By Jay Shelton
From the November/December 2015 Issue
Various insurance reports cite that in 2013 more than 128 natural disasters caused 207 fatalities and over $12.8 billion in U.S. property damage. When does these become more than just numbers? At what point do businesses—and their facility management executives—realize the short and long-term consequences of disasters? After it happens, perhaps?
Since disasters can strike at anytime, anywhere, and often with little to no advance warning, it is important to have proper precautions in place, along with a succinct disaster recovery plan. Unfortunately, not all buildings or businesses have plans in place, leaving facility management staff scrambling when trying to figure out infrastructure damage and any other business disruptions. Without a proper plan to cope with a disaster situation, lawsuits can arise from tenants, distributors, or employees claiming negligence.
Having recently observed the 10th anniversary of Hurricane Katrina, it is important to revisit the potential devastation that a natural disaster can cause. The unprecendented magnitude and duration of the effects of Katrina caused major disruption and exceeded the scope of disaster and business continuity plans. Many companies had to adjust their plans and response in dealing with the aftermath. While one hopes another disaster of that size never occurs again, it does not take away from the value of preparation, for even a small snowstorm or heavy winds.
Before Disaster Hits: Seven Preparation Tips
- Designate a time of year for the plan to be updated. This is a living document that must be consistently reviewed and adapted, especially as seasons change or additional threats come to bear, such as civil unrest.
- Include in the plan information and steps as far as utilities backup, mutual aid, disaster recovery services, data backup, internal and external communications procedures, backup facilities, and business income if production is suspended.
- Keep copies of insurance policies and other critical documents in a safe and accessible location (e.g., a fireproof safe), and document that location.
- Have call lists available for all key personnel so staff can be contacted during non-working hours from any location. Review procedures for notifying employees that a building is closed.
- Consider establishing an alternate method for the phone service if the switchboard becomes unusable (e.g., forwarding incoming calls to a cell phone or remote number).
- Check available emergency supplies such as flashlights, batteries, emergency generators/fuel, patching materials such as plastic sheeting, wood 2x4s, duct tape, spare fire extinguishers, first aid kits, etc. If it is anticipated that any personnel would stay at the facility during/following an emergency, consider stockpiling food and water for their use.
- Test. Test. Test. Testing is essential to ensure that the disaster and continuity plan actually works and that it aligns with current operations and addresses all areas of response. The plan should be tested at least annually, although seasonally is recommended, as cold and hot weather present a wide variety of issues that could be missed.
Eight Recovery Steps
Ensure the following procedures are included in a disaster recovery plan if damage is sustained.
- Assess any structural, equipment, or vehicle damage.
- Note any lost or damaged inventory.
- Compile a list of concerns that must be addressed before reopening.
- Contact employees, suppliers, and customers to inform them of any disruptions in operation and an expected date when they can anticipate it to resume.
- Have the building professionally inspected if there are concerns that damage could pose a safety hazard.
- Secure the building while repairs are being made or if relocating of business activity is necessary.
- Ensure utilities are restored and in safe working order before resuming business operations.
- Properly repair and clean facility to ensure the environment is free of any hazards.
- If damage is sustained, facility executives should work with their insurance adjusters and keep detailed records of all expenses incurred during the recovery process. Following the steps outlined above will help to minimize the risks and fallout from a disaster.
Shelton is the senior vice president of risk management services at Assurance, a Schaumberg, IL based insurance brokerage with services that include business insurance, employee benefits, financial services, private insurance, and surety. His experience includes a full range of risk, insurance management, and compliance functions as well as emergency response, business continuity planning, cyber risk mitigation, and breach management. He is a member of the Risk Insurance Management Society.
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