Ice storm reminds businesses to plan for disaster situations

Some were more prepared than others, but many of us were surprised at how helpless we were in the days and weeks that followed. Electrical power, shelter, heat, debris and tree removal, freezing pipes and communication systems suddenly became issues with many repercussions. Individuals, businesses and communities were adversely impacted.

How prepared was your business for this disaster? How prepared are you for the next disaster? Fire, flood, earthquake, wind and civil authority are a few of the potential types of events that businesses need to be prepared for and have a plan to resume operations after they occur.

Most businesses do not have a written emergency or recovery plan, even though they know it’s important. Of the companies that lose records in a disaster, 44 percent never resume business. Of the businesses that experience fire or major theft, 47 percent go out of business within two years.

A team approach

A simple disaster plan is invaluable for businesses. The first thing that needs to be established is a planning team. These individuals will be responsible for the execution of the plan. They will establish the business functions that need to be recovered in priority sequence. Communications should be coordinated through the team so that those executing the recovery will not be interrupted repeatedly for status. Purchase and acquisition of equipment and supplies, travel arrangement, food, accommodations and media contact also should be coordinated and executed by the team.

Dealing with data

In today’s business environment, off-site data storage is one of the more critical components of a disaster and recovery plan. Make sure that the data is stored in a different physical location and protected by security, and protected from fire and water damage. Computer backup tapes of all files, contracts, leases, insurance documents, financial records, recovery plans, payroll records, floor plans, architectural plans, mechanical plans and other critical documents should be duplicated and stored off site. Don’t make the mistake of having only one copy or keeping the duplicates at the same location as the originals.

Equipment and supplies

Another key component of the plan is to establish a vendor-readiness strategy for vendors that provide you with certain critical equipment, supplies, materials, goods or services. To minimize your exposure, you may want to avoid a single source for supplies. Having two suppliers for components could be key if one is unable to provide these supplies. It also may be a good idea to request a copy of your key vendor’s recovery plan, at least the part that addresses their ability to recover the processes that deliver the product or service you use.

Lines of communication

Communications are critical in the event of a disaster. Normally, a three- or four-pronged approach is utilized. Employees, vendors and off-site facilities should be contacted in priority order. A client contact plan may need to be established as well. It’s important to have landline, cell phone, e-mail and emergency contact information for all critical contacts. Employees are probably your biggest asset. A very specific plan should be established for communication, help with shelter, food and family, and returning to work.

Payroll is also a key part of meeting employee needs. During Hurricane Katrina, many employees didn’t return to their companies because their needs weren’t taken care of.

If possible, secure temporary facilities or arrange for the use of another business facility in advance. You’ll need to consider phones, computers, emergency generators, business supplies, tools and other provisions. Having a commercial property manager or Realtor on your planning team could prove invaluable in helping to find a temporary facility. There are disaster-recovery organizations that will help with this as well.

Insurance and recovery

Proper insurance coverage could mean the difference between recovery and going out of business. Make sure your property – both buildings and contents – equipment and inventory are evaluated regularly. Business income and extra expense is probably the most underinsured exposure and the most needed in the event of a major disaster.

If your income stream is affected and you have extra expenses, this coverage is invaluable. Off-premise power interruption also can be key; however, it’s nearly impossible to obtain coverage for transmission line failure or interruption.

Practicing the plan

After you construct a disaster and recovery plan, train and practice the execution of the plan. Walk-through drills, functional drills, evacuation drills and full-scale exercises are useful. Also, re-evaluation after a minor disaster can be helpful.

Your business is probably one of the most important assets you have. It likely employs people who rely on its cash flow to support their families. Other businesses rely on you as their client. Most importantly, your customers rely on your product or service. Don’t be a statistic after a disaster. A simple plan can make the difference between your company’s life and death.

Richard Ollis is president of Ollis and Company, a Springfield-based employee owned independent insurance agency. He may be reached at richardo@ollisco.com.