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Crisis Management:From Policy to Response

Presented to ACC Alberta Chapter by:Alex MacWilliam, Partner, Dentons Canada LLPDavid Weyant Q.C., Former Senior VP & GC, Alberta Health ServicesGarett Eisenbraun, Partner, Dentons Canada LLPSean Carey, Senior Legal Counsel, Enbridge Pipelines Inc.

Dentons Canada LLP & ACC Canada

March 2014

“When written in Chinese, the word crisis is composed of two characters. One represents danger and the other represents opportunity.” - John F. Kennedy

Dentons Canada LLP & ACC CanadaMarch 2014

Introduction


• Hallmarks of a crisis

• Case Study

• Planning for a crisis

• Role of legal counsel: in-house and external

• Incident Command System

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Sources of Crisis

• Environmental issues

• Financial / legal malfeasance

• Major regulatory non-compliance

• Natural disaster / weather

• Workplace violence

• Terrorism

• Product defect / recalls

• Supply chain interruptions

• Cyber attack

• Pandemics

• Adverse rumors


Crisis Frequency


• On average, a large company is hit by a crisis every seven years.

• 64% of organizations have faced some type of corporate crisis in the past five years:• compliance-related (19%)• natural disasters (16%) • tort/accident, workplace (i.e., employee misconduct, harassment, violence)

(11.2%) • environmental crises (11.2%) 2011 poll of members of 61 ACC Committees

March 2014

Dentons Canada LLP & ACC CanadaDentons Canada LLP & ACC CanadaMarch 2014March 2014

Common Elements Of A Crisis


• loss of control

• anxiety and panic

• lack of reliable information

• immediate actions will be required

• the 䇾right䇿 approach may not be clear

• extensive scrutiny and confrontation from outside forces

• innocent conduct may be viewed with suspicion

• the facts may turn out to be different than initially thought

March 2014

䇾A crisis is like an iceberg, you can see only a little

part of it sticking out of the water, but it is the mass of ice below the water level that can do the most

damage.䇿


Do You Have A Crisis?


1. Is there a good chance that this situation will, if left unattended, escalate in intensity?

2. Might the situation foster unwanted attention by outsiders, such as the news media or some regulatory agency?

3. Is it likely that the situation might interfere with normal business operations in some manner?

4. Could it make you look bad or cause people (the public at large, or investors) to lose confidence?

5. How is it going to affect your bottom line? Crisis Management: Planning for the Inevitable by Steven Fink

March 2014

Crisis Management


“The design and coordination of individuals or teams before, during, and after an event to resolve a crisis or potential crisis, minimize losses within and outside of the organization, and stabilize the situation and the organization, hopefully in a manner where the same losses will not occur again.”

March 2014

Current Added Pressures


• Digital media has revolutionized the speed and reach of information• Lack of trust in corporations may cause innocent conduct to be viewed

with more suspicion• Economic pressures may diminish available resources to prevent, plan

for and manage crises• Increased political involvement / agendas• More “watchdogs”• Global competition pushes reduction in best practices to remain

competitive

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PLAN Crisis Management Plan


• Comprised of both written CM Plan (guidebook/manual) and actions to be taken in advance

• Now is time to establish good relationships with media

• In addition to traditional media, identify influential bloggers, invite them to link to your blog, continue to monitor them

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Contents of CM Plan


• Identity of Crisis Management Team

• State who will be in charge during crisis

• Define command structure and roles

• State location of command centre(s)

• Set out communications plan and procedures

• Specify solution scenarios

• Redundancy/backups for everything/everyone

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WHEN A CRISIS OCCURS“Every fighter has a plan until he

gets hit.”


- Mike Tyson

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WHEN A CRISIS OCCURS


• Follow the CMP• Keep calm and carry on• Get the facts• Communicate honestly, early and often• Demonstrate your concern• Offer help, if possible• Apologize, if appropriate (s. 26 Alberta Evidence Act)• Cooperate with authorities

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The Sobering Reality


Today it is estimated that less than 30% of all organizations in North America possess a Crisis Management Plan that would actually work in the event of an incident.

FEMA Readiness Reporting, 2013

March 2014

Why Have a Crisis Management Plan?


“It was kind of like the Romans used to, you know, conquer villages in the Mediterranean. They’d go into a little Turkish town somewhere, they’d find the first five guys they saw and they’d crucify them. Then, you know, that town was really easy to manage for the next few years.

And so you make examples out of people who are in this case not complying with the law. Find people who are not complying with the law and you hit them as hard as you can and make examples out of them. It’s a deterrent thing.”

(Former) Environmental Protection Agency Region VI Administrator Al Armendariz, April, 2012

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Priorities When Implementing a Crisis Management Plan


• Crisis management theory sets out the following hierarchy of response objectives:

• Safety and Health of Responders• Save lives• Reduce suffering• Protect public health• Protect critical infrastructure• Protect property• Protect the environment• Reduce / mitigate economic and social losses

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Key steps to effective crisis management

March 2014 Dentons Canada LLP & ACC Canada

1) Best Defense is a Good Offense. • Establish a plan & communicate it. Train your personnel on their roles &

responsibilities;

2) Tell me now. • Encourage timely reporting, using established protocol, when potential

issues are identified;

3) Rally the troops. • assemble the crisis management team quickly, implement the ICS (if

applicable)

4) Investigate and verify the issue.• Send personnel to ‘go and see’ to demonstrate active response

Key steps to effective crisis management

March 2014 Dentons Canada LLP & ACC Canada

5) The truth is easier to remember. • Do not speculate or prevaricate. Likewise “no comment” is no answer

anymore.

6) Appoint a champion: • Identify a key spokesperson for any customer, employee, press release,

or other communication. One contact point.

7) Isolate, contain and fix the problem. • Always over-respond rather than under-respond. If you think you need

one, order two;

8) Participate in lessons learned

Communications – Advance Planning is key


The speed of information release, and the number of potential sources of that information, means that effective incident response must include a media / communications strategy:

1) Periodic Media training for identified “Champions” and spokespersons2) Identify and retain media and messaging consultants3) Relationship building between your public affairs group and key media4) Develop Fact Sheets5) Regular press releases emphasizing response efforts and status

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Documents – A Critical Aspect of Crisis Response


Documentary production and Information Requests (IR’s) are very onerous aspects of post-incident investigations by regulatory and prosecutorial bodies.

• Assume you will be investigated and will need to disclose documents and respond to overlapping Information Requests (IR’s) from multiple requesters. How do you prepare?

• Identify the location of key business documents, and the custodian(s) IN ADVANCE• Establish protocol that all IR’s must be in writing & addressed to identified individuals only• Divide and conquer: divide IR’s amongst document custodians to prepare initial

responses, then returned to Law Dep’t for vetting before disclosure• Use technology:

• Create electronic records that cannot be tampered with• Use secure FTP or Sharepoint sites to deliver documents to regulators

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Role of Legal Counsel in Crisis Management


“Going through the crisis there are two advisers I’ve paid no attention to. The first are the lawyers, and the second are the accountants. It’s not about money or legal liability; this is about our being accountable for providing consumers with safe food. This is a terrible tragedy. To those people who have become ill, and to the families who have lost loved ones, I want to express my deepest and most sincere sympathies. Words cannot begin to express our sadness for your pain.”

McCain Foods CEO Michael McCain in his public apology following the 2008 listeria tainted meat incident

March 2014

Role of Legal Counsel Prior to a Crisis


• Keep McCain’s comments in context

• There is an important role for in-house and external legal counsel both pre and post crisis

• Starts at the planning stage

• Lawyers trained to identify potential issues• Issues can become threats and crises• Advise on how regulatory regimes and common law can come into play during

and after a crisis• May have existing relationships and good will with regulators that can be used

to assist in development of plans and in working cooperatively when emergency situations arise

March 2014

Role of Legal Counsel Prior to a Crisis


• Ensure plans required by legislation are properly completed and filed with appropriate authorities and that corporate plans are consistent with statutory plans

• Examples• Alberta Energy Regulator – ERPs under Directive 071

• Site-specific ERPs• Corporate-level ERPs

• Transportation of Dangerous Goods legislation – ERAPs• Note recent changes in response to Lac Megantic

• E2 plans under CEPA Environmental Emergency Regulations• Responsible Energy Development Act – Security Management for Critical

Upstream Petroleum and Coal Infrastructure • Alberta Counter Terrorism Crisis Management Plan

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Planning More Important than Plans


• Plans are of limited value if no one knows how to implement them

• Importance of regular drills, exercises and mock disasters

• Plans should be tested and revised over time

• Critical to have in-house and external counsel involved to define and refine roles in preparation for the real event

• Internal assessment/audit of performance can be privileged if counsel properly involved

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Role of Legal Counsel During the Crisis


• Lawyers should not be leading the response but can provide key support to incident response team

• Advice on regulatory obligations (e.g. reporting requirements)

• Analysis of material contractual rights and liabilities including notices to counterparties, insurers etc.

• Working within communication plan to advise on content of external and internal communications

• Assisting with document management and control

• Providing privilege protection where necessary and appropriate

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Role of Legal Counsel After the Crisis


• Post crisis• Lawyers trained at finding facts

• Involvement in internal investigations and “root cause” processes• Preparation for and representation during regulatory investigations• Knowledge of liability “tails”

• In respect of regulatory enforcement and civil actions• Preserving remedies• Litigation mitigation

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FEMA Incident Command System


A Management System for responding to major crises or incidents.• In 1960’s Incident Command System (ICS) formed to provide consistent

organizational structure to respond to emergency situations• Common structure intended to reduce miscommunication and overlapping activities

• ICS is scalable. Can be established with as few as two people, and can be ramped up or down quickly as circumstances warrant

• ICS can be used for all types of incidents, not just disasters or attacks (eg: parades, concerts, public speaking events)

• Regulators expect companies to follow ICS, especially in industries where incidents will require regulatory participation to respond• Failure to participate may result in loss of control over the incident response,

while maintaining accountability for the costs.

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ICS Technical Specialist

Safety Officer Incident Commander Legal Officer

Intelligence Officer

Public Information OfficerDeputy Incident

CommanderLiaison Officer

Operations Section Chief

Recovery & Protection Branch

Emergency Response Branch

Air Operations Branch

Wildlife Branch

Staging Area Manager

Planning Section Chief Business Interruption Logistics Section Chief Finance Section Chief

Situation Unit

Resource Unit

Documentation Unit

Demobilization Unit

Environmental Unit

Technical Specialist

Services Branch

Communications Unit

Food Unit

Medical Unit

Support Branch

Supply Unit

Facilities Unit

Vessel Support Unit

Cost Unit

Time Unit

Procurement Unit

Compensation/Claims Unit

INCIDENT COMMAND SYSTEM

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Responsibilities of the ICS Roles


• Commander & Staff: Direct the Response, Liaise with Regulators, Manage Information

• Operations: Implement response tactics, implement plans and deploy resources

• Planning: Collects information, assesses options, plans response to be executed by Operations

• Logistics: Mobilizes and demobilizes resources for deployment, arranges infrastructure, facilities, personnel

• Finance: Tracks response costs, manages expenditures, coordinates compensation

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Counsel’s Toolkit – Resources at your fingertips


Counsel should collect and maintain some basic information in preparation for an incident:

• Company executive and responder contact lists, including home / cell numbers• Contact lists for key regulators (ensure no reporting obligations missed)• Identified external counsel in each jurisdiction where your organization does

business• Dealing with media guidelines; public affairs contact information• Standard Form Agreements to mobilize resources• Witness Briefing Instructions• Document Hold Notices and Retention Instructions• Guidelines for responding to subpoenas, warrants, raids• Interview forms• Chain of custody forms for records seized during searches

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QUESTIONS


Presentation will be available on ACC website

• Alex [email protected](403) 268-7090

• Garett [email protected](780) 423-7113

March 2014