Presentation of crisis management during FERMA Forum 2015

1. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
RISK CRISIS
MANAGEMENT:
A RAPID
RESPONSE
October 5th, 2015, 4.30 – 5.30 pm
1
Udo Kappes, Airbus Group Insurance Risk Management
Hans-Peter Wollner, BELFOR
Julia Graham, FERMA President
Panel Members:
Moderator:
Rob Harford, Salamanca Risk Management

2. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
Crisis Management – A rapid response
Airbus Group Insurance Risk Management principles
Here: Key Risk Responses
Risk Prevention (Loss Control Programme)
Self Insurance
Crisis Management –
From an Asset Insurance perspective
Business Continuity Management (Business Impact Analysis)
Emergency Response Plan (“Red Alert” agreement)
Case studies
2

3. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
Airbus Group Insurance Risk Management Principles
3
Loss Control Programme & Risk Engineering
- Objective assessment by Risk
Engineers of the leading Property
insurer
- Approx. 100 sites visited and
engineered p.a.
- LCP reports discussed with site
management and distributed
to co-insurers

4. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
Crisis Management –
From an Asset Insurance perspective
4
Business Impact Analysis
Risk Analysis
- Key hazards
- Loss scenarios
- Risk Mitigation
Business Model
Analysis
- Product/
Services flow
- Interruption assessment
Financial Analysis
- Profit allocation to products/
Services
- Costs related to delivery
Business
Impact
Analysis
- Identification of key
processes/facilities
wrt revenues &
costs
- Evaluation of
financial impact
Business
Continuity
Management
strategies

5. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
5
Crisis Management –
From an Asset Insurance perspective
Emergency response Plan

6. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
6
Airbus Group Crisis Management –
From an Asset Insurance perspective
“Red Alert Agreement”
• Preparation for Emergency situations
• Provides contact details
• Guarantees immediate response times
• Provides information material with clear advice
• Allows access to Emergency Response
trainings
Permanent review of contact lists
and distribution of updates keeps
risk awareness alive!

7. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
Case Studies – Lessons learnt
7
• Even quite minor incidents can have severe
consequences, if not analysed quickly by experts
• Emergency plans should contain clear advice regarding
immediate involvement of cleaning and restoration
experts (following potential contamination)
• Decisions based on knowledge about the damage extent
and being responsive to business impacts are valuable
• Effective Business Continuity Planning requires
continuous risk awareness

8. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October •8•8
Sometimes crisis
management creates:
A sad experience !

9. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October •9•9
Germany and international airlines were shocked after the
horrable plane crash in the alps in March 2015
Among all the painful memories about the victims and their
families and left behind we suddenly became involved
German Lufthansa looked for a company able to collect pieces of
a plane crashed in the mountains and called Airbus if they have
any idea how to handle such a case
Airbus recommended to call us.
Alpinists entered the inaccessible areas in the mountains and
collected singly and mostly small pieces and brought it to a
storage place.
We could fulfill the needs of Lufthansa and all obligations
regarding confidentiality and press communication.
We are very happy that it was a single challenge what hopefully
never ever will come again

10. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October •10•10

11. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October •11•11
Brief introduction

12. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October •12•12
Corporates in emergency
situations may face
Fire damage
Water damage
Storm damage
Floods

13. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October •13•13
One major task is: back to live!
Immediate measures
Damage restoration
Prevention of further damages
Restoring of the initial situation
Limitation of business interruption

14. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October •14•14
Deterioration after a fire can reduce the
opportunity
Removal of contamination Restoration combined with
replacement of damaged parts
All parts damaged:
Recovery no longer possible
Contamination by fire, soot,
water, etc.
Corrosion Damage -total loss
Time taken to make decision

15. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
Gaining control is crucial in the initial
phase of damage
Answers are needed
rapidly
Knowledge and
expertise is essential
Information is needed
to take the right
decisions
Typical Incident Development
0
20
40
60
80
100
Time after Incident
Decisions to
be made
Information
available

16. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
Two examples of large commercial losses
1.) A loss in Poland (supplier
to manufacturer in Germany)
2.) Alternative
Time lack in decision making by local
insurer increased BI for german
manufacturer
Quick response by large loss
restoration team resulted in recovery
and avoided downtime

17. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October •17•17
A German gobal corporate became affected
by a severe fire damage in Poland
Production of the key supplier caused a stop in
several plants due to a lack of parts from
Poland.
Business interruption is €1 mill. per day
The German company called the same day
BELFOR Poland assists by releasing the
damaged area (27.7 and 28.7 by hiring a local
structural engineer)
Preservation work on the tools starts on 28.7
following advice from BELFOR PL and a verbal
assignment of work by the customer
Supplier in Poland suffers major fire
damage

18. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October •18•18
Quotation for start of clean-up operation
and salvaging of tools on (30.7.2015)
Order to be placed by supplier is agreed
In anticipation, reservation of a crane and
clearing machinery to tear down the hall on
Monday (3.8.2015) is done
The supplier's Polish direct insurer wants
to use a cheaper provider and delays the
placing of work
The reserved machinery and crane
becomes cancelled as the order is not
placed
Supplier in Poland suffers major fire
damage

19. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October •19•19
German company sends BELFOR reminder of
placed order. Order is placed on (5.8.2015)
Crane (70 tonnes) and clearing machinery have to
be ordered again
Work starts on (5.8.2015)
The pillars have thermally deformed as a result of
which the cross beam (3.5 tonnes) cannot be lifted
out of the bracing. Solution: Hydraulic grippers on
excavator
Tools can only be salvaged once the loose-
hanging parts have been cleared and the hall has
been made safe so it won't collapse
Service provider indicates that all wearing parts for
all plastic injection tools should be ordered as a
precaution to avoid delays after the clean-up
Supplier in Poland suffers major fire
damage

20. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October •20•20
In parallel, a large series of ultrasonic immersion
baths is built to recondition the tools in Hamm,
Germany
The first tools are delivered to Hamm on
(7.8.2015).
The first reconditioned tool is passed for repairs to
the damaged party's sub-contractor in individual
parts on 12.8.2015.
Spare parts have not been ordered. Delay due to
lack of parts approx. (??? weeks)
Service provider reconditions and hands over a
total of 50 tools.
Business interruption damage to date.
Total costs for BELFOR Poland approx. €1.5 mill.
Total costs for DeHaDe approx. €750 k
Supplier in Poland suffers major fire
damage

21. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October •21•21
Lessons learnt:
Delays caused by not placing orders can be
avoided. (6 days ? = €6 mill.)
Delays caused by missing wearing parts
can be avoided. ( ???? €)
Coordinated planning and use of the
reconditioning company's experience is
helpfull
Retroactive effects are normally not part of
emergency plans
Supplier in Poland suffers major fire
damage

22. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October •22•22
An alternative example

23. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
Fire damage in final assembly line belonging to an international market leader for
machinery in the food industry
Cause of fire: Short-circuit when charging a forklift battery in the production hall
Staff and later on fire brigade use extinguishing powder
7500 m² hall and all the machinery in it are contaminated with extinguishing
powder
Call to service provider by the broker on Friday 06.03.2015 at around 9 am
BELFOR arrive at around 10:30 am, initial stocktake of situation
Customer produces list of priorities because some machinery are scheduled to be
supplied to international customers
Work starts at 1:30 pm
Direct insurer arrives at 4 pm and appoints chemist to contain the damage (chemical
analysis)
All building surfaces, machinery and some semi-finished products need
reconditioning
2-shift (day and night) operation of 100 people per shift for 9 days
Business interruption damage is avoided
Total cost for service provider services €1 mill.
23
Quick decision

24. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
24
Lessons learnt
Powder
extinguishers
are cheap and
effective
but use
may become
expensive

25. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
Benefits of facilities / equipment
recovery
Reduced business interruption
Reduced loss of profits
Reduced consequential losses
Reduced risk of losing customers
Reduced risk of losing market
shares
Reduced cost of reinstatement
Typically 10% to 30% of the
replacement price
25

26. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October

27. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
•www.belfor.de
RED ALERT® – policy holder is already
familiar with his service provider!
BELFOR RED
ALERT contact
Inspection Proposal for
initial measures
Issue work order for initial
measures
Carry out initial
measures
RA partner RA partner
Damage contained
No initial measures needed
No costs
RA partner

28. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October

29. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
Rob Harford
Head of Risk Consulting
Salamanca Risk Management (SRM)
29

30. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
Crisis Management
What could possibly go wrong!
Planning:
Poor risk assessment
Ineffective documentation
Command and control
Exercising
30

31. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
Crisis Management
What could possibly go wrong!
Execution:
Wishful thinking (failure to act upon
triggers)
Mishandling communications and PR
Social media monitoring and exploitation
Controlling of communications (inwards
and outwards)
31

32. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
Summary
32
Ensure you understand the risks in detail
Have a flexible easy to use plan, that has some of the work already
done for you and that all stakeholders are incorporated in.
Ensure the CMT is appropriate for the task, stand them up early and
make sure their roles are clear.
Exercise the CMT and put the plan through its paces, it’s a bad time
to realise a plan is unfit for purpose when a crisis is underway.
Know your plan, have confidence in it and have the bravery to
accept that you are in a crisis.
Communicate clearly, through coordinated mechanisms, and most of
all be human – the public love to empathise and demonise in equal
measure, ensure they choose the right one!

33. BRUSSELS, 20-21 October
www.ferma.eu
FORUM 2015
Venice, Italy 4-7 October
Thanks for your
interest!
Questions and
answers?
33
Udo Kappes, Airbus Group Insurance Risk Management
Hans-Peter Wollner, BELFOR
Julia Graham, FERMA President
Panel Members:
Moderator:
Rob Harford, Salamanca Risk Management