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Preparing for the unexpected in the world of managed property.

publication date: Apr 6, 2009
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author/source: Andy Cuerel
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Risk and crisis management. Expensive add-on? Tick box activity? Plenty of effort for little return?

Attempting to promote the virtues of best practice crisis management in the current climate can provoke a degree of incredulity amongst landlords and managing agents. “How are we expected to focus on ‘nice-to-haves’ when our profits have nose-dived? We can’t balance the books as it is, without compounding matters with another investment programme.”

Yet this attitude is, at best, misguided and, at worst, professionally and economically naïve. Not only can sound risk and crisis management planning protect the organisation and its stakeholders, but it needn’t incur a significant capital cost and will almost certainly save on the bottom line in the longer term.

PLAN AND SAVE PREMIUMS

In the first instance, consider insurance. Demonstrable systems of risk and crisis management work – and efficacy in reducing or removing risk – can significantly reduce premiums under a number of headings: business interruption / public liability insurance and of course buildings insurance itself. Further savings can be derived from more beneficial outcomes resulting from live incidents. This might be the avoidance of: litigation from tenants; reputational damage to the brand resulting in lost business with other clientele; statutory breach resulting from inadequate evacuation plans – think Corporate Manslaughter revisions here! In short, it will not pay you in any sense of the word, to ignore the possibility of unforeseen events affecting your portfolio. Events such as what, then? Terrorism historically is the main driver for crisis management in business centres, but for all the attendant horror and publicity, these attacks are relatively rare, albeit they remain a threat. Witness the ‘own goal’ scored by the would-be bomber Nicky Reilly in an Exeter restaurant last year when his chemical device detonated prematurely. This incident also highlighted once again that living and working outside of the major cities does not guarantee immunity from such barbaric acts.

The other end of the terrorism spectrum of course are events such as 9/11 and 7/7, which predictably energised the industry (to an extent), but the lasting effect is questionable: memories are short – “life goes on”, “surely it won’t happen like that again”, can easily prevail over short-term fear and longer-term good intentions.

No, for the most part, it is the more benign, or even ‘left field’ incidents which can trip up a landlord or managing agent. Potential issues such as: damage caused by external construction works – a US office tower on the Eastern seaboard was seriously damaged recently when an adjacent tower crane spun out of control and crashed into the upper floors.

Civil disruption: a multi-tenanted London office block was temporarily shut down by the presence of protestors in the foyer campaigning against the activities of a high profile tenant.

Celebs stranded in your building? Not so far fetched since the well publicised Stephen Fry incident at Centre Point, when the actor/presenter commentated his way through a lift malfunction, courtesy of social messaging utility Twitter. Amusing enough at the time (Fry appeared to see the funny side of it), but what would the ramifications have been for the landlord or managing agent if those trapped had collapsed from heat exhaustion or worse? Cue finger-pointing, litigation, prosecution, damning headlines, lost customer and public confidence etc. What prospective tenants are going to want to occupy a building which has suffered a series of badly managed public demonstrations? Are the public going to frequent a shopping mall which is evacuated due to a power failure, resulting in panic through poor communication from the property manager?

Even more commonplace than the above are the occupational hazards of any large property such as utility failure, with all the disruption that ensues from internal floods, power outages and gas leaks.

WHAT CAN I DO?

A comprehensive risk assessment of the environment is the correct starting point, quite literally for some risk categories. Who are our neighbours? What do they do? Could they be targeted by pressure groups or extremists? What does that mean for our tenant occupiers? Similar questions should be considered regarding the tenants themselves – think about those who may attract attention from animal rights groups for instance, or those who are perceived to take a strong stance either way regarding the Israel / Gaza conflict. Other pertinent issues to consider could be sabotage, theft or other criminal activity - these categories can be very significant in public access spaces such as shopping centres, pubs/clubs, stadia etc, all these in addition to the usual suspects, some of which previously mentioned, fire, flood, environmental spills, power outages etc.

What then? Contingency plans documenting actions and crisis communications are an important part of