Crisis Management: basic concepts

Just like any other business or organization, even shipping companies are forced to face from time to time some kind of unexpected problem or crisis event. Here are a couple of real-life recent examples:

1) A tanker run aground, spilling more than two hundred fifty thousands barrels of oil into the waters in Alaska. Fines and clean-up bills started pouring in – along with lawsuits and letters from outraged customers and shareholders;

2) A shipping company that operated an oil tanker ship that regularly made calls in multiple ports in Texas pleaded guilty Oct. 21 in Federal court in Houston for deliberately concealing pollution discharges from the ship directly into the sea, the US Justice Department announced.

So, let’s clear up the definition first…

Crisis is some kind of change – either sudden or slowly emerging – that eventually develops in an urgent problem requiring prompt attention. For a shipping company, a crisis event could be anything with the potential to cause sudden and/or serious damage to its vessels or shipboard personnel, or any possible threat even to its reputation and image. Of course, a major crisis will affect the entire organization and, in extreme situations, could even lead to the company’s collapse and crumbling.

Managers whose organization are struggling must act quickly to isolate the crisis source, keep it under control and eventually resolve the problem(s) with the least amount of damage possible.

In such a context, the crisis management is part of a larger system of organizational risk management that includes a series of diversification and insurance options. In other words, it a process by which an organization deals with a major unpredictable event that threatens to harm the organization, its stakeholders, or the general public. But the hard fact is that, despite everybody can easily recall some crisis situation at any given organization, few managers make and follow sound plans to actually prevent a potential crisis.

These deficiencies should not come as a surprise, since crisis management is a relatively new as a formal field of study. And while risk management involves assessing potential threats and finding the best ways to avoid those threats, essentially crisis management involves dealing with threats after they have occurred. A well-known example is the implementation of a Vessel Response Plan, required by the U.S. Oil Pollution Act 1990 only after the Exxon-Valdez disaster. While on the other hand the U.S. Non-Tank Vessel Response Plan cannot be “officially” implemented until the Final Rule will be enforced.

Some crisis spread just like fire. They start as small flames in some unnoticed spot. If you smell the smoke and catch the fire early, you are on the right track to avoid a major crisis. Left untended, these smoldering problems may quickly grow into a catastrophic hellfire. In this regard, non-conformity reporting systems as required by ISM Code, ISO 9001, ISO 14001, etc. are used as “smoke detectors” — enabling company managers to immediately spot the fire. However, it has been proven that often non-conformity systems lack good reporting and communication tools and therefore they might be not enough to prevent a given crisis.

Crisis Recognition (Where there is some smoke, there is a fire)

The readiness of a shore Crisis Management Team, equipped with adequate contingency plans (SOPEP, VRP, shore side crisis management manual, etc.), is always an advisable and cautious option.

Unfortunately, it is not always easy for a team to promptly address and stop a crisis event. The best strategy is to alert the shore team as soon as possible, through a Crisis Management Manual enabling the team to provide a quick response and the necessary assistance to the ship before the crisis event becomes a true emergency.

Crisis Management procedures

Ideally crisis management begins before a crisis situation actually starts unfolding, in a collected and stable environment.

ECM Europe is equipped to perform a thorough audit of your organizational risks and to identify (or review) those hazards that could result in major crisis and/or problems.

The following is an example of a potential crisis source we found during an audit, detailing our method to isolate and address the risk(s) carrying the greatest potential – and probability – for trouble.

Sources of potential crisis:

  • Accidents and natural disasters (e.g., heavy wheather, etc.)
  • Illnesses, injuries and deaths of shipboard personnel (e.g., medical assistance, helicopter emergencies, search and rescue operations, etc.)
  • Environmental damages and disasters (bunker spills, oil spill-tank overflow, oil spill hull leak accident, oil spill-pipe leakage, inert gas failure, release of toxic cargo,  hull leakeage, breaking way from Jetty, etc.)
  • Technological breakdowns (main engine failures, electrical failures, gyrocompass failures, loss of bridge control, power outage, etc.)
  • Rogue employees
  • Etc.

Source:

HBS, “Crisis Management: Master the Skills to Prevent Disasters”.

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