Headlines were made across Australia in November, 2014 when the severe ferocity of a Docklands apartment fire was attributed to the use of illegal cladding material in its construction. Even more alarming now, is that the cladding has been used in hundreds of high rise buildings throughout Australia.
The presence of non-compliant cladding in a building is a very serious issue, and while nobody lost their life in this instance, a similar fire in a building which features the cladding could see far graver consequences.
A crisis may occur at any time and can impact your business in a number of ways. Despite many years of good work in building a strong and favourable image in the community, a business’ reputation can be tarnished quickly if a crisis is not managed effectively.
This story however, has brought to the fore much larger questions for Strata Managers. What would you do if you were faced with a catastrophe like this in one of your buildings?
As a Strata Manager, you may be implicated in the events following a crisis, and if not managed appropriately, there are a number of adverse consequences that could impact your Strata Management business:
1. Liability
Your business may be held partially liable if you are not able to show you have done everything a reasonable person would be expected to do, to ensure the safety of all building occupants in a crisis. E.g. Fire safety measures including prevention and evacuation – ensuring a fire plan is in place for the safe evacuation of all occupants, ensuring sprinklers and fire alarms are working.
2. Reputational damage
If the crisis response is not adequate, your brand could be tarnished. This point is particularly relevant under the scrutiny of social media, and the modern day 24 hour media cycle. Stories can go viral in a matter of hours!
What would constitute a crisis?
Each Strata Management business varies in the types of incidents that would define a crisis, however you can gain some insight by asking yourself the following questions:
- What keeps you awake at night?
- What sort of incident can impact your organisation OR the properties you manage? E.g. fire, terrorism, defects, flood, unsafe building materials.
While you cannot possibly predict everything that could happen, you can stay a step ahead by formulating a Crisis Management Plan.
Predicting potential issues after a foreseeable crisis incident will help you plan your crisis response.
When formulating your Crisis Management Plan, it is important to consider the many stages of a crisis and the issues that may arise in each. These can range from the initial, immediate concerns in an emergency situation, or problems that present themselves in the medium to long term.
Consider the scenario of a high rise apartment fire in one of your buildings…
Below are just a few examples of some of the many issues that could arise, all of which need to be managed:
- Evacuation of residents and tenants.
- Managing Municipal, State Government, Emergency Services, Insurers (loss adjusters) and building owners / managers.
- Cause investigation /enquiry.
- Security of the building and residents personal property.
- Accommodation for residents.
- Access to the building for residents to recover essential belongings.
- Obtaining permission to reoccupy the building / safety.
Aside from the above, you also need to consider whether your office is equipped to handle the massive influx of enquiries you will receive from owners and tenants as a result of the incident:
- What was the cause?
- When can I move back in?
- Why can’t I move back in, my apartment is not damaged?
- Is my apartment damaged?
- Who will I sue for my loss?
- Will the Owners pay for my temporary accommodation?
- Will the Owners replace my damaged belongings?
- My real estate agent told me to call you to find out about insurance for my damaged belongings…
Do you have a Crisis Management Plan in place?
We strongly encourage you to think deeply about how you would address these issues in a crisis. Your answers will help you to begin formulating an effective Crisis Management Plan.
To assist you in the development of a Crisis Management Plan, there are key questions that you need to ask yourself for the buildings you manage:
- What can happen?
- What can we do to prevent it from happening?
- What can we do to limit the impact if it does happen?
- Do we have the mechanisms in place to handle the fall out?
Planning for the many stages of a Crisis
The Crisis Management Continuum featured below may assist in illustrating to you the different stages of a crisis, as well as appropriate responses required in each one.
Clarify your role as a Strata Manager in a crisis.
The key to your Crisis Management Plan, is understanding and establishing who is expected to take the lead when coordinating the crisis response.
In order to gain clarity on this, it is crucial for you to clarify how your Owners Corporations view your role. The last thing you want in a crisis is for the Owners Corporation to think that the Strata Manager is coordinating the response, and for the Strata Manager to assume the Owners Corporation is taking the lead.
Forming a Crisis Management Team.
Having a sound Crisis Management Plan is fundamental to managing a crisis, but of equal importance is formalising a Crisis Management Team to implement the response.
When forming your Crisis Response Team it is important to:
- Identify the key stakeholders who need to be involved in the response
- Define the roles and responsibilities of each stakeholder
- Ensure that those who are expected to implement the plan are well practiced in it.
Crisis Management Team Structure.
Below we have provided an example of what an effective Crisis Management Team structure can look like.
Next time…
While this article only scratches the surface when it comes to formulating a Crisis Management Plan, we hope Part 1 of our Crisis Management article series provides you with some insightful information on how to commence the process.
In Part 2 we will delve deeper, providing you with guidance on the various elements of a Crisis Management Plan, how to deal with a crisis, and an example of a Crisis Response Process. Stay tuned for April!
In the meantime, if this article is ringing alarm bells, and you would like to engage further advice on developing a Risk and Crisis Management Plan to protect your Strata Management firm, please contact your Whitbread Account Manager on 1300 424 627.
This insight article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.
