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Disaster Ahead: Planning for the Worst

In today's world, there's no longer such a thing as the unthinkable. Strategic preparation can help your business manage disasters, both natural and man-made.

Dec/Jan 10
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During Hurricane Katrina in 2005, New Orleans East was one of the hardest-hit parts of the city. Despite the fact that Michoud sits below sea level and was right in the path of destruction, the facility completed a space shuttle tank on time just six weeks after the storm, at a time when most businesses were still picking up the ruins. Director of business development Raymond Vogel credits that success not just to the durability of the physical infrastructure, but the fact that they anticipate the risks and constantly prepare and re-evaluate their plans to handle such disasters. 

One can't necessarily prepare for a disaster of such magnitudes, and only by going through it can a company learn where improvements need to be made. Experts in the industry say that the best-made plans are worth nothing if they aren't frequently practiced, tested and updated. "You are constantly doing these tests and want to make sure these plans are reflecting your business," says DiMartini. "Your plans should change as your business does." Philip Jan Rothstein, president of Rothstein Associates, Inc., a Brookfield, Connecticut-based firm specializing in disaster recovery and planning, says the exercise process is the biggest part of a business continuity program, and one that some businesses forget. "An unexercised contingency plan is worse than no plan at all," he says. "You are going to assume it works and that could be a fatal mistake. Exercising is the single biggest factor." He says business continuity planning is an ongoing process where the plan stronger with each test.

Shifting People and Processes
The specifics of business continuity plans and how businesses prepare for disaster can vary according to industry. Manufacturers might have excess inventory stockpiled in another location. Retailers might have inventory ready to flow in if a disaster destroys what is on hand. Call centers might simply transfer calls to another location.

Matt Szuhaj, director of strategy and operations for Deloitte Consulting, says that some companies use the "lifeboat" scenario, which entails partial or complete building of an alternative site in a different location. In the event of a disaster, that site can quickly be finished and made operable to house operations from the old location. "If you have a catastrophic failure, you can actually finish the facility and, within a short order, get things up and running," he says.

Rothstein says that while geography can often dictate what types of threats a business has to prepare for, the fundamentals of emergency and continuity plans are usually very similar. He estimates that roughly 80 percent of a business continuity plan will be written to deal with non-specific disasters. Plans to handle business interruption, work force support, and continuing operations can be applied to any disaster, whether it's an ice storm, tornado, or terrorist attack. "It's about building a structure that will address categories or classes of threats and vulnerabilities, some of which you can't even imagine," he says.

Aside from the physical threats that a natural or manmade disaster can pose, there are big risks in what can happen to a work force. During Hurricane Katrina and the September 11, 2001 attacks, many companies had facilities that survived the disaster, but they were out of operation for weeks because their employees couldn't get to work. Because large disasters can affect entire regions, the damage to transportation, housing, and infrastructure can disable a work force, even more than on the company itself. "The company also needs to take a look at the risk to [its] work force and ensure that there's going to be enough people coming in to make it operational," says Wilson. He suggests along with making plans to potentially house and feed employees, companies can also institute cross-training programs or set up some employees to work from home.

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