How to strengthen your organization against disasters and the case for communication for business continuity.
Most of us have experienced a disaster of some variety. From natural disasters like severe weather and wildfires to man-made calamities like riots and infrastructure failures, disasters can cause loss of life, hardship, and disruptions to business that lead to ultimate collapse.
Hurricanes, tornadoes, earthquakes, mudslides, and wildfires are all examples of natural occurrences that can quickly escalate into disasters. Even with the most calculated planning, these events can cripple organizations – creating uncertainty in the organization’s longevity, introducing massive rebuilding costs, and leaving some without jobs.
Identifying an organization’s potential exposures and taking steps to address deficiencies are essential practices in any business environment. Such efforts also apply to higher learning institutions, health care facilities, and government establishments.
Because natural and man-made disasters are largely unexpected events, stakeholders may not consider them an important part of their routine business planning. However, because such events are capable of rising to catastrophic levels – threatening lives, assets and property – they must be taken into account in every organization’s preparedness and response planning.
Such planning should include close attention to the safety of team members on- and off-site. Additionally, organizational assets and property are also at direct risk when emergencies occur and should be given due consideration.
While past events are troubling, we can learn from them. Diligence in planning and response can reduce loss of life or injury, lessen the economic blow and protect organizations against collapse. The incorporation of a far-reaching communication policy will aid an organization at every step in the preparedness and recovery process. Therefore, it’s important to identify opportunities for improving communication before disaster strikes.
How Disasters Leave Their Mark
According to a recent report from Forbes, 2021 was one of the costliest – and deadliest – years for natural disasters on record. They state that about $145 billion in losses were experienced, contrasted against NOAA’s annual average of $51.4 billion in losses, annually, since 19802. Worldwide, similar catastrophes are estimated to have cost over $280 billion in economic losses.
This, of course, does not take into account the loss of life or serious injury to individuals. An estimated 688 Americans lost their lives in 2021 during these critical events, demonstrating the very real and tragic implications that arise from disasters of every kind.
Natural and man-made disasters can also bring tremendous damage to businesses, educational institutions, health care facilities and government.
Depending on the nature and severity of the disaster, a business or organizational facility can experience damage or complete destruction. Fires, floods and high winds associated with tropical weather can all leave facilities unsafe to occupy or damaged beyond reasonable repair.
Insurance can oftentimes soften the financial blow of property damage following a disaster. However, time to rebuild and reorganization expenses can prove to be too burdensome for many businesses and organizations. Additionally, the disruption of operations – more often than not – can render even the most robust business a complete financial loss.
Develop a Business Continuity Plan
Business continuity following an emergency or disaster can be challenging but is certainly not impossible. As always, planning ahead, identifying stakeholders and their roles, and having contingency plans in place can help you keep your business operating as you respond and recover from a disaster or emergency situation.
- Create a checklist of all of the office jobs needed for the company to continue functioning post-disaster, noting where they would relocate to and how soon these roles would need to be operational.
- Keep an inventory of necessary office equipment such as computers and telephones and server equipment.
- Create a work-from-home plan where appropriate. If such a scheme isn’t a possibility, plan ahead for alternate facilities on a temporary basis.
- For a newly distributed workforce, have a solid communication plan in place that includes notifications to mobile devices, desktops, email, texts/SMS, and company intranets.
Loss of Assets
Even if a facility is spared during the course of a disaster, organizations can incur devastating financial losses due to damage to assets. A large manufacturing business losing expensive processing equipment may experience such economic loss that starting over may never be a reality. Likewise, computer and telecommunications equipment to enterprise business can be difficult to replace quickly or affordably.
In most scenarios, adequate insurance will cover the financial loss of assets. However, this is subject to adjustments for depreciation and other factors. This often results in long wait periods and lesser reimbursement than originally anticipated – leaving many organizations short-handed to cover the cost of rehabilitating their asset pool.
Supply Chain Disruptions
A number of disasters can create interruptions in the supply chain. Severe weather can damage roads and bridges, cyberattacks can impact the grid and company data management and fires can make entire areas impassible.
When this happens, a dangerous domino effect goes into play. Manufacturing companies find themselves without raw materials and are unable to fulfill orders, distributors are unable to keep scheduled deliveries and retailers are unable to satisfy client demands. The end result can often be a loss of clientele, leading to additional financial burdens on an already struggling company.
Why Organizations Fail to Plan for Disaster
Since 1980, the United States has endured 332 weather-related disasters where damages exceeded $1 billion. Summed together, these events exceeded $2.275 trillion in losses.
From January to July, 2022 alone, the United States experienced 9 weather disasters with losses exceeding $1 billion each1. These events, overall, resulted in the deaths of 8 people and had significant economic effects on each impacted area, according to the National Oceanic and Atmospheric Administration (NOAA).
In August 2021, Hurricane Ida descended on Louisiana, taking 107 human lives and costing over $75 billion in damages. This made the storm the fifth most costly in United States history.
That same year, a flurry of wildfires in California and nearby states cost an estimated $10 billion in damages and extreme cold weather in Texas created over $24 billion in damages.
Along with the cost of assets and property, these almost historical events cost hundreds of fatalities, making them as tragic as they are costly.
Severe weather – such as hurricanes, tornadoes and extreme cold – account for the greatest share of disasters in the United States. However, man-made disasters like cyberattacks and riots also spell danger to lives and property.
At least 25 people were killed during protests and political unrest in 20204. And, the riots that followed the death of George Floyd in police custody cost insurers up to $2 billion5.
For businesses, health care facilities, learning institutions and government, it is essential to prepare, plan and understand how disasters can threaten human life and impact operations. By understanding the potential for destruction, we can better discern our responsibilities and how to promote better outcomes.
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