Allgood Ltd, a listed company, announced the appointment of Sumer, as the Company's executive director. Despite opposition by few shareholders, the management offered justifications for the new structure to be more indep

CS Professional · Environmental, Social and Governance (ESG) Principles and Practice · PYQS · December 2024
Allgood Ltd, a listed company, announced the appointment of Sumer, as the Company's executive director. Despite opposition by few shareholders, the management offered justifications for the new structure to be more independent and investor friendly. It indicated that foreign investors were optimistic about the future of the Company and expected better financial results. The Company has been actually witnessing and struggling to address certain corporate governance challenges. A small shareholder filed a law suit against the Board of Directors' misuse of corporate funds. Rishi, the present Chairman and CEO, was working with the Company since last sixteen years and was a close family friend of Promoters. His leadership style being democratic, he was liked and praised by everyone. He was often found meeting people at all levels within the organisation and called for trying new things. His philosophy diminished conflicts and tensions in pursuit of goal setting and achieving. He believes that as long as dividend is paid to shareholders and earnings per share increases, the market values the stock. To address the changing business situations and the perception of the various stakeholders, Rishi had a detailed discussion with Sumer, to identify the further course of action, as Sumer had experience in managing crisis. Both of them evaluated various aspects threadbare and concluded that they should appoint some professional firm, who would do a detailed review and suggest the way forward to address these issues. In consultation with other directors and senior management, they appointed Mangal & Co., a consulting firm, to evaluate the present situation and suggest the best practices to mitigate these issues. The consultants were provided with the following shareholding pattern as on March, 31, 2024: Type of Shareholder Holding % Promoters 51.60 Mutual funds 7.25 Domestic financial institutions and Banks 24.75 Foreign institutional investors 10.40 Corporate bodies 4.60 Individuals 1.40 Total 100.00 Mangal & Co., performed a detailed evaluation of the Company's process and procedures, including its corporate governance practices and suggested that the Company should strengthen the role and position of a Company Secretary, who would not only be a focal point for the governance aspects, but also assist in the risk management process. Develop a robust system of internal controls and internal audit, which would support the management and also have a crisis management plan, which would help the Company to prepare a strategy in identifying and responding to threats. In the background of the above facts, answer the following: List the guidelines which the Company shall follow to establish a good crisis management plan.

Answer & Explanation:

Crisis Management is an organization's process- and strategy-based approach for identifying and responding to a threat, an unanticipated event, or any negative disruption with the potential to harm people, property, or business processes. The following guidelines are recommended for establishing good crisis management plans: Identify an individual from your workforce to take over the crisis management role as a manager or a firm can employ a professional crisis manager who can help you in planning crisis management processes. Initiate frequent training and refresher courses on handling crises. Drills and practice operations must frequently take place to keep refreshing stakeholders on emergency responses to crises. Form a crisis team to work under the leadership of a crisis manager. When a crisis occurs, this is the team that should be able to respond quickly. A veteran of several training sessions and drills for such occurrences, it is expected to be on the frontline in directing other stakeholders on what to do and where to assemble to avoid further damage. Planning responses and crisis management processes for various potential crises is highly recommended. It takes several approaches and processes to address different crises. Initiate systems that can effectively monitor or detect foreseeable crises signals early enough in order to tackle the situation before it gets out of hand. Examples of such systems are smoke detectors that can detect potential fire long before it gets out of hand. Provide a list of key persons in case of a crisis and their contact information. The contact information must be displayed where anyone can see it and easily access them. Identify the ground person to be notified immediately when a crisis occurs. Apart from a crisis manager, there must be a coordinating person among employees who possesses first hand news on a looming crisis. This should be a person who can be trusted by his colleagues with vital information during any suspected crisis. Identify a central point where employees can assemble and the exit points to use in case of a crisis. Emergency exit doors with case of opening them must be labelled well and an emergency central gathering place identified and properly labelled as well. Regular testing of the crisis management process and emergency equipment and updating them frequently or as needed.

Topics: Risk Management

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic