Top tips on crisis management in the food industry

By Richard Barker

- Last updated on GMT

Related tags: Management, Food manufacture group

A survey of senior risk managers revealed that less than half of respondents said they were 'good' at crisis management
A survey of senior risk managers revealed that less than half of respondents said they were 'good' at crisis management
Do you remember when sales of Perrier Water were hit in 1990 by traces of carcinogenic benzene found in the bottles? The company had to withdraw 160M bottles worldwide at a cost of £150M and saw sales tumble for four years. Or when Heinz had to withdraw baby food worth an estimated £30M? Plus we can only speculate what the full financial impact of the horsemeat crisis will be. So how can you protect your food and drink business?

The media and general public can be very unforgiving of errors or misfortunes, and the effects can be devastating to any business. It isn’t only FTSE 500 companies that are at risk following a crisis and the subsequent damage to their reputation. Companies, small or big, are equally vulnerable when operating in today’s highly competitive markets.

Two-thirds of business leaders believe it’s harder to recover from reputational failure than it is to build and maintain a reputation. It takes on average, three to four years for a company to recover, they say.

Some never recover. Often the deciding factor is how a company responds when something goes wrong.

Most businesses are not well-prepared to respond quickly. A survey of senior risk managers by the Economist Intelligence Unit found that less than half of respondents said they were “good”​ at crisis management while 11% rated it as “poor”.

Large businesses are more likely than smaller ones to have a well developed crisis management plan as they often use outside consultants to help develop and assist them prior, during and post crisis, yet companies of every size could benefit from this expert advice.

Crisis management plan

So, here’s a quick guide to taking the drama out of crisis management. In honour of Natinonal Donut Week, which ends on Saturday May 18, take a look at my ‘Dos and Doughnuts’ tips to consider for your crisis management plan. It may help you plug a hole.

Dos

  • Make crisis management a proactive discipline rather than reacting afterwards
  • Communicate with stakeholders, employees and the public quickly on the steps you’re taking to rectify the problem via a designated spokesperson
  • Display regret and concern for the consequences of an event
  • Assert commitment to make things right and demonstrate control
  • Collect and analyse customer feedback

Doughnuts

• Be complacent / hide your head in the sand, thinking ‘it won’t happen to me’.

• Ignore social media / blogs

• Set up a crisis management plan and leave it to gather dust

If the worst happened, a well-conceived crisis management plan, would not only help avoid a crisis becoming a reputational disaster, it might be the foundation to turn a very bad situation into a net gain in how you are viewed by your customers and investors.

Some insurers can provide you with financial security for a set period of time enabling you to ‘get back on your feet’ over and above any business interruption cover.

Cash flow

Experience has shown that the immediate aftermath of an adverse event might affect your cash flow as the business revenue will be instantly affected. Also, it’s advisable to consider whether certain products or lines of products would benefit from insurance coverage where they are of critical financial and strategic value to your business.

Insurance brokers are here to protect not only you, your people and physical assets, but also your reputation, another key ingredient of your business.

They can audit your company, identify and minimise the risks and review crisis management plans, plus ensure your insurance will cover costs following an adverse event. And, most important, it’s tailored to your individual business needs.  

Meanwhile, the Food Manufacture​ Group’s free one-hour webinar dedicated to learning the lessons of the horsemeat crisis takes place today (May16). Listen to our panel of expert speakers explain how you can protect your food and drink products agaist fraud here​.

  • Richard Barker is a food and drink insurance specialist with Sutton Winson (www.suttonwinson.com).

Related topics: Drinks, Hygiene, safety & cleaning

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