropriate and reasonable steps to protect property and lives are taken and it is able to maintain critical services during a crisis.

? Conversations with underwriters must take place to see that coverage issues are addressed before litigation occurs.

? The entity must determine what is considered reasonable and practical when preparing for a crisis.

This type of situation invites a “battle of experts” to determine the entity's legal duty, or standard of care, in terms of preparing for a particular type of crisis. But to what cost or effort must a hospital go, for example, to remain operating during a crisis?

According to legal experts, some states may provide a hospital some immunity in the event of an “officially declared disaster.”

Understanding both the insurance coverage required to address possible crises and the underlying legal issues is, therefore, critical to this process of pursuing a total crisis solution.

TEAM RESPONSE

The term “crisis management” is a bit of a misnomer. In many instances, a crisis management team meets on an emerging incident, such as a pandemic, tornado or inclement weather. In other cases, a full-blown crisis may occur without warning, such as workplace violence, product tampering or an earthquake.

Regardless of how the crisis management plan activates, the process should always include the steps of prevention, coordinated response, recovery and a post-incident debrief to improve the plan.

First, a team needs to be formed, ideally including senior personnel and multiple stakeholders from the organization. The team could include staff from public relations, legal, senior management, human resources, risk management, environmental safety and health, security as well as other identified areas.

Once the team is formulated, it needs to develop formal policies and procedures. These procedures should include:

? Developing a crisis management plan, which has senior management support.

? Determining the extent of the crisis and identification of other internal/external resources.

? Developing recovery processes.

? Developing a media management approach.

? Determining follow-up processes to learn from mistakes.

? Producing ongoing training.

Once an organizational plan has been developed, team members should examine the types of incidents that could impact their organization and develop responses to these incidents.

Each of these incidents will have its own unique responses and will call on myriad internal and external resources that will be identified by the team. Identifying resources before an incident is critically important to an effective and timely response.

Once in place, the crisis management program should not be shelved–it needs to be an active part of the organization. The crisis management team should meet regularly and continually update the plan.

The plan and its responses needs to be tested through tabletop exercises and mock drills or exercises emphasizing “wild card” scenarios.

WILD-CARD SCENARIO

For instance, in a pandemic crisis, a hospital may call upon a specialized doctor to offer expertise to the crisis management team. A wild-card scenario, during a table-top or full-blown exercise, could remove the availability of this key person from the crisis management process. As a result, the crisis management team would need to adapt quickly to deal with the loss of the team member.

This process can identify the weak links in the crisis plan. Crisis management teams that utilize wild-card situations will be prepared for an effective response and will be better prepared for unexpected and unpredictable crisis.

A crisis management plan does more than offer guidance–it instills a mindset of planning for the organization's benefit.

Organizations using this process will be surprised at the resources that have been independently developed within the organization, such as business continuity, insurance programs, mutual aid and relationships with internal, external, municipal and government agencies.

Although appearing dormant, the crisis management plan remains fresh for those charged with managing a crisis. The biggest enemy to crisis management is time. By employing a plan, decisions and resources can be brought forth quicker, minimizing the potential for an event to further escalate into a larger catastrophic crisis.

Ultimately, this will minimize damage to an organization.

Michael Zuckerman, J.D., ([email protected]) is the managing director for the National Health Care Alternative Risk Practice and Professional Development at Aon Risk Services. Sean A. Ahrens, CPP, CSC [email protected]), is a security consultant with Schirmer Engineering, an Aon Global Company.