Reference no: EM131016441 , Length:

Answer each question accurately and do further research to include references.

Introduction

Eurostar is the high-speed rail service directly linking the UK (St Pancras international station) to France and Belgium via the Channel Tunnel. It started operating in 1994 and runs up to 17 services to Paris and nine to Brussels daily. This case study examines how Eurostar proactively manages risk through its business continuity programme.

The importance of managing risk

Transport is never far from the headlines, particularly when services suffer severe delays or cancellation. Apart from the inconvenience suffered by the passengers, the reputation of the company is affected by adverse publicity even if the cause of problems is outside the company's control. For this reason Eurostar proactively manage risk to ensure that customers receive the services they expect.

Eurostar is very aware of the need to provide a safe, reliable, convenient and comfortable service by putting the customer first in everything they do. In order to ensure that this is the case, the company has established a business and service continuity department. The department ‘sets the pace' and the policy framework. However, the responsibility for implementing and maintaining actions designed to improve business continuity and service resilience is firmly the responsibility of line management. This ensures internal clarity and accountability.

What is business continuity?

Business continuity can be described as the strategic and tactical ability of the organisation to plan for and respond to incidents and business interruptions in order to continue business operations at an acceptable level. It also involves managing the recovery itself or continuation of business activities in the event of a business disruption. This is achieved through training, exercises and reviews to ensure the plans stay up to date.

Business continuity management is the process that identifies potential threats to an organisation and the impacts to business operations that those threats might cause. It also provides a framework for enabling the organisation to develop resilience so that it can respond effectively in order to safeguard the interests of its key stakeholders, reputation, brand and value creation.

Eurostar objectives

Eurostar's key message for business continuity is Semper Paratus (‘always prepared'). Eurostar adopts an open culture that encourages colleagues to share knowledge and concerns. This helped it to put together a realistic set of risk factors that might impact its business.
It also helps identify what it can do to improve or alleviate these risks. It ensures that the company has taken account of all the risks that could occur and that efforts to avoid them have been put into place, as far as reasonably practicable. It also ensures that, if they do, the consequences are managed well, safely and efficiently.

This is consistent with the Eurostar objectives of safety, customer service, value for money, reliability and punctuality that are the cornerstones of the way the business wishes to treat its customers.

Benefits of business continuity

Eurostar's emphasis on proactive management is highly important to the company's ongoing growth. By continually identifying present risks and assessing possible future risks, the company has the ability to avoid problems as much as realistically possible. For example, passenger demand has risen by 4% over the first half of 2011 and Eurostar is already in the process of a major refurbishment of its trains and is purchasing 10 new train sets.

Eurostar has also set up complementary work streams for both business continuity and disaster recovery. An effective business continuity plan and programme has the following benefits

• Proactive identification of risks and their impacts contributes to proactively avoiding their effects
• Provides an effective response mechanism, should the risks become reality, which minimises their impacts
• Encourages cross-team working
• Demonstrates a credible response to customers
• Enhances business reputation
• Gains competitive advantage
• Supports continuous and sustainable business improvement.

Calculating risk

Each Eurostar department is asked key questions so that a relevant set of risks can be established. Examples of the risks considered range from losing the main offices due to fire (long-term) or a bomb scare (short-term) to a train derailment, a major financial catastrophe or the loss of one or more of the vital computer systems.

Measuring risk
Eurostar had developed a matrix methodology to measure risk. Some cases could be described as a simple risk that has no mitigations (the company activity designed to prevent the occurrence of an unwanted event e.g. a procedure or a fire alarm) against it. An example could be the loss of Eurostar's telephone Contact Centre in Ashford following a fire. The centre is the central hub of communications for Eurostar sales, ticket distribution and customer service. This would be a serious event since, were it to happen and no proactive action had been considered regarding how it would deal with the problem. Eurostar would lose much of its booking capability with the resultant impact both on revenue and reputation.

The gross risk is arrived at by the addition of a likelihood score and impact score in a simple matrix. Next, the mitigations are considered. These are the processes and responsibilities necessary to control the risk of an undesired event and limit its impact should it occur. In this example, even mechanisms such as fire alarms and trip switches on electrical circuits mitigate the risks. Back up locations that could be switched to easily to continue taking calls and bookings are one of the mitigations that Eurostar has arranged should this facility be affected.

Reducing risk

By considering the mitigations the gross risk can be rescored to produce a net risk which should be lower than the gross. If that risk is still high then further plans will need to be considered to reduce the net risk even further. Even if the risk is seen to be ‘reasonable' there is always the possibility that its effect can be further reduced.

Assessment of this type can be easily wasted. If having gone to all of the effort (staff time and other associated company resource etc) of identifying how the business controls the continuity risks identified, it is critical to ensure that these are more than just mere words. Checks must be made to ensure mitigating activity is actually in place and working as intended.

Therefore at Eurostar the matrix is revisited every six months and regular audits are carried out on the mitigations and further plans to ensure they are being progressed as stated.

Business continuity - Eurostar implementation

The company has organised itself so that it has a business continuity department that will lead the process and set the scene. It is implementing a recognised business continuity model. However, one critical and distinctly important point is that responsibility for delivery is very firmly in the responsibility of departmental line managers. Each department has also nominated a business continuity representative (champion).

The business and service continuity department provides assistance through nominating its staff to individual departments. This enables a watchful eye to be kept on the whole process so that interfaces are coordinated where something could ‘fall through the gap' between departments.

Training for risk

Eurostar has a full training programme of exercises that allow them to experience what it will be like if a ‘disaster' occurs. This programme includes major exercises on site (Eurostar carried out evacuation exercises in the Channel Tunnel recently in partnership with Eurotunnel and the Emergency Services) through to table top discussions where each participant informs others about what they would do at particular moments. Eurostar is also about to commence the construction of a tunnel evacuation training simulator. Eurostar management also visited airlines, airports and other institutions to learn from good risk management practices.

Reviewing levels of risk

Therefore Eurostar reviews the risk matrix in its entirety every six months and adapts it according to the results. It is important to understand whether the risks are still current and whether any new ones have appeared. It has also developed an audit based on the requirements of the business continuity British standard. Following the saying that ‘you cannot control what you cannot measure' Eurostar has quantified the audit. Departments will score more points for the more important aspects of business continuity and targets for the overall score have been set. Another spin off of such a process is the ability to point out to each department where they can take action to achieve higher scores and to be able to prioritise.

Through regular review of the risk matrix and audit results Eurostar can say with confidence that it knows what can go wrong and has taken action to prevent it. It has also carefully considered what it will do if any disruption to the business does occur.

Questions:

1. What is business continuity management and who is responsible for this process at Eurostar?

2. How does Eurostar identify and calculate different risks to their operations?

3. What tools does the company use in order to reduce risk?