Since the fall of 2015, Chipotle shares have shed more than half their value; they’ve undergone two shifts in executive management within two years; and customers continue to shy away from supporting the chain despite increased advertisement and food giveaways.
If Chipotle hopes to come back from these losses, they’ll need to take risk management seriously and implement the proper tools to help them identify, prioritize, and mitigate critical risks.
Whether the food-borne illnesses stem from employees working while sick or disparate food quality assurance practices, the way to preventing future scandals is ensuring a common policy is followed across all locations.
All organizations, including Chipotle, need to implement a risk-based approach to policy management and ERM by:
1) identifying the stakeholders of the policy
2) identifying the root-cause risks that threaten adherence to that policy across the organization
3) addressing those risks with appropriate controls
4) monitoring the effectiveness of those controls on a regular basis
5) and instituting incident and complaint management for employees, customers and vendors to report and escalate observations.
As Chipotle searches for a CEO to take Ells’ place, it will be important that he or she believes in the operational and reputational benefits of ERM. But as important as a healthy tone from the top is, it’s just as important to seek out and implement strong ERM processes and systems down through the front lines to ensure the company’s goals are achieved without impediment.