Emergency Preparedness
Businesses must also prepare
Approximately 50% of companies
fail following a major disaster
affecting their business.
The key to staying alive
is to develop an effective
contingency plan and implementing
it correctly.
"We'll survive, we always have", "I am too busy making money", "I haven't the time, skill or resources", "I
don't need it in my business".
These are just some of the responses to suggestions that companies plan for a major disaster. They are understandable, but they are a recipe for bankruptcy.
Some recent press comments are also of particular interest:
"Contingency planning is the safety net of risk management", and "any public utility providing an essential service .... must have a well tested business contingency plan that is able to cope with any catastrophe and maintain continuity of supply".
Planning is the key
Statistics
vary,
but
they
suggest
that,
following
a
major
disaster,
approximately
50%
of
businesses
fail
to
survive.
Why?
Simply,
their
customers
desert
them.
Customer
loyalty
is
very
fragile.
It
takes
years
to
develop
but
can
be
lost
overnight.
It
makes
sense
to
have
a
fall
back
position.
From
the
perspective
of
any
manager
or
CEO
who
want
to
maintain
a
functioning
operation,
to
the
board
who
could
face
shareholder/
stakeholder
litigation,
advance
planning
is
the
key.
There
are
many
cogent
reasons
why
disaster
management
should
form
part
of
any
organisation's
business
plan.
How
to
go
about
putting
in
place
a
disaster
recovery
plan
is
straightforward.
The
implementation
can,
however,
be
complex.
-top-
Business Impact Analysis
Firstly, it is necessary to establish just what is a disaster to the organisation. There are the obviously man-made and natural perils such as fire, earthquake, flood and the like, but don't forget loss of reputation (a major risk to most organisations), loss of Information Technology and computerised processing functions (example - the millennium bug problem had a very real disaster potential), adverse exposure to contracts with penalty causes, legal and regulatory risk. Think laterally with particular emphasis on marketing and ability to service clients.
Terminology
Some
of
the
terminology
can
at
first
glance
seem
somewhat
bewildering.
Organisations
are
being
bombarded
with
the
need
for
an
emergency
response
plan,
a
contingency
plan,
a
disaster
recovery
plan,
and
a
business
continuity
plan.
No matter what you call it, the need is to have a pre-agreed plan to aid an organisation to work through any predetermined foreseeable 'contingency' and to survive.
-top-
Objectives
The overall objectives of the plan will essentially be as follows. (Obviously the detail will depend on the type of organisation, whether it be manufacturing, a service organisation, a government etc.)
- Ensure the continuous availability of your business.
- Protect assets (buildings, plant, people) and the profit earning capability.
- Maintain customer confidence.
- Identify the exposures to the business and corporate risks.
- Develop recovery strategies and priorities.
- Expedite restoration of services.
- Minimise financial loss and embarrassment.
- Maintain or gain competitive knowledge.
- Meet legal obligations - employees, clients, shareholders, community.
- Identify business process inefficiencies.
- Identify single points of failure.
- Maintain a positive image.
The Contingency Plan
Try and keep things as straightforward as possible and think of the overall plan as the contingency plan (CP).
Within the contingency plan, there will generally be three distinct stages of planning which need to be considered. These phases will each be time-dependent. The initial response (emergency response) may cover a timeframe up to about the first 24 hours. Thereafter, there will be the need to 'hold it together' or business continuity, which could extend from a day to several weeks followed by the return to normal operations over a period of weeks or even months.
In some organisations it may be relevant to develop an overall 'umbrella plan' ie, the big picture plan, within which more detailed divisional/departmental plans can be developed. However, both the umbrella and divisional/departmental plans should generally follow the above approach, with the restoration objectives being established under each phase. It may work like this.
-top-
The Three Stage Contingency Plan
The restoration objectives in terms of the business should have been clearly identified for each phase as part of the business impact analysis.
Phase 1 Immediate Response
Objectives: To secure
hazardous conditions; establish
the control organisation;
provide initial status
report. Phase 1 is likely
to extend for the first
24 hours or so.
Phase 2 Business Continuity
Objectives: To effect
minimum operational status;
to review phase 1; to initially
prepare for phase 3. Phase
2 is likely to extend for
up to two weeks.
Phase 3 Disaster Recovery
Objectives: To provide
an orderly programme for
full operational restoration.
Phase 3 may extend for
six months or more.
Summary
- It doesn't matter what you call it - develop a plan as broadly or as detailed as your own needs may be. Typically a broad 'umbrella contingency plan' is sufficient which may need to be broken down to some detail in specific areas, eg IT, product recall procedures, plant level etc.
- Think of it more as a programme needing regular and ongoing review rather than a document to be filed and forgotten.
- Top management commitment is essential.
- Test the plan regularly and modify as may be necessary.
- Document the plan and ensure management are familiar with it.
- Ensure the necessary resources will be available as detailed in the plan.
Other Resources
Click these links for further information on business contingency planning.
Ministry of Civil Defence and Emergency Management
Ministry of Economic Development
Risk Management Standard - AS/NZS 4360:1999
www.mcdem.govt.nz
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