If Disaster Strikes, Will Your Company Survive?

The wildfires across the West earlier in the year should be a reality check for businesses all over America. They underscore the need for appropriate insurance coverage and limits, and for having a basic disaster recovery plan.

In the event your office lost power or was totally destroyed during a wildfire, hurricane, tornado or other type of natural disaster, how prepared would you be? Have you identified alternative premises to set up operations? Would your employees know who to call or where to go?

Disaster recovery is a risk control technique. Risk control is anything you can do to lower the frequency and severity of a claim. Disaster recovery won’t reduce frequency, but it will definitely reduce severity. In some cases, an effective disaster recovery plan, supported by a correctly written insurance program, can be the difference between a business’ survival or failure.

According to the forecasting firm Eqecat, Superstorm Sandy in October 2012 was the second most expensive storm in U.S. history. At least 286 people in seven countries were killed along the path of the storm, including more than 125 in the United States alone. The estimated economic damage was more than $68 billion, and 8.5 million businesses and residences lost power. Though many companies were unharmed during Hurricane Sandy, their employees could not, or would not, return to work for various reasons.

Below are some thoughts and lessons learned from Hurricane Sandy on how to better prepare your workforce for disaster so they can return to work in a timely manner:

• Cross-train your employees. Regardless of a disaster’s impact on your business, if an employee’s family is displaced or affected by a crisis, they will respond to their family first and their employer second. Be sure you can continue operations if key personnel are unavailable due to family emergencies.
• If a "work from home" scenario is part of your disaster recovery plan, you must plan for the risks of power loss, communication interruptions, inconsistent Internet access and the inevitable distractions encountered when staff members are working in a home environment.
• If employees must be "in office," how will they travel to work when public transportation and fuel are cut off? Consider establishing carpool protocols or hiring a transportation service. For future events, consider storing fuel on site for distribution to key personnel. Be sure to follow official guidelines for fuel storage and distribution.

In every crisis, from large to small, communication is the key to recovering quickly. When planning, communications should be a top priority. Below are some suggestions that might allow you to better develop your crisis communications plan:

• Having a single carrier for phone, Internet and mobile access is a major point of failure. Diversify your communications providers to provide an extra layer of resilience.
• Because communication is the key to any recovery, mobile service is a typical bottleneck during a regional crisis. During Hurricane Sandy, for instance, smartphone power and network access were either limited, or simply not available. Be sure you have a solar-powered or hand-crank charger for mobile devices. For those in healthcare, government, security, etc., you might need to consider satellite communication tools, including phones and Internet providers.
• When bandwidth is limited, text messaging might be your only means of communication. Know how to send texts to employees, staff, vendors and customers. Consider implementing a system for sending mass texts or email-to-text messages.
• Think about the different audiences you must communicate with immediately following a disaster: family, employees, partners, investors, vendors and customers. What is the message to each audience? If you communicate effectively, most people will be able to accommodate short-term disruptions and will remain loyal customers. However, if you don’t communicate at all, they might simply find the next provider.

It seems like, sometimes, the smallest detail can have the greatest effect on your ability to recover during a crisis. Here are a few tips:

• Know your local emergency management, political leadership and law enforcement. Knowing these leaders can make or break your recovery when it comes to outside assistance making it into a restricted area, or finding out key information that can aid in your recovery.
• Document, document, document. Take pictures before, during and after the crisis (if it is safe to do so.) It will help aid the recovery effort and ensure that insurance has enough information to quickly and properly process claims.
• Knowing your electrical demand ahead of time is critical. It can save time and potentially thousands of dollars when making decisions in the midst of a crisis.
• If your generator is elevated to avoid flooding, make sure the fuel supply is elevated as well. Fuel sources and/or pumps to deliver fuel to a generator that is below or at ground level can be compromised by floodwaters. Additionally, any generators elevated above ground will be difficult to refuel. During Hurricane Sandy, some hospitals were forced to hand carry containers of diesel fuel up dozens of flights of stairs to refuel generators on rooftops.
• Have more than one fuel vendor available. Perhaps no other frustration attracted more media attention than the lack of fuel for both backup generators and vehicle use. Supply lines can be interrupted hundreds of miles away, affecting supply, and local rationing can be imposed at any time. Be sure to have multiple vendors in the event a primary vendor’s operations are interrupted.

There are companies that specialize in helping businesses create disaster recovery programs. Regardless of whether you use a specialty vendor to help build your plan or elect to devise one yourself, the key is having a plan. Many businesses never recover from a disaster; would yours survive?

Associated General Contractors of America
2300 Wilson Blvd, Suite 300
Arlington, VA, USA
Ph: 703-548-3118 Fax: 703-837-5402