Why does a business need a disaster plan?

Two weeks ago I was mixing with a crowd of chamber of commerce members, and I started talking to a guy who ran a local barber shop. I told him what I did, and he told me that he didn’t need disaster planning services, because he had insurance.

"So why does a business need one?" he asked. Oh boy.

There are a lot of reasons, of which just a few are below. What he doesn’t realize is that insurance just isn’t enough.  Don’t believe me? Just ask the businesses of New Orleans what they think. Insurance is a wonderful tool that can assist in controlling or financing risk, but it isn’t something to supplant a good disaster plan.


Recovering Operations

If your operations are interrupted as a result of a disaster, it is critical that you get those back on track as soon as possible. Simply stated, if your critical processes aren’t recovered, there is no way you can go back to making money, and without a disaster plan, there is no way for you to get back into business. Companies have tried for years to avoid disaster planning, and there is just no way around it.

Think about it in terms of your business: Would you start thinking how to develop your product after you got your first order for one? Of course not, that would be crazy. So why would you do that in a disaster?

Consider this as well: If you lose customers to the disaster, do you think they will come back to you?

Loss of income insurance only goes so far, and the covered perils aren’t always the ones your company is likely to face. In one of the Gulf Coast disaster areas where I worked a couple years ago, there was a beach wedding photography studio with 5-7 full-time employees.

When the disaster struck, the beaches were complexly quarantined and isolated. The studio executives had no idea what to do, but they tried to make alternate arrangements for the bookings they already had. Unfortunately, that was too late. About a year later, I found out the company had gone out of business and faced an equity loss of almost half a million dollars.


Protecting Employees


If you have employees (or are a single-person business) you owe it to them to have a plan in place. Many, if not all, your employees are relying on you to continue to be in business so that they can continue to make money. During a disaster, a family will be stretched financially and will require that income. If they don’t get it, there is a domino effect of losses from business to person.

Ironically, the problem could be the exact opposite, where employers are expecting employees to come in without communicating that to their workforce. A few years ago, I worked with a graphic design company that nearly found itself in legal jeopardy after they fired two employees because they didn’t show up to work after a disaster.

The employees were living in a rural area where cell service was almost nonexistent as a result of disrupted communication towers. The company was so infuriated that they didn’t come to work that they sent nasty termination e-mails. Within a week, though, the employees were threatening litigation, and the company relented. It was soon after that I got a call from them inquiring about a disaster plan.


Protecting Property

It is well-known that the majority of the damage during Hurricane Katrina occurred after the hurricane had left New Orleans. It was the flood waters and the resulting deluge that caused the majority of the property damage. This is why a good disaster plan can keep you out of trouble. A plan that determines evacuation of employees and property, and adequately budgets for resource protection and supplies has the best chance to mitigate damage after a disaster.

When I was growing up in Orange County, we were told to get sand-bags and prepare for possible flooding during El Niño, which is a weather system that periodically strikes California. I remember as a child wondering why people needed sand bags when we had the beach not 50 yards away! As an adult, I would ask why people didn’t buy the bags beforehand, and have an executed plan for filling them, and placing them in the most vulnerable areas of their property.


Conclusion


Remember, disaster planning is not just something you do after disaster strikes. Whether you are a barber, a wedding photographer or a graphic design company, your operations, employees, and customers are relying on you. Remember, if you aren’t there to fill orders and provide services, there will be another company with a disaster plan that will be ready to steal your clients, all because they had a better method to Reverse Disaster.

The Indictment of Disaster Plan Templates

I was speaking to a group of museum owners in the Northeast a couple years ago, and, after the presentation was over, a group of them asked me about a disaster plan template they had purchased.  I have very strong feelings about this subject, so I said, “Get rid of it. It’s worthless. It’s worse than worthless; it’s detrimental to your program.”

They were a bit shocked with how forthright I was; however, I wanted to be blunt, because univerally, my professional experience has demonstrated that:  


Templates are ineffective disaster plans. Period.

I still see this a lot with companies that are trying to save a few bucks, because they are cheap, fill-in-the-blank disaster planning solutions. But, unequivocally, these provide a false sense of security, because experience has shown in disaster after disaster that these do not work, for a myriad of reasons.


Templates Don’t Account for Changes

This may not seem like a big deal, but in practice, it is one of the largest drawbacks of a template. Depending on the size and complexity of your business, there are dozens (sometimes hundreds) of variables that can change in a short period of time.

Employees, clients, new building contracts, homeland security policies and even a new fleet of company vehicles can have a massive impact on your planning calculus. Circumstances, policies, procedures and strategy can also change with critical vendors or even the government.  Your plan must take account for these changes, because they can have a huge operational impact when faced with a disaster.


Templates Don’t Account for Evolving Threats


Every plan has to have, as a foundation; certain set of threats it uses as a guide for responding and recovering. However, it does not account for unique community factors that will either make that disaster more devastating, or more likely to occur.

For example, communities in the US can either have underground or over-ground electricity wires. The ground soil could also be permeable, semi-permeable, non-permeable, and could have the composition of a dozen different compounds that would have a massive impact on the likelihood of, and extent of disasters occurring, including: flash flooding, erosion, wildfires, ground collapses, engineering disasters, or tornados.



Templates Don’t Account for Training


When I worked for a coffee chain as a young man, I was asked to train the staff on the disaster plan, since they noticed I had a propensity for speaking and an interest in disasters. So I trained the staff, and told each one individually that at some point they needed to read up on the evacuation routes embedded in the plan so they knew the best route to get home.

I intentionally omitted the evacuation route in the training so that I could conduct a little experiment. On that same page, I put a $10 bill and said “if you are reading your evacuation route, you can take this $10”. After 6 months, I retrieved the money; presumably, not a single person had read it.  Templates provide zero accountability on this factor.

Templates Don’t Account for Regulatory Requirements


If you run a business in an industry with a regulatory requirement for a disaster plan (or a derivative such as an EAP, ERP, BCP, IT/DR), a template will not only be operationally defunct, but they can also put you in legal jeopardy.  This is particularly true if you actually experience a disaster which results in injuries or property damage.

State and Federal regulatory agencies have held hundreds of facilities accountable for inadequate disaster plans with fines and criminal sanctions. Civil actions would not be far behind, which could keep you in courts for years.

We call these templates “checkbox” disaster plans, because they are used to meet the bare minimum requirements under a regulation or statute. In some cases, facilities purchase a template, but don't even bother filling in the blanks! You can imagine how effective that plan is when disaster strikes.

Conclusion


Perhaps inevitably, my words came back around to haunt me. About a week after my museum presentation, I got a phone call from the planner who had created the template, who was more than a little annoyed at my comments. You can guess the outcome of that conversation.

While I can respect that companies are trying to save a few dollars, don't waste your company's money with a useless disaster plan. They provide a false sense of security, and ignore the realities of a robust disaster program, which requires training, a good exercise program and evaluation measure.

Don’t be fooled; a template is simply not the way to Reverse Disaster.

Threat #1 (National Planning Scenarios) – Improvised Nuclear Device

An Improvised Nuclear Device (IND) can describe either: a nuclear device that has been modified from an existing weapon, or can be one that is constructed from parts of devices.

It is important to differentiate them from Radiological Dispersion Devices (RDD) (otherwise known as “dirty bombs”) because, in the latter case, the purpose is to disperse radiological particles using a conventional explosive like dynamite or TNT. In that case, there isn’t a nuclear reaction. An RDD will create an explosion like any other.

Courtesy: Department of Homeland Security

An IND, by contrast, creates a nuclear explosion like those at Hiroshima and Nagasaki (mushroom cloud), because it is a radiological chain reaction and will be vastly different from an explosion from TNT. The detonation of an IND is a major catastrophe of an almost apocalyptic scope. The explosion of an IND in a major city would raze dozens, or (depending on the yield) hundreds of square blocks.


Plan

Like any other explosion, an IND will cause casualties, damage buildings, and disrupt utilities and essential services. However, as you put together your plan with your disaster manager, you should keep a few unique things in mind:

• If an IND is detonated near your facility, work will cease indefinitely. The number of casualties and the pace of destruction will be such that economic activity will grind to a halt until order is restored;
• If an IND is detonated in the US but not near your facility, work will essentially cease for a few days as fear and panic sets in awaiting the government response.
• The risk is not just from the explosion itself, but also from the nuclear fallout that results from the detonation;
• Do not rush your employees back to work, and consider that friends and family may be affected. 
• Roads may be closed, and other commercial activities involving transportation will almost certainly be halted.
• Government functions, public sector activities, and contractual obligations (both buying and selling) will be suspended.
   
• Employees may have severe psychological trauma, trouble concentrating, or experience phobias. Be prepared to activate the EAP.
  

Train


I recognize that training your staff on how to respond to a nuclear weapon explosion will probably result in a few smiles and side-jokes. When we train our clients, we do our best to make the training relevant, but not too “doom and gloom”.

Courtesy: United States Army

If you decide to do your own training, make sure you be very careful of the wording you use, and don’t make it too company-centric. If you have medical staff, they all need to be trained on the medical effects of a nuclear reaction detonation, including (but not limited to):

• Primary, Secondary, Tertiary, and Quaternary Injuries as applied to a nuclear explosion
• Blast Wave and Overpressure;
• Radiation Exposure and Contamination;
• Delayed effects of acute radiation exposure;
• Specific organ effects depending on where a given isotope is incorporated;
• Carcinogenesis;
• Psychological effects.

Conclusion

Thankfully, this is a threat that has a remote chance of occurring. Unlike what the movies portray, a nuclear weapon is a highly sophisticated machine that requires incredibly specialized skills and equipment to design and build.

Furthermore, even if a group were able to get the blueprint for one, they would have to acquire the radiological materials, properly harness them (without getting killed from radiation poisoning), and procure all the other machinery necessary to properly administer and maintain the weapon before the radiological materials broke down into their half-lives. 

However, an IND event should remain a planning scenario for your business, because, if that terrible day does come, it may be the only way you can effectively Reverse Disaster.

Patrick Hardy

phardy@hytropy.com

Twitter: @hytropy

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