StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

CitiGroup Crisis Management and Continuity Plan - Essay Example

Cite this document
Summary
The paper "CitiGroup Crisis Management and Continuity Plan" examines a financial group based in the United States that encountered several challenges over the years and serves to provide its customers with uncomplicated, innovative, and dependable financial solutions…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97% of users find it useful
CitiGroup Crisis Management and Continuity Plan
Read Text Preview

Extract of sample "CitiGroup Crisis Management and Continuity Plan"

? CitiGroup Crisis Management and Continuity Plan Introduction: The primary goal of a business continuity planning procedure is to facilitate an organization to prepare for prevention and recovery measures that would enable the company to manage its functions during a crisis situation thereby maintaining its competitive advantage and the values that it follows (Elliot, Swartz & Herbane, 2002, p.2). Citigroup is a financial group based in the United States that encountered several challenges over the years and serves to provide its customers with uncomplicated, innovative and dependable financial solutions. Serving the clients and stakeholders of the company is the primary objective of the group fulfilled by the organizational members (Citi Mission Statement and Principles, 2011). The economic crisis in the recent years had a significant impact over the nation thus impacting the businesses of the Citigroup as well. The current research focuses on the responses of the organizational group to the economic crisis and to learn the concepts and use of business management continuity plans in the process. Citigroup and the Global Economic Recession: The global economic recession that hit the United States in the late 2008 and thereafter the entire world affected the nation’s gross domestic product, led to unemployment, decrease in purchases, and decline in investments (U.S. Economic Downturn Worsened at End of 2008, 2009). Root Cause of the Recession leading Citigroup to a Crisis Situation: With the enhancement of the economic slowdown in the United States, the Citigroup started getting affected and was encountered with the crisis of recession. One of the major crises that led to the crisis in the Citigroup was the decline in the demand level among the customers. When a financial slowdown was prevailing in the United States, people tended to invest less and save their funds. When the nation was encountered with the decline in the economic growth, customers feared the failure or lack of performance of the different companies that included Citigroup as well. With scarcity in the availability of funds in the economy of the country customers started saving and stopped investing or lending to the company that ultimately led to a crisis for the company (Beek, 2010; Cochrane, 2010, p. 34). Thus the two primary reasons that could be reflected as the root causes for the crisis in the Citigroup are the economic slowdown in the United States followed by the change in the customer outlook and behavior towards fearing the failure of companies to overcome the global crisis, leading to huge declines in the levels of demand. Citigroup before the Crisis: Before the global recession had hit the United States, Citigroup had been successfully performing its activities. Several innovative strategies have been encouraged within the group. Also, with greater expansion plans the company created several job opportunities (Our commitment is our promise, 2006). The year 2007, which was before the economic crisis, the company reflected positive results with respect to its international consumer related performances, wealth management at an international level, as well as operations of services in its different business divisions. However, the results for the banking and marketing segments of the group were not satisfactory. Too much of lending and written down values might have led to such a condition for the group. The revenue generation was thus affected although the customer growth was increasing. The volume of products and the operating expenses of the group also started rising from the previous years. Credit costs for the financial sector of the group also increased (Citigroup’s 2007 Annual Report on Form 10-K, 2007). Citigroup during the Crisis: During the global economic slowdown, the Citigroup suffered huge losses that primarily occurred as a result of increasing costs of credits and the intensifying economic recession. Inflation and increasing levels of unemployment, that were resultant from the global economic crisis, were major causes of concerns for the company in successfully implementing its operations and overcoming the effects of the slowdown. The overall financial performance of the company deteriorated as a consequence. In spite of the company being capable of reducing its expenses, the operating costs of the company rose significantly impacting the operations of the company (Citigroup’s 2008 Annual Report on Form 10-K, 2008, p.6). In the light of the company facing troubles owing to the crisis situation, the government played a significant role in aiding the group to overcome the phase of the crisis. Such government intervention included movements of the government to bring stability in the financial markets such that the economic growth of the nation could be restored (Sibun & Wilson, 2008). Role of the government: The loss for the Citigroup during the time of recession was obtained to be at $27.7billion. The government played a significant role by supplying the company initially with a cash amount of $25 billion that was provided by the Troubled Asset Relief Program or TARP. The company had to introduce a breakup plan when it received warnings owing to declining share prices and compelling the government to supply for a second cash flow to the company that amounted to $20 billion. In the event of the crisis, the organizational structure of the company was decided to be altered and the chairman of the company was replaced. New strategy of the company involved focusing on the stronger business divisions. At the same time it stressed on overcoming the losses incurred to the company due to the recession (Citigroup Inc., 2011). The CDOs or the Collateralized Debt Obligations supported by nonprime mortgages were also used by the company in response to the economic slowdown (IN RE Citigroup Securities Litigation, 2008). The company can be understood to have not been prepared to face the severe impact of the recession and hence they had no prior plans of business continuity management. Without the intervention of the government it was not possible for the company to come back to its original position. Hence, the global economic crisis can be found to have significant impacts on the operations and business results of the Citigroup that were reflected through the financial results of the company. The company was assisted by the US government since the government took the measure of raising capital through the selling of the preferred stock made available by the company. Citigroup after the Crisis: As the economic crisis started fading away over time, Citigroup conducted plans to return to its original management operations, and obtain profitable business results, reducing risks as well as expenses and by implementing modifications in the management policies of the company. The global recession having impacts on the financial markets, produced constraints for the company’s growth at the global level. This created pressures for the company to perform business activities effectively and hence measures needed to be formulated to overcome this phase (Citigroup’s 2008 Annual Report on Form 10-K, 2008, p.7). Post recession, the company reflected strong business results and profits for the group. Although the company was badly hit by the recession and government intervention was required to sustain its stability, yet after the recession the company was returning to its original position. The profits earned by the company occurred as a result of the company’s selling of its Smith Barney unit and thereby increasing values of its risky assets. The company still has a lot of loan issues to be solved. With intentions to manage the losses incurred by the company and return to its profitable position, the company focused on realignment of its functions post recession (Citigroup reports surprise quarterly profit, 2009). Citigroup’s Response to the Economic Crisis: After the global economic crisis, Citigroup planned to return to its original position and make profits for the company. The company planned improvement in its management continuity process and operations and focusing on its business impact. The company focused on the improvement of its services and the security systems (Lennon, 2011). The plans of the company involved continuity of the organization’s crucial functions and activities that might get affected during times of crisis. These included performing functions from different sites, and across different networks of authority, thus marinating the firm’s position in the industry and successfully serving its customers. Such plans were intended to allow the company to continue with its operations even if it had to encounter any crisis situation. The management of the company placed a senior authority for the department of business continuity management to look after the internal and external issues related to the business continuity management (Notice of Business Continuity Preparedness, 2010). If the incident management of the company is considered, it can be realized that three incidents have been faced by the group that includes the pre-crisis situation, the crisis situation and the post-crisis situation. The company had made its planning and decisions in the pre-crisis stage that could not prevent the effects of the economic slowdown on the company’s financial outcome. During the crisis phase, the company incurred huge amounts of losses. However after the crisis the company focused on its management of the incidents it encountered and planned measures to overcome the crisis and prepare the company for its future implementation of successful strategies. This could be related to the incident management procedure of the company where it can be found that in the pre-crisis scenario, the company was susceptible to failure caused by the impacts of the global recession. The effect of the second stage of the incidence was dependent on the nature of the crisis and the ability of the organization to handle it; which in the case of Citigroup was found to be lacking. Thus the company suffered losses and required the assistance of the government to overcome the phase. The third stage of incident management deals with re-positioning of a company that in the case of Citigroup can be found to be effectively implemented in their planning and decision making with intentions to return to their original position (Elliot, Swartz & Herbane, 2002, pp.66-68). The company’s business continuity plan can be understood in the following manner. In the initiation phase, the company set the objectives that it would focus on, as mentioned above. Thus this phase dealt with the planning of the measures and preparing the organizational members to effectively perform the decided measures. The second stage of the business continuity planning framework involved the business impact analysis whereby the company’s focus was on the analysis of the internal and external threats and the management of the measures to overcome the threats. The post-crisis planning that the company prepared was focused to fight the threats of the company capable of affecting the business outcomes. The external threats from the global recession and the changing minds of the customers compelled the company to focus on business continuity plans to prepare for future crisis situations. Thus the company can be seen to have made the business impact analysis and make decisions accordingly. The strategies formulated by the company were broadly determined from the business impacts that the company analyzed and the basic ideas that the company could formulate. Thus depending on then scenario Citigroup made plans to focus on its core operations and make them more effective through the constant monitoring system. The plans once prepared were developed, tested and maintained to deliver the company with an effective system of safety and security and prepare the company to encounter crisis situations in the future. These steps constituted the major steps of the business continuity management planning that Citigroup followed after the crisis and focus on its operations accordingly (Business Continuity Planning, 2011). The company’s crisis management policies involved the wealth and risk management which are parts of the business continuity management process that can eventually lead the company to restore its original position and prepare the company for future crisis situations as well. To overview the overall management of the company in response to the recession it can be realized that the company has taken adequate measures for its business continuity thus enhancing the business impact as well. This implies that the company would now be able to encounter situation of crisis without its work operations being affected. The efforts undertaken by the company can be understood to manage the situations of crisis thus effectively incorporating the business crisis and continuity management in its operations. The three major stakeholders of the Citigroup are the investors, the employees (Corporate Citizenship, 2011) and one foreign stakeholder of the company is Egg Bank in UK (Derby). The effects on the investors can be realized since the recession caused a fear in their minds as to the possibility of the company moving into a bankruptcy. The employees too could be expected to be scared since the company becoming bankrupt would mean their becoming jobless. The unemployment rate could be expected to increase. This is primarily because with the customers making lesser investments and the company incurring losses, it would become difficult for the organization to maintain the employees and provide them with the compensation that they were supposed to receive. To have an understanding of the effect that the recession could have on the foreign stakeholder of the company, the reports on the Egg internet banking in the UK can be taken into consideration. Egg internet banking had become a part of the Citigroup. It was formed when the US had bailed out the company in the light of a banking crisis (Citigroup (C) To Sell Egg Internet Banking Business For $994M; Report, 2010). However, Citigroup had to sell the Egg Bank division reflecting a draw back from retail banking that the company had its operations in the UK (Citigroup (C) To Sell Egg Internet Banking Business For $994M; Report, 2010). Conclusion: The business management continuity planning is now a highly significant process being incorporated in most organizations that assists the organization to deal within the different factors that might affect the growth and development of the company and hence assists the organization to prepare itself for crisis situations and manage such situations with expertise. This has been reflected by the above mentioned case of Citigroup that was severely by the recent global economic slowdown. The company has been able to place itself back to its original position with focus on the use of business continuity management planning in its management techniques. References 1) Beek, V. (2010), Factors contributing to Economic Growth and Causes for Recession and Economic Crisis, Stock Trend Investing, available at: http://www.stocktrendinvesting.com/blog/factors-contributing-economic-growth-and-causes-recession-and-economic-crisis (accessed on October 25, 2011) 2) Business Continuity Planning (2011), Metric Stream, available at: http://www.metricstream.com/solution_briefs/BCP_FFIEC_Compliance.htm (accessed ion October 25, 2011) 3) Citi Mission Statement and Principles (2011), Citigroup, available at: http://www.citigroup.com/citi/business/mission.htm (accessed on October 17, 2011) 4) Citigroup (C) To Sell Egg Internet Banking Business For $994M; Report (2010), Wall Street Pit, available at: http://wallstreetpit.com/38465-citigroup-c-to-sell-egg-internet-banking-business-for-994m-report (accessed on October 19, 2011) 5) Citigroup Inc. (2011), The New York Time, available at: http://topics.nytimes.com/top/news/business/companies/citigroup_inc/index.htmlb (accessed on October 19, 2011) 6) Citigroup reports surprise quarterly profit (2009), MSNBC, available at: http://www.msnbc.msn.com/id/31961556/ns/business-personal_finance/t/citigroup-reports-surprise-quarterly-profit/#.Tp0Z_5vhEyo (accessed on October 18, 2011) 7) Citigroup’s 2007 Annual Report on Form 10-K (2007), Citi, available at: http://www.citi.com/citi/fin/data/k07c.pdf (accessed on October 18, 2011) 8) Citigroup’s 2008 Annual Report on Form 10-K (2008), Citigroup, available at: http://www.citigroup.com/citi/fin/data/k08c.pdf (accessed on October 18, 2011) 9) Cochrane, J.H. (2010), Lessons from the Financial Crisis, CATO, available at: http://www.cato.org/pubs/regulation/regv32n4/v32n4-6.pdf (accessed on October 19, 2011) 10) Corporate Citizenship (2011), Citibank, available at: http://www.citibank.com/citi/citizen/approach/governance.htm (accessed on October 18, 2011) 11) Elliot, D., Swartz, E. & B. Herbane (2011), Business Continuity Management- A crisis management approach, London: Routledge 12) IN RE Citigroup Securities Litigation (2008), Stanford, available at: http://securities.stanford.edu/1038/C_01/2008121_r01c_079901.pdf (accessed on October 19, 2011) 13) Lennon, M. (2011), Citi Ups Number of Compromised Accounts from Cyber Attack to 360,000, Security week, available at: http://www.securityweek.com/citi-ups-number-compromised-accounts-cyber-attack-360000 (accessed on October 18, 2011) 14) Notice of Business Continuity Preparedness (2010), Citibank, available at: http://www.citibank.com/icg/b_continuity.jsp (accessed on October 19, 2011) 15) Our commitment is our promise (2006), Citigroup, available at: http://www.citigroup.com/citi/citizen/assets/pdf/diversity06_en.pdf (accessed on October 18, 2011) 16) Sibun,J. & A. Wilson (2008), US government rescues Citigroup, Telegraph, available at: http://www.telegraph.co.uk/finance/financialcrisis/3511317/US-government-rescues-Citigroup-financial-crisis.html (accessed on October 18, 2011) 17) U.S. Economic Downturn Worsened at End of 2008 (2009), PBS, available at: http://www.pbs.org/newshour/updates/business/jan-june09/economy_03-26.html (accessed on October 18, 2011) Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Citigroup Crisis Management and Continuity Plan Essay”, n.d.)
Citigroup Crisis Management and Continuity Plan Essay. Retrieved from https://studentshare.org/management/1433824-citigroup-crisis-management-and-continuity-plan
(Citigroup Crisis Management and Continuity Plan Essay)
Citigroup Crisis Management and Continuity Plan Essay. https://studentshare.org/management/1433824-citigroup-crisis-management-and-continuity-plan.
“Citigroup Crisis Management and Continuity Plan Essay”, n.d. https://studentshare.org/management/1433824-citigroup-crisis-management-and-continuity-plan.
  • Cited: 0 times

CHECK THESE SAMPLES OF CitiGroup Crisis Management and Continuity Plan

Goldman Sachs History and Key Products

oldman Sachs is an American investment bank that has its roots in Manhattan in New York City, having been founded there in 1869, with its key competencies being in general investment banking, financial services, the management of investments, and securities.... It leads the world in the management of mergers and acquisitions, the provision of services tied to underwriting, the management of assets, as well as prime brokerage services that it is able to provide to individuals, companies, and countries....
14 Pages (3500 words) Term Paper

Analysis of the Banking Crisis of 2007-2008

However, the banking crisis of 2007-2008 precipitated the deepest global recession since the 1930s and has led to calls for significantly tighter controls over banks' activities.... Part I of the paper will critically assess whether or not this crisis has fundamentally undermined the corporate governance frameworks in both the UK and USA.... PART I: The Banking crisis of 2007-2008 and its Impact on World Economies It all started with an excess of lending in the mortgage sector of the USA....
10 Pages (2500 words) Essay

The Economic Collapse of 2008

As the crisis deepened, even the banks that had not provided adequately for bad debts in the real estate sector were affected.... Merrill Lynch and Lehman Brothers in the USA and Morgan Stanley in the UK were institutions that were brought down by the crisis; others have had to sell off, divest and re-organize themselves.... AIG and Citibank in the USA, Deutsche Bank in Europe, citigroup in the USA and Standard Chartered in the UK were all offered stimulus packages that have helped them recover rather than join the ranks of the bankrupt companies....
11 Pages (2750 words) Research Paper

Investment and Portfolio Management

Investment needs and Financial plan differs from individual to individual, and changes with respect to the life cycle of the individual.... This article will explore the subject of investment and portfolio management.... The companies selected for the purpose of research are Apple Incorporation from the Information Technology sector, Pfizer Incorporation from the pharmaceutical sector, citigroup Incorporation from the Banking sector, Chicago Bridge & Iron from the Infrastructural sector, and General Motors from the automotive sector....
33 Pages (8250 words) Assignment

The impact of financial crisis on five USA companies

The financial crisis of 2007 – 2009 was the greatest financial disaster that has confronted the United States of America and the world since the Great Depression.... Often a financial crisis follows periods of boom with a high money supply and the financial crisis of 2007 –....
11 Pages (2750 words) Essay

Understanding of What Happened in the US Economy over the Last Few Years

The key question that needs to be answered is why the combination of the Federal Reserve and the Government acting in tandem has failed to prevent the current crisis from happening.... What makes this crisis different from the periodic cyclical downturns one witness during alternating periods of boom and bust is that this crisis has been caused by borrowing and lending practices that were highly questionable and on top of that excessive leveraging of the financial sector meant that the sector's contribution....
8 Pages (2000 words) Term Paper

The Economic Collapse of 2008

This paper outlines that the banking crisis of 2007-2008 precipitated the deepest global recession since the 1930s and has led to calls for significantly tighter controls over banks' activities.... As the crisis deepened, even the banks that had not provided adequately for bad debts in the real estate sector were affected.... Merrill Lynch and Lehman Brothers in the USA and Morgan Stanley in the UK were institutions that were brought down by the crisis; others have had to sell off, divest and re-organize themselves....
11 Pages (2750 words) Research Paper

Rio Tinto-Earthquake Disaster Event

The earthquake affected the marketing processes in relation to communication, transport and human resource management and the community at large with respect to social-cultural influences.... Rio Tinto just like many other companies that face natural disasters should have Disaster Recovery plan (DRP).... Rio Tinto just like many other companies that face natural disasters should have Disaster Recovery plan (DRP).... Rio Tinto just like many other companies that face natural disasters should have Disaster Recovery plan (DRP)....
8 Pages (2000 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us