Emergency preparedness: Compliance, care and the long view

Learning from risk events can improve preparedness and resiliency

Responsible leaders heed these expectations of care, as well as the increasing relevance of board-level risk, which has been shown through research and articulated by the Security Executive Council. Some of their concerns are illustrated in the graphic on page 55.

More influential metrics on this issue may persuade leadership toward a path of sustainable resilience. Ultimately, "the metric" for private-sector stakeholder confidence is market valuation. Company worth before and after major catastrophic events is instructive.

One recent calamity, the BP/Transoceanic accident, supports the point. CNN Money reported on June 15 that "Fitch Ratings downgraded BP for a second time this month to just above junk status, as the news just keeps getting worse for the oil giant. Fitch said it lowered its senior unsecured rating to BBB from AA, in response to increasing estimates of spilled oil in the Gulf of Mexico and increasing pressure on the oil giant to establish an escrow account to pay for damages"

Value metrics like this must be made clear to organizational leadership. The stakes for emergency preparedness go beyond compliance fines and sanctions. Leadership will be judged on people-care. In the court of public opinion, the organizational outcomes for apparent negligence before, during and after a disaster bodes additional peril, if not doom.

Drs. Rory Knight and Deborah Pretty conducted decade-long research of 74 firms following their involvement in aviation disasters, fires and explosions, seismic catastrophes and terrorist attacks. Their findings are informative for both worst-case and other types of disasters.

Here is a summary of their main findings:

1. Mass casualty events have double the impact on shareholder value.
2. The market makes a rapid judgment on whether it expects reputation to be damaged or enhanced ... in the case of mass fatality events...it takes... on average, 100 trading days to emerge prominently.
3. As with non-fatal reputation crises for firms... value recovery relates to the ability of senior management to demonstrate strong leadership and to communicate at all times with honesty and transparency.
4. ...the sensitivity and compassion with which the chief executive responds to victim's families and the logistical care and efficiency with which response teams carry out their work is paramount.
5. Irrespective of whose responsibility is the cause... a sensitive managerial response is critical to shareholder value.

Our relative success as asset protection professionals and risk mitigators will likely be determined by our organizational leadership performance. We have the opportunity to influence.

Taking the Long View

We know the long view and a diverse data set are required to calculate catastrophic impacts. Similarly, longer views are required for forward-looking, cross-functional risk mitigation teams. To that end, Bob Hayes, managing director of the Security Executive Council, recently introduced an initiative called "Security 2020." He says: "Board-level risk requirements for people, critical process and asset protection are increasingly complex and require a new, collaborative and performance-based approach with practitioners, manufacturers and service providers."

Our aim must be to persuasively influence continuous solutions innovation with return on investment and risk mitigation improvement through the next decade.

No single entity can own emergency preparedness. Process and technology convergence guided by organizational mission will enable intra-departmental strategic plan execution with oversight by executive risk committees and the board of directors.

Communications Promote Confidence

Our ability to execute a cross-functional, operational plan with cost efficiencies, loss avoidance and prevention earns both leadership and stakeholder confidence.

Importantly, efforts that produce results will fund additional programming. Even when prevention or mitigation efforts fail, we will be given the "benefit of the doubt" when we have transparently communicated risk with relevant mitigation resources before an event and act responsibly thereafter.