Monthly Archives: July 2013

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July 29, 2013 by: James Bone Categories: Risk Management Tragedy in Quebec: Crisis Management is a Business Imperative by Dr. Allan Bonner

Allan Bonner

Victorian-era British Prime Minister, Benjamin Disraeli said that all crises are the same.  Fire, explosions and floods seem different.  There may be insurance and liability differences, but the dead remain dead and damaged property remains damaged.

 From the déjà-vu file, there’s a combative corporate head, flippant remarks, delay in going to the scene and blaming others.  Is this Exxon Chair Larry Rawl during the Valdez oil spill?  Is it BP’s Tony Heyward during the spill in the Gulf of Mexico?  Yes, but it’s also Edward Burkhardt, chair of the Montreal, Maine & Atlantic Railway in Lac-Megantic, Quebec in mid-July, 2013. 

 His 73 car train carrying crude oil rolled about 11 kilometers and derailed near the Maine border.  At least five of the train’s tankers exploded.  More than three dozen people died and dozens of others may never be found.  Two thousand people were relocated and about thirty buildings destroyed in an apocalyptic fireball. 

 Mr. Burkhardt may have been doing many important things other than what we saw reported.  But what we saw him do and say made matters worse. 

There’s often a charge that response is slow—a concept open to interpretation.  Time passes more slowly or quickly, depending on what you are waiting for–Christmas or to get a tooth pulled?  Response may not even be the responsibility of the company, but of government, quasi-government (FEMA, The Canadian Marine Response Management Corporation), police and firefighters.  But what a company can do is have a pre-written statement, expressing empathy, and a dark web-site and other documents with company background, capabilities and projected actions available within an hour. 

Was this Chair slow in visiting the site?  There’s a joke among responders that when the senior person or politician arrives for a photo opportunity, most response stops.  The dignitary plays with a shovel or puts food in a box for victims, eats one of your sandwiches and makes a speech containing unrealistic promises, and leaves.

The dignitary is a net drain on response.  But if the dignitary keeps clear of responders and shows empathy, it can reduce the anger of the community.  The visit must be managed carefully though.  Mr. Burkhardt was the subject of death threats in Lac-Megantic and when Union Carbide’s CEO went to the Bhopal, India chemical release, he was arrested.

Why speculate?  There’s an unlimited supply of misinformation in crises.  Mr. Burkhardt went far too deeply into liability, criminal investigations and other matters, long before anyone had enough information to speculate.  In many crises (TWA 800, Egypt Air 990, Tylenol poisonings) we never find out for sure what happened.  Speculation about how many brakes were activated is pointless.  Given that the brakes may have vaporized in the fire, we may never know.

Union Carbide blamed Indian sabotage (which was never proven) and Exxon blamed its ship’s captain (who was acquitted of a drinking charge).  Mr. Burkhardt implicated a firefighter who may have “tampered” with the engine and brakes, and within 36 hours blamed his own engineer (suspended without pay).  But Mr. Burkhardt admitted that his company had not been allowed enough access to the site to conduct a full investigation, and thus had little way of knowing.  Public sympathy is with the engineer.

If you’re managing a crisis, it’s not about you.  Exxon’s Larry Rawl noted he was not used to speaking in public and sucked on lozenges to sooth his throat.  BP’s Tony Hayward said “I want my life back” when workers had died.  Mr. Burkhardt noted his net worth had gone down, that he’d been working hard at his desk, 20 hours a day and was tired–small comfort to grieving relatives.  It’s also not about rebuilding the railway (which he spoke about prematurely), but rebuilding the town and people’s lives.

One of a senior manager’s jobs is to ensure there’s a good crisis plan in place and test it.  Had Mr. Burkhardt done this, he could have arrived quietly in a controlled school gym or church basement with a Francophone moderator and technical expert to brief reporters competently.  He didn’t need to look nervous, ill-informed, self-centered or combative.

Media protocols aren’t brain surgery.  They’re predictable. 

Academics study when in the coverage certain topics are raised, who gets interviewed in a crises and in what order.  These studies were done recently, in the electronic media age, long after Disraeli’s time.  All crises are the same.

Crisis response entails being able to shift communication gears quickly.  Senior people are used to making speeches at the board of trade, chairing meetings and making motivational speeches to employees in normal times.  These communication challenges feature skills quite different than the give and take you’ll experience in a crisis.  In fact, the skills that allow you to excel in normal times may actually make a crisis worse.  For example there is no time for long, morale boosting meetings to ensure everyone is on-side while a town is on fire.  Action is what’s required.

Similarly, you don’t start a scrum with reporters with long opening remarks about how nice it is to be back in town.  Nor do you do what Mr. Burkhardt did.  He began his encounter on the street by telling reporters they couldn’t all speak at once.  In fact, reporters won’t all speak at once if you look at one and acknowledge him or her verbally and with body language.  You can indicate you’ll take one follow up and move on to try to get to everyone. If you appear fair and determined to answer everyone, you won’t get multiple questions.

A brief opening statement is fine, but Mr, Burkhardt began one, interrupted himself and made another and appeared to be winging it for almost four minutes before taking questions.

News is what journalists write.  Freedom of the press is for those who own one (A. J. Liebling).  Don’t pick fights with people who buy ink by the barrel full and recording chips by the pound (Mark Twain, updated).  Exxon tried repeatedly to interest reporters in the story of how hard it was to siphon oil off its foundering ship in the Valdez, Alaska spill.  But reporters were more interested in why the ship was foundering in the first place.  You might as well get on the same page as reporters quickly.

Mr. Burkhardt was out of phase with reporters.  He was speaking about relocation and response, which is news on the first day, but not the third when he’d arrived in town.  He also spoke about rebuilding the railway long before this was appropriate.

There also no point in being testy if you’re asked the same question many times.  There are several legitimate reasons why a reporter may ask the same question many times or several reporters may ask the same question.  Recording equipment may have failed, the spokesperson may have turned away from the microphone, the reporter may want his own voice on the recording or back of head in the shot, a new reporter may have just come on the scene, the answer may have been unsatisfying or any number of other reasons.Mr. Burkhardt’s asking if reporters had heard his previous answer is a waste of time.  It’s even a waste of time to say, “As I just said [or] I’ve already answered that question.”  A new-sounding version of the same answer is the best approach. 

Yes, in the age of social media spin and obfuscation, perception is indeed reality.  But, then again, reality is reality too.     

 http://allanbonner.com/

 About the author:

Allan Bonner Communications Management offers clients expert services and insight related to crisis communications, issues management and media relations.

For over 25 years, we polished our skills while solving problems for high-profile clients in all sectors on five continents. Many of the world’s largest communications, consulting, law, research and accounting firms have had us train their clients or staff. We are known as the “trainers’ trainer” or the “coaches’ coach.”

Dr. Allan Bonner was the first North American to be awarded a Masters degree in Risk, Crisis and Disaster Management, from the only university in the world to offer such a program—Leicester in the UK. His training in systems theory, quantitative risk assessment (QRA), risk engineering and the case method sets him apart from competitors.

TheGRCBlueBook mission is to become a global risk and compliance community site and resource portal for sharing best practice across all highly regulated industries.  A one stop source for all things risk and compliance related.

July 25, 2013 by: James Bone Categories: Risk Management TheGRCBlueBook offers Free Promotional Services to GRC vendors!

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TheGRCBlueBook is providing free promotional and marketing services to GRC vendors to bring greater transparency to the marketplace. GRC vendors now have an advocate to help promote and showcase risk, audit and compliance solutions to thousands of risk professionals from around the world!
FOR IMMEDIATE RELEASE
 TheGRCBlueBook Home Page
TheGRCBlueBook Home Page

PRLog (Press Release)Jul. 16, 2013LINCOLN, R.I.TheGRCBlueBook .com, the largest online directory of software solutions for risk, audit and compliance professionals, is offering free marketing and promotional services to all GRC vendors.   GRC vendors will be able to publish marketing and promotional material at no cost on TheGRCBlueBook.com, a global directory of GRC vendor software.

The market for GRC vendor solutions is growing and competitive but buyers of these products are not aware of the variety of solutions available.  “TheGRCBlueBook is dedicated to bringing transparency to this marketplace “, according to James Bone, Executive Director of TheGRCBlueBook.

GRC vendors are invited to advertise or become a sponsor of TheGRCBlueBook however there is no obligation to do as a result of this offer.  “Vendors will get free exposure to thousands of risk professionals from around the globe while growing their business and raising awareness of the available solutions”, said James.

Contact:
James Bone
Executive Director
info@thegrcbluebook.com
866-503-2931

Photo:
http://www.prlog.org/12175556/1

July 24, 2013 by: James Bone Categories: Risk Management Customers rate their Corporate Performance Management (CPM) Vendors – Gartner Survey

stock-photo-8800639-business-womanGartner recently published the results of its 2012 survey of 13 Corporate Performance Management vendors with 275 customer respondents.   In comparison, TheGRCBlueBook has 44 vendors in the category of Corporate Performance Management in this category therefore the Gartner survey is skewed toward the top 25th percentile of the category.

Some the key findings include an overall improvement in customer satisfaction scores from the 2011 survey results, mid-tier CPM vendors have competitive products and services relative to their larger competitors, the CPM value proposition is relatively high versus cost however the most surprising finding may be that Software as a Service (“SaaS”) has not proven to be as cost effective as traditional solutions. 

Survey respondents were asked to estimate the total cost of implementation with a breakdown of their organizations’ CPM based on five categories:  (consulting, system integration, managed services, hosting, and outsourced process).   However, given the range and diversity of customers and number of implementations the survey findings may best be described as inconclusive. 

Oracle’s implementations were listed as the most expensive however the survey may not reflect a true comparison of comparable clients.  A more detailed analysis of costs, scope of project, retirement of technology and other factors would be required to validate the cost of SaaS over traditional solutions.

Overall, corporate performance management vendors have high quality product offerings that add value and perform as expected.  The range of CPM vendors is quite wide therefore selection of these vendors requires an in-depth analysis of cost, comparable solutions, client need, and a vision toward how a vendor will scale its services as each firm grows and matures.

TheGRCBlueBook mission is to become a global risk and compliance community site and resource portal for sharing best practice across all highly regulated industries.  A one stop source for all things risk and compliance related.

July 18, 2013 by: James Bone Categories: Risk Management 2013 Institute of Internal Auditors Governance, Risk & Control Conference August 19th – 21st

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Biltmore Hotel Phoenix Arizona

The 2013 Governance, Risk & Control Conference in Phoenix, Arizona held at the Arizona Biltmore Hotel is a collaboration between The Institute of Internal Auditors (“IIA”) and the Information Systems Audit and Control Association (“ISACA”).

TheGRCBlueBook mission is to become a global risk and compliance community site and resource portal for sharing best practice across all highly regulated industries.  A one stop source for all things risk and compliance related.

July 11, 2013 by: James Bone Categories: Risk Management Expectations of Risk Management Outpacing Capabilities – KPMG study

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In December 2012, the Economist Intelligence Unit carried out a global survey on behalf of KPMG International. This survey gathered data from 1,092 respondents around the world in a closed-ended online questionnaire. All were C-level executives: 28 percent were Chief Executive Officers or equivalent and 18 percent were Chief Financial Officers, the two largest groups. Five percent were Chief Risk Officers.
If you combine those in the risk function and departments that work most closely with risk (legal, compliance and audit), the number comes to 131 people, or 12 percent of the total.

TheGRCBlueBook mission is to become a global risk and compliance community site and resource portal for sharing best practice across all highly regulated industries.  A one stop source for all things risk and compliance related.

by: James Bone Categories: Risk Management Talent Risk – The Illusion of the “Best Athlete”

Big Ben Carter dunking the pillOrganizations are overlooking their best candidates for job openings and leadership positions while adding hidden costs and risks to the firm in the process.  Many hiring managers and human resource recruiters have accepted the often stated illusion of hiring the best athlete for the opening which too often is perceived to be an external candidate with more experience from a competitor firm. 

In a recent study by Matthew Bidwell, Wharton School’s Penn State University, “external hires will initially perform worse than workers entering the job from inside the firm and have higher exit rates, yet they will be paid [18%] more, on average, and have stronger observable indicators of ability as measured by experience and education.”  The best athlete myth is called the Halo Affect by cognitive scientists.  External talent is perceived to possess skills not evidenced by empirical data.  

Blame professional sports for creating many of these illusions.  We see our favorite sports teams pay millions to athletes in a never ending search for the “right mix” of position talent to win the national championship of the team sport.  What we don’t fully understand is the failure rate of this flawed philosophy or the poor odds of success in this strategy. 

Professor Bidwell’s study points out that “workers promoted into jobs [cost less] and have significantly better performance for the first two years than workers hired into similar jobs and [have] lower rates of voluntary and involuntary exit.”  Few firms calculate the risk or cost of turnover of external hires but it they did they would be shocked by the negative results.

So how does an organization overcome this bias in talent management and avoid these inherent risks? 

Reallocate resources into internal staff development to acquire the perceived skills gap that is missing.  Organizations must consider human resources a strategic asset that is refined and developed over time.  Behavioral science has established that it takes approximately 10,000 hours to perfect a skill or become an expert.  Manage those hours to the benefit of the firm!  New and existing employees should have a path to expertise that ensures the organization is creating the talent it will need for the future success of the firm.

Talent risk is a self-inflicted wound that can only be overcome by changing how organizations perceive its internal talent.  According to a study by CareerXRoads, 58% of new job openings were filled by external hires.  While it is not always possible to fill existing openings with internal staff its takes new hires 2 – 5 years to become proficient in their new roles in any organization.

Talent risk is a strategic risk every firm can manage.  Firms can save money and build sustainable risk cultures by hiring and promoting its internal talent.

TheGRCBlueBook mission is to become a global risk and compliance community site and resource portal for sharing best practice across all highly regulated industries.  A one stop source for all things risk and compliance related.

July 10, 2013 by: James Bone Categories: Risk Management GRC Mergers & Acquisitions heat up with economic recovery

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Berkery Noyes, Investment Bankers, has tracked the GRC market for two decades and reported 156 M&A deals from 2011 and 2012 alone.  GRC solutions providers are now considered strategic to managing business process and represented a 17% year over year increase during this period.

 

July 3, 2013 by: James Bone Categories: Risk Management Change Management and Operational Risk with AllianceBernsten, L.P.

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GFMI interviews Paul Emerson, Vice President, Asset Allocation, Risk Management at AllianceBernstein L.P. on effective change management and the role of operational risk management.

GFMI is a specialized provider of content led conferences for the financial markets. Carefully researched with leading financial market experts, our focused quality events deliver key bottom line value through targeted presentations, interactive discussions and high level networking opportunities.