Risk and Crisis Management: An Analysis of KFC's Salmonella Incident

This report analyzes the risk management process of KFC following the salmonella poisoning incident in Australia, which resulted in severe health issues for a young girl. The essay examines the risk type, level of risk, and the stakeholders affected, as well as the company's initial response and subsequent handling of the crisis, including the $8 million compensation. It critiques KFC's approach and suggests alternative strategies for better crisis management. The report outlines an action plan for future similar risks, including identifying risks, evaluating their impact, and defining control strategies. A business impact assessment highlights the negative consequences of the incident on KFC's reputation, supply chain, and key staff, ultimately affecting its customer base and brand equity. The analysis concludes that the incident highlighted several areas of weakness in KFC's risk management and crisis response.

Running head: RISK AND CRISIS MANAGEMENT
RISK AND CRISIS MANAGEMENT
Name of the student:
Name of the University:
Author's Note:

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Introduction:
The aim of this essay is to discuss the risk management process of KFC after it faced issues
with the case of salmonella poisoning in Australia. The reports have stated that a girl has
suffered from severe brain damage due to salmonella poisoning after eating the chicken twister at
KFC. This report has made this company to be the victim of disturbing as well as unsettling
practices at the fast food giant. The case was taken to court as Monika Samaan, the seven years
old victim faced salmonella septicaemia and salmonella encephalopathy brain damage. This is
the reason why the family had claimed that this condition of their girl was the result of their visit
to the Villawood KFC on October 24, 2005 (Kontominas, 2018). Monika is now confined in her
wheelchair hence her family kept on suing the company for their damage. This critique will
discuss risk type and level of risk to the business, how the company handled the risk, how it
could have handled the situation better, action plan and business impact assessment on the
situation.
Discussion:
1. Describe the risk type and level of risk to the business
Risk Analysis Table
Risk
category
Risk type
(Human,
physical,
environmental,
financial etc.)
Stakeholders
affected
Likelihood
rating
(A,B,C,D,E)
Consequences
rating
(1,2,3,4,5)
Risk control
methods
(elimination,
substitution,
engineering,
administration,

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process/
equipment)
Externa
l
economical Internal
stakeholders
A- high 4-higher administration
Externa
l
political Internal and
external
stakeholders
C-medium 3-medium administration
Externa
l
natural Internal and
external
stakeholders
E-low 5- catastrophic engineering
2. Identify how the company handled the risk
The company initially did not accept this accusation by the family of Monika Samaan rather
refuted this when the news of food poisoning spread in the news. The family of the victim
suffering from salmonella encephalopathy due to the food poisoning of chicken twister wrap by
KFC had filed the case for their damage. After the judgment by Justice Rothman was passed that
ordered KFC, the fast-food giant to pay the family $8 million in compensation plus cost, the
company paid this to save their reputation or further defaming enquiry (Bibby, 2018).
3. Suggest where the company could have handled the situation better
In this case, KFC could handle this situation better rather than refuting their responsibilities
initially (France-Presse, 2018). This could have addressed the issue initially, through media like

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internal and national print and digital media, bring in a face to the brand, by choosing their words
carefully, it could have regained the lost trust of their huge customer base, suppliers and other
stakeholders both globally and regionally.
4. Briefly outline an action plan for future similar risks
Actions Details Resources Time
Identify  Identification of the risks to
cluster them according to the
category and impact area.
 Reservoir
 Technical
 Cost
 schedule
Within
three days
of the
incident
Evaluate  Evaluating the risk level either
qualitative or qualitative based
on the likelihood of the
occurrence as well as level of
impact.
 Prioritize the risk based on the
risk level.
 Assess manageability
 Risk register Within
two days
Plan and control  Defining the risk control  Risk Within

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strategy to the associated
stakeholders
 Allocating takes and
responsibilities for the risk
tracking, reporting and
closure.
management
plan
five days
5. Conduct a brief business impact assessment on the situation:
Due to the reason of negative news or incident in the company, it had faced a negative
reputation. By these the company had faced a huge risk which had affected the business of the
customer base in the Australian region for many years. Through proper analysis three biggest
risks have been identified which can be encountered in KFC in the respects of Supply chain
failure, Loss of key Staff and loss of reputation in the market (Tacksgoudkamp.com.au, 2018).
As the court has identified that the medical tests of this victim have been pointing
towards the employee, supply chain and management in the corporation, KFC failed manage its
supply chain effectively. The suppliers of KFC were not convinced with the incident hence the
poorly managed supply chain easily brought halt to production. Without any kind of proper
delivery inputs, the assembly line of the organization could be dormant. In this scenario, the
employee does not any kind of work for performing which can easily leave the organization to
satisfy the time-sensitive orders (News24.com, 2018).
Secondly, the food management, cooking and serving process was directly affected by
the accusation of the Samaan family. Despite the company strongly refuted this allegation that

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their food processing and serving was the sole responsible for this incident, it created pressure on
the employees related to these matters. Therefore, it has lost some key staff and others were
strongly affected by this incident. Loss of key staff with KFC easily resulted in devastating effect
on both morale and productivity and this loss hit the overall economy of the organization.
Finally, the ill reputation affected the brand image of the company. This is the reason
why the company lost the huge customer base in the region where this incident of food poisoning
took place. This also led to affect the business of KFC in all over Australia. Due to media
coverage of dragging this case to the supreme court, this incident spread internationally which
affected the brand name more severely (Lewis et al., 2018). This affected the brand equity of
KFC that reduced the customer visit in all the outlets in one hand and reduced the share within
few days globally. In addition to this, as the company operates as franchise model, it affected
their existing franchises also who were bothered with the future of KFC as a healthy and safe
food provider.
Conclusion:
Therefore, it can be concluded that this case of Monika Samaan, the seven years old
victim faced salmonella septicaemia and salmonella encephalopathy brain damage after having
the food from KFC, gave birth to risk for the company. However, KFC had agreed to pay the
family $8 million in compensation plus cost. This negative media reports have affected the
company more than a financial loss, by affecting the shareholders, employees, customers and
stakeholders.

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References:
Bibby, P. (2018). KFC to appeal $8m salmonella case and pursue legal fees. Retrieved from
https://www.smh.com.au/national/nsw/kfc-to-appeal-8m-salmonella-case-and-pursue-
legal-fees-20120919-2673z.html
France-Presse, A. (2018). KFC guilty in Australia salmonella brain damage case. Retrieved from
https://newsinfo.inquirer.net/180375/kfc-guilty-in-australia-salmonella-brain-damage-
case
Kontominas, B. (2018). KFC twister salmonella poisoned girl, court told. Retrieved from
https://www.smh.com.au/national/kfc-twister-salmonella-poisoned-girl-court-told-
20090803-e6ls.html
Lewis, C., Keane, B., Rundle, G., Keane, B., & Keane, B. (2018). KFC could've settled over
Twister but instead spent $35 mil on advertising. Retrieved from
https://www.crikey.com.au/2009/08/06/kfc-couldve-settled-over-twister-but-instead-
spent-35-mil-on-advertising/
News24.com. (2018). KFC sued over dodgy chicken. Retrieved from
https://www.news24.com/World/News/KFC-sued-over-dodgy-chicken-20120421
Tacksgoudkamp.com.au. (2018). Samaan v KFC | Stacks Goudkamp. Retrieved from
https://stacksgoudkamp.com.au/court-reports/samaan-v-kentucky-fried-chicken/