Preparing for Long-Term Business Interruptions

Consider what to expect in terms of disruption of services and the length of time it is likely to take for any or all of them to be restored.

• By Karen D. Hamel
• May 01, 2013

Almost 40 percent of facilities affected by a disaster do not reopen, according to the Insurance Information Institute. Because disasters don't happen every day, preparing for them often gets left for another time. In fact, nearly two-thirds of surveyed business owners reported they do not have a disaster recovery plan in place for their facility.

Recovering from a disaster takes time and many different types of resources. Pre-planning is a vital key that increases the likelihood of recovery after a business interruption and decreases the amount of time it takes for operations to resume.

Types of Disasters
Facilities can be faced with a variety of disasters, but most can be grouped into one of three categories: natural, technological, and intentional. It is important for facilities to determine the likelihood of different types of disasters so that plans include resources and response techniques to address each type.

Natural disasters include events such as earthquakes, wildfires, floods, blizzards, hurricanes, tornadoes, tsunamis, and health epidemics. Geography plays a role in disaster planning. A facility in Kansas, for example, probably wouldn’t plan for a tsunami, nor would a facility in Hawaii have much need for blizzard planning. Although some natural disasters, such as earthquakes, strike without much warning, facilities can take steps to prepare for most natural disasters. Chemical spills, power plant accidents, blackouts, fires, and explosions are examples of technological disasters. Preparations for these incidents can include reviewing standard operating procedures, isolating processes or buildings, installing back-up power sources, and having the correct response supplies readily available.

Intentional disasters such as terroristic attacks and acts of violence are among the more difficult to guard against, but in some cases, increased and vigilant security measures can help to decrease the likelihood of this type of incident.

Interruptions
Roadways, fuel supplies, utilities, buildings, communication systems, water services, and financial services all can be interrupted, damaged, or completely destroyed after a disaster. After a major incident, the combination of these disruptions can quickly overwhelm local response and rebuilding capabilities. Consider what to expect in terms of disruption of services and the length of time it is likely to take for any or all of them to be restored. Roads and other forms of infrastructure that are destroyed easily could take several months and even years to rebuild.

Even vital first response efforts and supplies can take time to reach an affected area. County first response teams may be able to respond within a few hours if their resources are still available, but state and federal teams that are comprised of volunteers and professionals from outside areas can take three to five days to assemble and arrive -- assuming that roads and airports are intact. The first goal of these responders, however, will be to ensure life safety; their efforts won't necessarily be focused on rebuilding until their first objective has been met.

Knowing how external interruptions will disrupt facility operations is important, because even if the facility is standing and is deemed to be safe to resume operations, a number of external factors can hinder the facility's capability of restarting at its current location.

Building a COOP
Business Continuity of Operations (COOP) Plans are comprehensive documents that catalog a facility's assets, resources, and critical functions and detail the steps that will need to be taken to recover from a disaster, as well as the resources that will be necessary to do so. Although contingency, spill response, and other emergency response plans address the steps to be taken immediately following an emergency or disaster, they do not provide a complete recovery plan. A COOP Plan also addresses what it will take for the facility to resume operations after a major business disruption.

COOP Plans consider everything from communicating with employees to making choices between rebuilding and relocating. Facilities that take the time to establish a COOP Plan and determine the pros and cons of many different disaster recovery possibilities before an incident actually occurs are able to make better-informed decisions, under much less stressful conditions.

Facilities with a COOP Plan are also able to rebound from a disaster more quickly because recovery steps already have been planned out and essential employees already know specifically what they need to do. Precious time is not spent trying to figure out what to do and where to get the resources to make things happen.

Resources
Both tangible and intangible resources need to be considered and documented in COOP Plans. Economists sometimes define a resource as a needed commodity, service, or asset. Others define it as something useful that has a limited availability. No matter how it is defined, it is easy to take many resources for granted and therefore overlook them when plans are being created.

Tangible resources include things such as employees, equipment, machinery, and products. Intangible resources such as patents, intellectual property, and brand or corporate image are sometimes harder to define but are just as important following a disaster.

People
Employees, especially those with extensive knowledge of processes and other business functions, are an essential resource after a disaster. Their knowledge will provide valuable insight into determining what will or will not work as the facility recovers from an incident.

Essential employees will come from various areas of the facility. Whereas a shop foreman can provide details on the types of processing equipment that will be needed, someone from information technology will likely be a better choice for reestablishing a call center and restoring vital records.

Plans should include a system for communicating with and accounting for all personnel after an incident, and they need to include contingencies for resuming operations with a limited number of staff.

Buildings and Equipment
Maintaining an accurate record of all of the equipment, suppliers, tools, computers, furniture, and other types of inventory that collectively make a facility operate is a monumental task. In addition to this essential list, logistics also need to be determined.

After a disaster, operations may need to be relocated to another site. Some employees may telecommute. Outsourcing or third-party contracting may become necessary. Understanding these complexities and creating contingencies that determine how and where operations will resume helps to eliminate the stress of trying to find an alternative location or services after a disaster.

Insurance
Insurance companies are an excellent resource to COOP planners. In addition to reviewing coverage, they often can provide planning templates and other tools to assist facilities with emergency preparations. As part of COOP planning, some facilities identify gaps in their coverage or the need to purchase business interruption or other forms of insurance. Reviewing policies with insurance providers can also provide clarity about policy details, procedures, and assistance that may be available following a disaster.

Communication
Even with a superior business recovery plan on paper, when communications fail, all of the good work that has gone into planning can be quickly lost. Communication plans need to contain a variety of ways to communicate with employees, suppliers, and customers.

If wireless phone towers are not destroyed after an emergency, they are very quickly overwhelmed by people trying to use them to contact each other, thus making them extremely unreliable as a sole means of communication following an emergency. Power outages can diminish the ability to use email. Having accurate contact information and establishing a variety of methods for maintaining communication following a disaster helps to minimize chaos and maintain customer loyalty. Storing information in off-site locations or on redundant servers in other geographical areas are two ways to help ensure that vital contact databases and other essential information is not lost.

A Little Planning
Creating and maintaining a COOP Plan is an enormous effort. Unlike safety or other programs, it's almost impossible to gauge the results or to quickly see a return on the investment -- especially if disasters and other incidents are infrequent.

However, even if planning needs to be done in stages, having an incomplete plan is better than not having any preparations in place. Each step that can be taken now, before an emergency, is one step that makes it easier to for the facility to recover after a disaster.