taking the sting out of a crisis
e-News - March 2005
Edited by Dr. David Perl MB BS, MBCI
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Lessons to be learnt from the oil industry
In the last week of March news flashed around the world of a catastrophic explosion in a Texas oil refinery owned by industry giant BP. Fifteen workers lost their lives and it is reported that over seventy more were injured, many seriously. Clearly this was a major incident for a public company with a worldwide reputation.
What lessons can be learned here by companies involved in travel and tourism? In docleaf®’s view, plenty.
Firstly, chief executive Lord Browne of Madingley immediately flew to Texas to see matters for himself and to face the media. This demonstrated unequivocally how important it was that the company should be seen to be showing top-level care and concern. Meanwhile the company’s PR bosses had swung into action, issuing a press release in the form of a personal, caring, statement from the refinery’s manager, who was named. The release was also instantly available worldwide via the BP website.
By taking the initiative in this way, even when all the facts were not entirely clear, the company showed a caring image in the face of what could have been difficult and embarrassing circumstances. Such openness also meant that no one in the media could make allegations of, or even imply, incompetence, corporate mismanagement or a cover-up.
As it happens, the disaster could still have extremely serious repercussions for the company. BP took a conscious decision some ten years ago to discontinue insurance cover for major catastrophes, believing that they were strong enough to absorb the risk. Now the bill for repairs to the refinery, workers’ compensation issues and potential litigation could, in the view of some analysts, exceed £500 million. This could prove to be a heavy burden on the company’s balance sheet, demonstrating once again the value of consistent and professional risk assessment and comprehensive insurance.
As we at docleaf® believe this incident to have valuable lessons for us all, we have provided links to the news item in the Daily Telegraph’s Business section of 26 March here and to BP’s initial press release of 24 March here, in our view an excellent example of a well-written and timely company statement in the aftermath of disaster.
Second Major Indian Ocean Earthquake
As a dreadful follow-up to the Boxing Day tsunami that featured in our January e-Newsletter, at the end of March southeast Asia suffered yet another major off-shore earthquake. Although it appears on this occasion not to have caused a major disturbance of the sea, catastrophic damage has been caused to much of Sumatra and neighbouring islands and many lives have been lost.
This time it appears that tourist destinations are largely unaffected, but once again it demonstrates that natural disasters cannot always be foreseen and can strike at any time. Any company involved in travel and tourism should definitely have contingency plans in place to cope with such a calamity. Has your company reviewed policy and training procedures as a result of recent events?
Up in smoke - A US lawyer gets a taste of his own medicine
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A Charlotte, NC lawyer purchased a box of very rare and expensive cigars, then insured them against fire, among other things. Within a month, having smoked his entire stockpile of these great cigars and without yet having made even his first premium payment on the policy, the lawyer filed claim against the insurance company. In his claim, the lawyer stated the cigars were "lost in a series of small fires." The insurance company refused to pay, citing the obvious reason that the man had consumed the cigars in the normal fashion. The lawyer sued and won. In delivering the ruling, the judge agreed with the insurance company that the claim was frivolous. The judge stated nevertheless that the lawyer "held a policy from the company in which it had warranted that the cigars were insurable and also guaranteed that it would insure them against fire, without defining what is considered to be unacceptable fire" and was obligated to pay the claim. Rather than endure lengthy and costly appeal process, the insurance company accepted the ruling and paid $15,000 to the lawyer for his loss of the rare cigars lost in the "fires." After the lawyer cashed the check, the insurance company had him arrested on 24 counts of arson! With his own insurance claim and testimony from previous case being used against him, the lawyer was convicted of intentionally burning his insured property and was sentenced to 24 months in jail and a $24,000 fine. I have it on good faith that this is a true story and was the First Place winner in the recent Criminal Lawyers Award Contest. |
Don’t call your lawyer! For help in all crisis management and risk assessment matters, why not call docleaf® now on 01923 681224 or visit us at www.docleaf.com.
The above articles are written by Dr. David Perl, Chief Executive of docleaf®, unless otherwise mentioned. Articles are copyrighted to docleaf®. Permission to reprint will usually be granted for no charge. Write to info@docleaf.com
A collection of articles about Crisis Management can be found at: www.docleaf.com/enews.htm