Putting Out The Fire: When A Crisis Occurs

Pamela J. Ritz, ARM, SPHR, CRM, HACCPPresidentSpecialty Risk Management, Inc.®

May 16, 2008

Crisis Crisis Management Management in the World in the World

of Food of Food Borne Borne

IllnessIllness

© Copyright All Rights Reserved SRM, Inc. © 2008

SRM has created a closely integrated team with expertise in the areas of:

– Food Law– Public Health Law– Communicable

Disease/Pathology– Product Recall– Media– Marketing Response– Customer Response– Employment Practices– Business Recovery– Contracts– Insurance


•• 100%100% of our prevented cases happen within a matter of hours of the first Health Department contact

• However, 5% slip through to “public/media events” … TIME ISTIME IS

OF THE OF THE ESSENCE!ESSENCE!

Prevention


Presently 11,000 to 12,000 Interactions per Year on “Media”-Based Events

Food Borne Illness

1997 - 2008

Interactions73,937

Summary

• 41% Customers• 38% Company Crisis

Management• 6% Insurance Carriers• 4% Health Department• 5% Media• 3% Medical• 2% Law Firms• 1% Lab

Recall Manufacturers

2002 - 2008

Interactions4,328


Food Borne Crisis – “Plug In”

MarketingInternal orExternal

PublicRelations

HumanResources

RiskManagement/

Insurance Carrier(s)

CorporateManagement

RestaurantManagement

Quality Assurance/

HealthDepartment

Increase EffectivenessIncrease Effectiveness

Goals• Integrate• Take on

character of company

• Uniquely mold to each event

• Be invisible• Earn our

place

1.1. Current Trends Current Trends –– WhatWhat’’s Hot Now s Hot Now

2.2. Prevention / ControlPrevention / Control3.3. Controversial Controversial ––

““PammiePammie DearestDearest’’ss”” Future PredictionsFuture Predictions

Current Trends Current Trends --WhatWhat’’s Hot Nows Hot Now


Even If You Are Doing Everything You Can to Monitor your Employee’s Health and Exclude any Symptomatic Employees …

Scenario:A “Regular” customer (retiree) walks into your restaurant and seats himself at his usual table. On his way, he stops to grab his own silverware accidentally touching other pieces of silverware. Little does he know he is a carrier of Norwalk virus …

He visits with his favorite wait staff. She has been an acquaintance and server for almost two years. He finished his meal and she clear the dishes while serving his final cup of coffee…


Illness is Building … HD - Slow to Respond …

• Week 1 (total of 9 ill guests, 1 ill employee)– Sunday: - Customer infected with Norovirus eats at restaurant– Wednesday: - Server calls in sick– Thursday: - Server returns to work– Saturday: - 8 guests eat – sick within 48 hours (Server working)

• Week 2 (total of 45 ill guests, 13 ill employees)– Sunday: - 14 guests eat – sick within 48 hours (Server working)– Monday: - 3 employees call in sick

- 3 guests eat – sick within 48 hours– Tuesday: - 6 employees call in sick

- 6 guests eat – sick within 48 hours– Wednesday: - 2 employees call in sick– Thursday: - 9 guests eat – sick within 48 hours– Friday: - Employee calls in sick

- First inspection related to customer complaints – HD gets involved

– Saturday: - Employee calls in sick- 13 guests eat - sick within 48 hours


Warning Signs are often missed…

• Week 3 (total of 24 ill guests, 2 ill employees)– Sunday: - 9 guests eat - sick within 24 hours– Monday: - SRM receives call from restaurant for help

- 1 employee calls in sick- 4 guests eat – sick within 24 hours

– Tuesday: - 1 employee calls in sick- 3 guests eat – sick within 24 hours

– Wednesday: - 4 guests eat – sick within 24 hours– Thursday: - 1 guest eats – sick within 24 hours– Friday: - 3 guests eat – sick within 24 hours

- Confirmed death from complications- Restaurant closes

– Saturday: - Media circus begins- Intense cleaning

• Week 4– Sunday: - Intense cleaning– Monday: - Re-inspection– Tuesday: - Re-opened restaurant

100 sick 8 hospitalized 1 death


Scenario:Employee travels internationally –

unknowingly exposed to Hep A

• Friday, 5 p.m.: Health Department Press Release– “The County Health Department has

learned that a worker with confirmed infectious Hepatitis A worked while ill at “our” restaurant.

– People who dined at this restaurant between March 14 and March 25 contact their local Health Department or healthcare provider for assessment and vaccination.

– A vaccination clinic will be set up next week. It is strongly recommended all over 12 months obtain the vaccine.

– Symptoms for Hep A are …

“Laissez Faire” (hands off) Health Department – Hep A


• Week 1– Friday afternoon

• 5:00 - Press Release – Health Department goes home• 5:30 - 60 phone calls to restaurant• 6:00 - Local news continues• 7:00 - Calls from weekend reporters• 8:00 - Cameras rolling in parking lot• 10:00 - Return calls to local media complete

– Saturday• Customer hotline running• Customers (eating 14th, 15th, want testing and shots)• Health Department available for one (1) call Saturday with

company – vaccine / IG harder to find than realized, maybe no clinic or maybe Wednesday

• More cameras rolling out front• No private physician has vaccine / IG• All employees inoculated/tested

Media Nightmare Cycle & Upset Customer Eruption


The rest of the

story…

– Sunday – Private clinics established by restaurant for testing/shots

– Monday (within 48 hrs)• By 8:30 a.m. 2300 customer calls over

weekend• Media stories Monday

– Tuesday• Starting arrangements for >155 customers

shots from California, Canada, Florida – 22 states total

• Media stories Tuesday– Wednesday

• H.D. slates one day for shots – only 1000 shots available – run out in a matter of hours

• Stampede of customers as they rush to private clinics for shots – only to wait for hours due to long lines – “standing room only” – “wall to wall” people

• Media (big) – “not enough shots”– Thursday - Customer calls – follow up– Friday – Customer calls – follow up

• Week 2– Saturday

• Health Department gives another 250 shots• Customers also want testing

9,700 Total Interactions

No restaurant closure!

85% in revenue

1 employee illNo other employees (ill)

No ill customers

Copyright © 2008 SRM®, Inc. and its licensors. All rights reserved.

HD / Media Problems We Currently See…• Customers hear “Hepatitis” or

“Norovirus” – demand treatment• “Fecal/oral” route stalls business• Workers with Hep A “worked

while ill” (customer anger)• “Contact your local Health

Department or Healthcare Provider – You’re Exposed”

• Delayed response after press announcements – 5 to 7 days even in a pro-active HD setting


Crisis Management Environment• Friday night press releases – weekend

catastrophes• Coordination of nationwide needs• Availability of “serum”• Testing/treating your own employees –

pre-requisite for restaurant re-opening• “Cash strapped” Health Departments are

charging for services

http://www.sydandfaith.ca/wp-content/uploads/2007/05/syringe_2.jpg


Dollar Costs to the Community…or will it be you?

• Scenario: Patrons wait 3 hours for Hep A inoculations– **“One elderly woman fainted in

line and was taken to a hospital”– **“’They expected several

thousand people, but it looks like half of Arlington is here’, said Wayne Springer, the deputy fire chief.”

• Total InoculationsGiven (2 wks customers): 38003800

• Cost per Inoculation: x $35-$75• Total Cost of

Inoculations: $133,000$133,000--$285,000$285,000

** As reported by The Boston Globe, 6/19/04

• Customers expect treatment

• Insurance carriers may not covermay not cover

• “Tax Dollar Expenditure” outrage


Health Departments may Regulate our Restaurants but …

Public Health Law mission statement:

… The board shall exercise its power in matters relating to protecting the public health to prevent the introduction of disease into the state… including anything necessary or expedient to promote health or suppress disease…

No thought for revenue/expense impactNo after-hours/weekend support

Law allows unlimited use of media


Public Health Varies by State - Will Impact Your Event

TennesseeTennessee GeorgiaGeorgia CaliforniaCalifornia New JerseyNew Jersey

3 Regions Single Strong Coordination

– not a “Monolithic”

Force

Cities + Overlapping “Agencies” Divided by

County


American’s Demand Healthcare Increasing Phenomenon

• Most don’t know personal vaccine history• Want to be tested or treated• Internet tells them about disease / treatment• Customers want a place to go for help –

immediately• “High end” customers – demanding• “Inoculations / vaccine” not on hand at

treating physicians• What are you going to do?


Our First Hurdle Towards Rebuilding Business Traffic

Customers want:AttentionTreatment

Business Recovery Efforts


After the Initial Shock of Media Events the Issues of “Liability” and BI Intertwine

BusinessIncome recovery requires “getting out”of the public consciousness

The longer an Insured

remains as a source of

“public contempt” the

longer the BI event


Sick EmployeeTreatment

HealthDepartmentDoctor

Report

Restaurant

Restaurants and hospitality are uniquely vulnerable to any one of the 35 reportable

diseases

It’s Simply Enough…

Cycle is Defined by Law


HealthDepartment

CommonRestaurant

Sick CustomerTreatment



DoctorReport

DoctorReport

DoctorReport

Commonality is Enough to Generate a Health Department Investigation

Restaurants are vulnerable to special risks


The 1999 Federal Food Code Transferred all Responsibility to the Restaurant Manager

• Managers are expected to know:– Any employees diagnosed– Any employees with symptoms– Any employees previously ill– Any employees with sick family members or who

have recently traveled outside U.S.

Hepatitis, Salmonella, E-Coli, Shigella were the focus (Employees as ‘Carriers’)


The Big “5”

20052005• Federal Food Code changed• Laboratories upgraded• New abilities to diagnose• “Old Disease” will look like a “new”

problem• Most common Media events


Public Health Science v. Traditional Product Testing

• Expectation – “food is long gone” – illness onset time periods

• No actual contaminated food is required to complete investigations

• Food testing advances may not even address (especially virus)

• Food Code changed in 1999 & 2005you should be thereyou should be there

Public Health

Food Borne Illness

assumes:


PFGE Patterning / RNA Sequencing Technology is Catching Up

• Health authorities using science of “victims” and statistics– Homeland Security money

has dramatically improved state labs

– “Pulse Net” now tracking all pathogens - E. Coli, Shigella, Salmonella, Hep A

– States now ID Norovirus


Complications – Compressed Operating Environments for Restaurants

• Enjoying recent abilities to negotiate insurance premiums

• Property/casualty coverage must be “tested” for “restaurant” industry readiness

• Lawsuits – sick customers don’t help – media impact

• Standard carriers don’t have to pay for your business losses

“Send Money”


Smack Down (pleeeeaase)

• “I cannot comment on matters involving litigation” – COME ON!

• Give American people some credit

• “We have given individualized attention to each and every customer – there has never been a need to file a lawsuit.”


Radical Legal Principles in Food Borne Illness Events - Product Liability

• Customers are entitled to “actual damages” under strict liability law

• You can “render aid” during ongoing investigations without “admitting liability”

• There will always be a “written report” by Health Department

• Enough science to rule out most “fakers”

Prevention / ControlPrevention / Control


Prevention: (Actual Event) The Phone Rings

“We have taken samples from your ice machine along

with other restaurants in the

city. We found coliforum counts. Do

you have any comments?”


Creating the “Ick” Factor Thru “Junk Science”

• Making news on a slow day…– Health Department is not

involved– No customers have

complained– Now what?



Can the media just say anything they want to?

You still can’t yell fire in a crowded theater

No!!No!!No!!No!!


There are Laws that Govern the Publication of Information

• “Libel law” - basics still apply

• “Truth” is the media’s only defense

• “Privacy” is another barrier


Reporters Think About the Factors that “Ping” the Ear of the Public

• Am I affected?• Unknown effects• Caused by employees• Caused by restaurant• Companies we know• Children, elderly, pregnant

women (death or injury)

Media reaction / consumer fear

angles



Media Prevention Work Means Playing a Game of “Brinksmanship”

• Don’t drop into media training here

• Dialogue – chat only• Stay in touch (you’ll have

another opportunity …)• Do the science (internally)• If you comment - it becomes

the “truth”© Copyright All Rights Reserved SRM, Inc. © 2008


Return Call to Reporter…”Let’s Test Your Science…Buddy”

• So I know that there are natural coliforum counts in public water supplies – how does ours compare?

• “We will want to test, too. Let me compare processes – water testing requires sterile containers obtained from labs with time periods strictly maintained for submission.”


Goal: Prevent our Brand Name from Being Mentioned – or Article Published

OUTCOMEOUTCOME

NO MEDIA EVENTNO MEDIA EVENT


The Weight of “Truth” – Prevention Strategy for “Brand Impact” Protection

Be prepared - 2008 Junk Science Trend

• Coliform Bacteria• Fecal Coliform • “Aerobic Plate Counts”



We Slip into “Media” Training Sometimes too Quickly

• There is a natural “surface tension” in any news story called “truth”

• If you break it with volunteered information – “game’s on”

• Don’t remove the “burden” of truth in how you interact


“Privacy” has Some Strength as a Tool in Brand Protection

• Customer calls the media with a report of a food borne illness

• Reporter calls – “Would your restaurant like to comment?”



Truth – In the “Food Borne Illness” World it means Health Department Involvement

• Discipline– “I’d love to talk with you

… have you talked with the Health Department? Who (name)?”

– “What did they say?”– “Can I call you back?”


Switching Gears: Basic Truths During any Food Borne Illness Event – Public Events

• Must know / understand the Health Department message first

• If there is a message – they must know your plan

• Health Departments now have PR spokesman – you have to seek them out during events

• If there is no ongoing investigation, then there is NO validated illness© Copyright All Rights Reserved SRM, Inc. © 2008


The Majority of Your Time is Spent on Advertising and Branding

• For our brands – it’s “reflex” now– Reach– Spread– Surveys and analysis– Who “we” are, what “we” serve, who

buys our “stuff” (inside Brand Loyalty)


We Know Who and What we are (Reacting to “Pain” or “Reality”)

• It’s just painful to hear / see:– “Popular local eatery sickens

hundreds”– “Tune in at 6 – eating at the most

popular place in town could just be your last meal”

• Your officers are mad• Your largest investors are

shocked• Your founder wants to fight back


.

Internal Communication is also Important

• Food borne illness media events will impact our sales

• “Responding” is a long term commitment = day/week/months

• Measure financial impact in context

• Yes - It will cost us money


How to Handle the Media – Books are Written about it• There is no magic “structure”• Too often we think:

– Being “open” or “available”– Get our “media trained staff” out

there– Interviews at the restaurant– Get the press releases

out far and wide



Non-Traditional Marketing / PR

• PR’s role is shaped everyday by the crisis management meeting

• You will be learning “technical” knowledge during an event

• “Get in” and “get out” of the press for a reason

• Control your “reach” and “spread”• Prevent it if you can, of course


Technology in U.S. gives us some natural limitations on “who hears story”

Broadcast Bands License for a “Fixed” Distance

Impact restricted to “need to know area” for mandated action


Financial Results - Not Brand Surveys

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Affected Location Nearby Location

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Other Location$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Other Location

Year to Year Revenue of Location Tells us How to Rebuild Business

Copyright © 2008 SRMSM, Inc. and its licensors. All rights reserved.

It is Always a Shock – But Success in Crisis Management is Measurable

• Minimizing the financial drop• Limiting the spread• Focusing on how fast we recover

ActionsAffect

Recovery

Success is…


Crisis Management is About Continuously Affecting/Reducing Loss – Mentally Prepare Yourselves

Integrated Effort/Expertise

Food Borne Illness Event

Reduce Media

Business Response Plans - Integrating

Marketing Concepts to Increase

Business Flow

Immediate1-800 Customer

Response

Gov’t Control /Pathology Dialogue

Gov’t Control /Pathology Dialogue

ControversialControversial““PammiePammie DearestDearest’’ss””

Future PredictionsFuture Predictions


History: CDC Data 1996-2006 10 YEARS

“Supplier Events”

66 Events

8,520Customer Illnesses

“RestaurantCaused Events”

6,000 Events

258,168Customer Illnesses

Current Pre-Occupation with “Supply Chain” Issues


There are Often 2 Waves of Media Events

Health Department Press

Events –Media Reactions

Plaintiff Attorney Special Interest

Stories –Media Reactions



“E-Coli Lawyer Cleans Up, Makes Good Money from Bad Food” (article from Associated Press 2/5/08)

Highest Plaintiff Attraction -

Restaurant Events+

Supplier Issues


Science is tightening the noose

Salmonella Reduction Initiative2008 FSIS / FDA Initiative

Salmonella Reduction Initiative2008 FSIS / FDA Initiative

CDC PostingPulseNet Comparisons

PFGE PFGE

FactoryProduct Sampling

Human Illness /Outbreak Sampling

http://images.google.com/imgres?imgurl=http://www.nrc-cnrc.gc.ca/images/education/bac_salmonella.jpg&imgrefurl=http://www.nrc-cnrc.gc.ca/eng/education/biology/gallery/salmonella.html&h=334&w=450&sz=80&hl=en&start=16&tbnid=GMwSZUBJ6_ygHM:&tbnh=94&tbnw=127&prev=/images%3Fq%3Dsalmonella%26gbv%3D2%26hl%3Den%26sa%3DG

http://images.google.com/imgres?imgurl=http://www.nrc-cnrc.gc.ca/images/education/bac_salmonella.jpg&imgrefurl=http://www.nrc-cnrc.gc.ca/eng/education/biology/gallery/salmonella.html&h=334&w=450&sz=80&hl=en&start=16&tbnid=GMwSZUBJ6_ygHM:&tbnh=94&tbnw=127&prev=/images%3Fq%3Dsalmonella%26gbv%3D2%26hl%3Den%26sa%3DG


We have to think about more seamless approaches to “worst case”

• Collision course:– (BI) Insurance agents pushing for risk transfer

for financial loss– (GL) Insurance agents pushing for risk

transfer for liability loss– Corporation is pushing coverage and low cost


Think About the Worst Case Death – Disability – Customer Injury

We want our suppliers sitting beside us at the Defense Table

What if we are suing them for recovery at the same time?



Any Loss Transferred to Insurance will Mean Lawsuit

Recovery / Subrogation

Any Supplier Loss

InsuranceCarrier

Transferred

SubrogationLawsuit

YourCompany

Supplier


100% of all Food Borne Illness Restaurant Outbreaks Result in Inspections

• Health Department Inspection

Critical ViolationCritical ViolationCritical Violation

• Public Information– How much are you at

fault?– What ammunition will be

in Health Department investigation?


Media Nightmare – Disclosure and Managing conflict in the media eye.

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We Know How Product Liability Law Works – Lock Attorneys in a Room

DecideHow do we

want to defend?

ContractsWork

Backwards


Back to Basics - Contracts

• How do we want to do business anticipating liability?

• Car companies went through the same cycles• What media agreements are integrated into

contracts?• Some suppliers are our only source• How do we both survive?• QA, Purchasing, Risk Management & Public

Relations – joint project

Pamela J. Ritz, ARM, SPHR, CRM, HACCPPresidentSpecialty Risk Management, Inc.®

May 16, 2008

THANK YOU!THANK YOU!