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Risk Management Business Contingency Plan Essay

The qualitative risk analysis performed in a previous report identified eight notable risks associated with setting up a call-center presence in Québec, Canada. As those risks are successfully managed, the call center will commence operation and start handling telephonic insurance requests from mostly French-speaking customers. (Only one-quarter of employees at this center will handle English-speaking calls from Canadian customers.)

Because there will be a sole call center in Canada handling 100 percent of the French-speaking calls and one-quarter of English-speaking calls, it will be imperative to establish a business contingency plan, or BCP. Because of the aforementioned propensity for natural disasters in Canada, this plan will address continuity of business in the event of a natural disaster, such as a tornado. The specific areas of business continuity to be treated are

1. Pre-incident adjustments,
2. Ethical use and protection of sensitive data,
3. Ethical use and protection of customer data,
4. Communication plan, and
5. Post-incident continuity.

The goal of this plan is to reduce pandemonium associated with natural disasters’ effects on normative business operations.

Pre-Incident Adjustments

It is important to understand the principal components that contribute to the locomotion of a well-functioning call center. These components include:

1. A functioning telephone-delivery system, also known as a PSTN
2. A functioning networking system for data sharing
3. A functional group of computers for customer processing
4. A functioning electrical system

There are other less-crucial components that contribute to a normative operational environment, such as fax capabilities and office equipment. The focus, however, will be on major components.

It is obvious that a call center requires the ability to manage inbound and outbound calls. A tornado of any strength has a high likelihood of disrupting this call management ability. (Please review the risk register and attendant risk report for more information on the level of severity and likelihood.)

Public Switch Telephone Network

The call center is dependent on a public switch telephone network, or PSTN. This is an array of externally managed networks employed to deliver calls throughout the world; this network uses coaxial cables, fiber optics, land lines, and satellite communication to support communication. A natural disaster can physically affect this aspect of the communication network, which effectively prevents the delivery of calls to the call center’s own internal automatic call-delivery system, or ACD. This is an obvious impediment to the nature of a call center.

Networking System

In order for call-center employees to make and receive calls, the PSTN must deliver the calls to the call center’s networking system, which comprises the business telephone system, or PABX, and high-speed data delivery lines, such as ISDN. If a tornado affects the PSTN, the call center’s networking system for call delivery would be useless, and no calls would be delivered or could be made. If the tornado damaged the call-center structure, the networking system would also fail, not only preventing the handling of calls but the appropriate transmission of data. If there are onsite servers or mainframes, they may also be damaged.

Functioning Computers

Computers are required in every aspect of call-center operation. Front-line employees cannot process calls or customer requests without access to a computer. Information-technology workers cannot support the existing call-center network without a computer to interface with the network. A direct impact of a tornado would most likely destroy a significant number of workstations, causing elevated levels of inefficiency and the inability to meet customer needs.

Functioning computers and network lines are also important for what is referred to as the Intra-Day Management Team. This team is responsible for 1) the proper routing of calls to call-center representatives based on their skill set—referred to skill-set gating—and 2) managing the call-center employees’ phone and off-the-phone schedules—referred to adherence and conformance. Damage to telephone lines, networking structures, and computers prevents the proper support of the call-center employees, which results in missed commitments with telephonic customers.

Functioning Electrical System

The electrical system is managed by the public-utilities company of the local area. If a tornado sufficiently damaged this entity to prevent the consistent delivery of electricity to the call center, there may be a disruption to the ability to make and receive calls as well as process data. The call center employs backup power generators in such an instance, but these generators provide eight hours of power. In natural disasters, it is not unlikely that utilities companies will be able to restore service within weeks.

For each of the communications components listed above, State Farm should establish a call-routing process to handle inbound and outbound calls in exigent situations. Call routing simply means that a national Intra-Day Management Team, a team that manages the overall statistics generated from
all State Farm’s call centers and that supersedes the authority of local intra-day management teams, would direct calls from the Canadian center to any number of call centers in the United States.

In theory, this concept is simple: Calls are routed to a random call center for processing. In reality, the execution of this process is complicated. State Farm’s call centers house representatives with specific skill sets, with some call centers sharing overall skill-set attributes with others. For example, State Farm’s call center in Jacksonville, Florida, shares the same skill set as its Tempe, Arizona, location. However, four other call centers house representatives that, internal to each call center, are multi-skilled and, external to other call centers, do not share the same skill set.

For example, the Phoenix call center houses customer-service representatives and claims representatives—two mutually exclusive skill sets within one call center. The Utah call center houses Spanish-speaking risk-management representatives and non-polyglot underwriting professionals. The call centers are dissimilar in the skill attributes and overall functioning.

Depending on the call volume handled by the damaged Canadian call center and based on the distinctions in the antecedent paragraph, routing Canadian customers to American centers can

1. Be tedious to find the appropriate representatives in the call centers to handle the calls 2. Be a negative influence on the call center’s existing metrics it is required to meet.

The latter difficulty is notable, since each call center is required to meet specific service-level agreements set forth by operations managers at the national level. These service-level agreements comprise call statistics, such as average speed of answer, average hold time for calls answered, abandon rate (number of calls that disconnect before being answered), etc. These agreements do not account for natural disasters, so with the introduction of, for example, 400 calls to a particular call center, that call center’s ability to meet its own service-level agreements will most likely be constrained. Considering the nature of service-level agreements is to ensure that telephonic customers are responded to within a reasonable time frame, the customer experience will decline, which will result in lower customer-satisfaction results. This reality correlates with lower profit-maximization opportunities; customers who must wait what they deem to be an interminable amount of time to have a request processed will be more likely to choose a competitor, such as All State, for their insurance needs.

Another notable concern is that the Canadian call center answers mostly French-speaking calls. There are currently no other centers nationwide that have French-speaking representatives. At present, customers routed to other customer-service call centers would speak with customer-service representatives who would use a language vendor State Farm employs, AT&T Language Line. With the assistance of a language professional from the vendor’s company, the State Farm representative can successfully handle the call. However, statistics demonstrate that these calls are extensively longer and negatively influence the customer experience.

It is recommended, therefore, that State Farm seek to employ bilingual representatives throughout its call centers. Human resources would be responsible for managing this proactive initiative.

Ethical Use and Protection of Data

State Farm houses a staggering amount of proprietary sensitive data. This data must be ethically used and protected. Some examples of this sensitive data is call-center statistics that can expose the employee identification numbers of the Canadian call-center employees; human-resources information systems, or HRIS, containing employee records; and financial records of all payments made to vendors.

The call-center statistics are stored onsite on a server. The reason for the onsite storage is the ready access to read and write to this information. Call-center statistics change constantly. For example, the average speed of answer will vary daily, depending on the call volume.

The HRIS is also stored onsite on the same server that houses the call-center statistics. The reason that this data is resident on the same server as the call-center statistics is that they are interdependent. The HRIS will contain information on the results of previous-years’ performance evaluation; however, this performance-review data cannot be properly curated without input from call-center statistics. As an example, State Farm can justifiably offer a 10-percent salary increase to an employee because that employee met the calls-handled-per-hour metric, which is culled from call-center statistics. Technically, this data can be discretely stored, but an attention to efficiency demands otherwise. Pulling data sets from one location is more efficient than doing so from discrete locations.

The call center has many vendor relationships, all of which require payment to sustain the contractual relationships. For example, all office equipment, excluding computers, is leased through Ricoh International. The call center makes quarterly lease payments for the use of this equipment. This is a financial relationship that requires each element be tracked and stored for tax-reporting purposes. This data is housed in a separate server onsite. The reason for onsite storage is ready access to reading and writing to this data. Similar to call-center statistics, this data constantly changes, so onsite storage offers an efficient way of handling this data.

In the event of a natural disaster, the call center must adopt a data-redundancy mindset. Specifically, State Farm must house this data at a separate location, preferably in a different country. Doing so ensures that if a natural disaster were to affect all of Canada, this data, which is stored in Salt Lake City, would still maintain its integrity and can be readily accessed by American call centers that would temporarily manage the calls.

Also, when housed offsite, the data should be maintained in the same fashion as it is onsite. Call-center statistics and HRIS data should be housed together due to their interdependence, and financial data should be housed separately.

Ethical Use and Protection of Customer Data

Just as company data is important, the maintenance and protection of the integrity of customer data is imperative. Examples of State Farm customer data include customer name, Social Security number, insurance-policy identification number, mailing address, vehicle identification number, and credit-card information. As has been demonstrated with well-publicized data breaches in the past, there is a causal relationship between identity theft and dilatory security processes. Thus, State Farm should not take a languid attitude toward customer security.

The abstractions from the customer profile are grouped in two:

1. Demographics: name, address, Social Security number, and license-plate information 2. Financial data: credit-card name and number, banking information, invoices, receipts, and tax documents

Each categorization is housed on separate onsite servers, but the categories are connected by a primary key, that is, a record in each group that connects in order to create a complete customer profile. The primary key is name—the name field in the demographic group abstraction and credit-card-name field in the financial-data group abstraction. (This primary key is necessary in order for each representative to access a complete customer profile upon processing a customer request during a call.)

In preparation for a natural disaster, this data must be stored offsite on discrete servers but still connected by a primary key. These servers must also be in another country, though they both can be offsite in the same country. When a natural disaster causes the Canadian call center to shutter temporarily, American call centers will still have access to complete customer profiles to add insurance riders or to make payments, since they will not have been affected by the natural disaster.

It should also be clearly noted that this data must be stored, whether onsite or off, using the highest encryption, which is presently 256 bit. This encryption level is especially imperative for offsite storage. It mitigates against unauthorized access or breach of this customer data, which would surely lead to expensive and unnecessary lawsuits.

Communication Plan

A communication plan is a strategy, normally a project-management function, that details the process of effective communication during exigent situations, such as when a call center is damaged due to a natural disaster and is unable to function normally. To avoid chaotic discourse or managers leading at cross purposes, the communication plan offers structure and, thus, efficiency. Ultimately, it is a planning document. (Please note that the goal is always to ensure the customer’s needs are met; this can only happen when the company proceeds in a structured, well-planned fashion.)

An effective communication plan has the following attributes:

* Objectives
* Stakeholder identification
* Communication strategy

Objectives are set forth in a scope statement. A scope statement is a sentence or series of sentences that define the parameters of the communication plan, that is, what the plan will manage, and what is out of its purview. Setting these boundaries is necessary in order to promote efficiency and structure.

The objective of the State Farm Canadian call-center communication plan is to keep all shareholders updated on the drive to normative call-center functioning for the Canadian location.

Stakeholder identification is also important, since doing so identifies the key individuals who will benefit from the communication plan. This is also referred to as a stakeholder analysis. The reason to know the beneficiaries of the plan is so the plan can be crafted to meet their needs.

State Farm’s communication plan for a natural-disaster event identifies external customers, shareholders, management, and even line-level employees as stakeholders. Each of these entities will gain a benefit from the successful execution of the plan.

Communication strategy sets forth the details of how communication is to occur. For example, when the network fails due to damage from a natural disaster, the communication plan will explicitly designate the entities responsible for communicating and receiving the communication of this event.

The communication strategy can be reduced to several components. First, a routine communication strategy must be set. This strategy identifies quotidian communication behaviors, for example, meetings that are held, issues that are identified, and the communication of status updates.

Second, financial communication should be set. This aspect is important to internal stakeholders, since recovery from a natural disaster places a burden on limited company finances and, as a result, on their ability to earn profit. Questions that this portion of the communication plan addresses are

1. Is the cost of transferring calls to different American call centers aligned with expectations?
2. What are the current costs for repairing the Canadian call center?
3. What is the downtime cost for every day that the Canadian call center cannot take a call?

This is not an all-inclusive list of queries.

Third, this communication plan should provide updates on risks and issues that are identified during recovery from the natural disaster. This portion of the communication plan is dependent on prior risk registers and reports that were generated. When additional risks are identified or if additional issues are noted, this portion of the plan identifies the entity that should be notified and updated. Two risks associated are delays in re-building permits and follow-up natural disasters that thwart rebuilding progress.

Post-Incident Continuity

The goal of this BCP is to ensure that the call center returns to the level of function prior to the natural disaster. To ensure continuity of the business after the natural disaster, the following must take place:

1. Collaboration with external entities to resolve any communication-line issues
2. Restoration of any communication lines managed by the call center 3. Possible repurchasing of office equipment, inclusive of computers
4. Reinstatement of laid-off employees
5. Rehousing of company data onsite
6. Rehousing of customer data onsite
7. Rehousing of financial data onsite
8. Redirection of routed calls back to the Canadian call center

Depending on the severity level of the natural disaster, adjustments will have to be made to the Canadian call center’s service-level agreements. The average-speed-of-answer requirement is 95 percent, that is, 95 percent of all incoming calls must be answered within 30 seconds. This level would have to be upwardly adjusted to allot time for call-center homeostasis. Also, depending on the call center’s downtime, there may be an extenuating time period in which there are no statistics to generate. Such a scenario would have an overall negative influence on the achievement of yearly service-level agreements.

It may also be conceivable to start to reroute calls back to the Canadian call center in a gradated fashion. For example, if the call center returns to mostly normal functioning in August, it may be helpful to route only 20 percent of normally handled calls back. Doing so allows the target call center to adjust sufficiently to avoid short-circuiting processes designed for restoration that are already underway. With each successive month, rerouting can increase by 20 percent. Within five months, the call center would handle all the calls it originally handled, and it would do so within the service-level agreement.

State Farm previously developed a risk register and attendant risk report to account for such natural disasters. After normative functions have been restored, call-center management, along with any other entities involved in the execution of the restoration project, should hold a lessons-learned session. The purpose of this session is to determine which executions of the restoration project, based on the risks identified before the natural disaster, were successful and which were areas of opportunities. This is a continuous-improvement aim. Adjustments may have to be made to various aspect of the restoration project to better respond to future natural disasters affecting the Canadian call center.


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