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Beyond the ERP: Enterprise Risk Management PRESENTED BY: Tim McSwain, Claims Consulting Andy Mawdsley, Southern California Edison Brint Smith, John F. Throne & Co. Insurance Marketing, Inc. Maintenance Management Conference | Tampa, FL | April 23 25, 2014 Wednesday, April 23 | 8:35 a.m. 9:30 a.m.

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Beyond the ERP:

Enterprise Risk

Management

PRESENTED BY:

Tim McSwain, Claims Consulting

Andy Mawdsley, Southern California Edison

Brint Smith, John F. Throne & Co. Insurance Marketing, Inc.

Maintenance Management Conference | Tampa, FL | April 23 – 25, 2014

Wednesday, April 23 | 8:35 a.m. – 9:30 a.m.

Beyond the ERP: Enterprise Risk Management

• Scenario and analysis

• ERP Checklist Scheduling/Dispatch

• Total Cost of Incident / Event / Risk (to Enterprise)

• Takeaways

Agenda

2

Beyond the ERP: Enterprise Risk Management

B&G Storm Door and Aircraft Repair, Inc. (B&G), a maintenance contractor to Humongous Inc.’s (HI) G-

V, was dispatched to HI’s hangar to clean the jet before a trip with an important customer. B&G, which

had no one available, subcontracted it Speedy Clean Landscaping LLC which dispatched Ralph

“Quickrag” Smith in his 1994 Ford Explorer. He had his 15 year old daughter, Bernice, and two of her

classmates with him (and no place to leave them) at the time.

The job done, Ralph was wrapping things up in the HI’s rep office, when they heard a very loud,

undiscernible noise coming from the hangar. From the window, they saw the Explorer, which had been

parked outside the closed hangar door, had crashed through it, brushed aside a tug and hit the G-V

squarely in the nose gear. It appears the Ford’s power had also pushed the jet backwards off its chock,

hitting a Falcon 2000 and another tug.

How it had happened is not clear and, fortunately, neither of the girls who were in the car were not

injured, at least not by the accident. According to the girls, they got bored and Bernice challenged her

friend, a self-proclaimed “good” driver, to demonstrate her ability.

As for the facts, Ralph, an independent contractor to Speedy, has an auto liability policy with $25,000.

limits for property damage. Bernice’s friend has no driver’s license and thus no coverage under Ralph’s

policy. Her parent’s homeowner’s policy carries $25,000. limits but excludes coverage for motor vehicle

accidents. Damage to two aircraft, hangar and two tugs is an estimated $4,000,000.!

Scenario

3

Beyond the ERP: Enterprise Risk Management

1. What are the short term actions needed?

1. What kind of incident is this?

2. What are the immediate hazards to be dealt with?

3. What do we need/have to do so?

2. Who is affected by this incident?

1. Who needs to know what?

2. Financial vs personal vs political issues?

3. What are the organizational issues that arise?

1. Org chart information pathway vs ERP?

2. Training at each level?

3. Awareness of each participant

4. Top management support

4. What resources are needed to address these issues?

1. Business case prep

2. Internal vs external

3. Retainers vs ad hoc employment

Scenario Analysis

4

Beyond the ERP: Enterprise Risk Management

5. What proactive steps can be taken to address minimize the impact of the incident? ("elevator

speech?

1. Vendor selection and training

2. Contracts?

3. Insurance coverage?

4. ERP drills, feedback, amendments

6. What are some of the variables ("wild cards") that may appear?

1. Injury claims and lawyers?

2. Municipal gov’t

7. How can we prepare for the "wild cards" and mitigate their impact?

1. Drills, feedback, amendments to plans

2. Ask questions, find answers

3. Selection and training

Scenario Analysis continued

5

Beyond the ERP: Enterprise Risk Management

ERP Checklist Scheduling/Dispatch

6

Follow and document the accident verification form

Notify the Director of the Exec Lead Team or alternate if not available

Manifest retrieval of an accurate crew and passenger manifest

Recommend ‘Flight Dept. Stand-down’ procedure based on EOC Director recommendation and also implement crew ‘Call Home’

procedure

Gather FBO name and phone number for departure/arrival FBO’s, check with Arrival FBO, if transportation has arrived, make

sure no information is given to press or other bystanders.

Coordinate with Flight Ops Rep to have Departing FBO fuel truck locked down and obtain a fuel sample

Work with Security to have some at the front door and the Travel Dept.

Support the efforts to relay information to the Family Notification Teams

Support with preparing for travel arrangements for on-site team. Begin exploring areas of possible assistance, such as aid from

charter operations; travel options, to help move our Eyes on the Ground Team, FA team and family members to the location

Collect data to print overhead maps of the accident site and surrounding location, retrieve airfield diagrams, find phone

numbers for key facilities in the accident city (coroner, hospitals where survivors are, local police dept., etc.)

Debrief and document lessons learned

Return to normal operations

ALL Incoming media calls will be routed to the Media Hotline: 8xx-xxx-5555 / 610-xxx-5555

Beyond the ERP: Enterprise Risk Management

7

Total Cost of Incident / Event

Immediate

Impact

First aid to persons

Need to protect aircraft from further damage

Minimize property damage

Required notices

Sequester from press

Stand down?

Protect records

Environmental damage containment

Beyond the ERP: Enterprise Risk Management

8

Total Cost of Incident / Event

Immediate Impact Longer Term Impact

First aid to persons, Need to protect aircraft from further damage, Minimize property damage

Aircraft Physical Damage, Property Damage, Bodily Injury

Required notices Legal Claims

Sequester from press Loss of Business… Damage to reputation / “good will”

Stand down? Lost Productivity (“actions” for defense)

Protect records Lost Equipment

Environmental damage containment Environmental Liability

Loss exceeds insurance / partially insured

Future insurability impacted , in question

Damages, fines, regulatory action

PTSD, Recruitment, Training

Beyond the ERP: Enterprise Risk Management

9

Total Cost of Incident / Event

Immediate Impact Longer Term Impact Who to Inform

First aid, Protect A/C , Minimize property dmg., Required notices, Environ. damage Containment

Aircraft Physical Damage, Property Damage, Bodily Injury; Legal Claims; Environmental Liability

Risk Management, General Counsel Legal, Human Resources/Administration, Operations, Finance, Leadership

Sequester from press Loss of Business… Damage to reputation / “good will”

Operations, Finance, Leadership

Stand down? Lost Productivity (“actions” for defense); PTSD, Recruitment, Training

Human Resources/Administration, Operations, Finance, Leadership

Protect records Lost Equipment Operations, Finance, Leadership

Loss exceeds insurance / partially insured; Future insurability impacted, in question

Risk Management, General Counsel/Legal, Human Resources/Administration, Finance, Leadership

Damages, fines, regulatory action Risk Management, General Counsel/Legal, Operations, Finance, Leadership

Beyond the ERP: Enterprise Risk Management

10

Total Cost of Risk (to Enterprise)

Immediate Impact

Longer Term Impact

Who to Inform Impact to Enterprise / Aviation

First Aid, Protect A/C, Minimize PD, Req. notices, Environ. dmg. containment

A/C Physical Damage, Property Damage, Bodily Injury, Legal Claims, Environ. Liabs

Risk Management, GC/Legal, HR/Admin, Ops, Finance, Leadership

Transportation – Solutions, Outsourcing, Effectiveness; Operational Control

Sequester from media

Loss of Biz… Dmg. to rep. / “good will”

Ops, Finance , Leadership Executive Support and Oversight; Optics; Operational Control; Corporate Strategy

Stand down? Lost Prod. (“acts.” 4 def.); PTSD; Recruit., Training

HR/Admin, Ops, Finance, Leadership

Service Expectations; Talent Pool; Cash Flow; Effectiveness

Protect records Lost Equipment Ops, Finance, Leadership Cash Management; Capital Costs; Required Metrics and Benchmarking

Loss exceeds ins. / part. insured; Future ins.?

RM, GC/Legal, HR/Admin, Finance, Leadership

Safety and Risk Management; Cash Management

Damages, fines, regulatory action

RM, GC/Legal, Ops, Fin, Leadership

Tax Strategy; Regulatory Implications

Aviation Alignment with Corporate Strategy; Value Proposition for Business Aviation

Beyond the ERP: Enterprise Risk Management

• ERP (Flt. Dept.) – ERM (HQ / “Downtown” / Divisions)… Short Term, Long Term Impacts

• Differences?... Differences!

• Understand / Articulate / Communicate…Elevator Speech

Takeaways

11

Beyond the ERP: ERM Thank You – Questions?

PRESENTED BY:

Tim McSwain, Claims Consulting ([email protected] / 973-668-0168)

Andy Mawdsley, Southern California Edison ([email protected] / 909-974-4620)

Brint Smith, John F. Throne & Co. Insurance Marketing, Inc. ([email protected] / 206-622-3636)

Maintenance Management Conference | Tampa, FL | April 23 – 25, 2014

Wednesday, April 23 | 8:35 a.m. – 9:30 a.m.