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Tuesday, September 14, 2010

Crisis Planning and Risk Management

In the wake of the deadly gas explosion in San Bruno, CA, CNN interviewed Georgia Public Service Commissioner Stan Wise in order to get a sense of the risks and realities in our utility infrastructure. Wise made the following points:

• There are 2.3 million miles of underground gas pipelines in the U.S.

• Several of the regional gas systems – such as the one in San Bruno – use pipes and infrastructure dating back to the 1940s and 1950s.

• "There’s a cost associated with upgrading these systems," he said. The debate over that cost, he said, and who pays for it, must be brought up by citizens and political leaders before state public utility commissions.

• In the meantime he cautioned citizens, repeating what he called the tried-and-true gas industry axiom, "Smell gas, act fast. Call 911."

Commissioner Wise's comments point to the difference between Crisis Planning and Response on the one hand, and Risk Management on the other. At CommCore we believe awareness of both is integral to any communications plan by an organization such as a gas or oil company when the essential commodity it delivers to the public is, literally, a potentially explosive substance.

Planning is what an organization does on the ground floor to prepare for an emergency that qualifies as a potential or real disaster. A crisis is an instantaneous game changer, as we have said repeatedly, because it has caused or could cause death, injury, significant financial loss, and /or damage to an organization or brand. The same procedures take hold in an emergency; the crisis occurs when larger groups (usually media) become aware of an emergency. Safety and security of people is always the first response. Wise's "smell gas" advice is similar to: "In case of emergency, break glass" and follow the pre-determined plan that should cover all variables and eventualities.

Risk Management, on the other hand, is part and parcel of crisis planning. It involves the identification, assessment and prioritization of risk in order to monitor, minimize and control unfortunate events such as crises. There is a balance between what needs to be done to manage the risk of maintaining 2.3 million miles of aging pipelines and valves and potential disruptions and explosions, and the politically sensitive issue of higher rates, fees or taxes to upgrade the infrastructure before another disaster strikes.

The two intersect when a crisis has erupts and must be been responded to. The crisis response, effective or not, is usually followed by finger-pointing about blame, responsibility, and whether appropriate steps had been taken to prevent the disaster. Lawsuits, hearings, investigations – all are in the offing if the crisis was big enough. Effectively communicating the potentially controversial Risk Management calculations that went into whatever preparations, repairs, or precautions were in place – or not – becomes of paramount importance when the blame game starts after a crisis.

Where are you in this balancing act. Do you have any case studies where risk management and crisis preparation teams have worked well together? What worked? What didn't?

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