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When Things Go Drastically Wrong

Disasters caused by fires, hurricances or tornados can wreak havoc on businesses. The smart company will design a robust business contigency plan to alleviate the aftermath. Key issues to consider:

1. The first-pass contact list will generally lack the detail for actual use and data may change over time. Employers should have multiple contact methods for each employee and update them at least annually. Basic emergency contact data should include not only local fire, police, rescue and media contacts, but also contacts needed for immediate support in relocation and new facility infrastructure improvements.

2. Production support options should include a list of facilities capable of absorbing a total loss of facility capacity. It is not necessary to negotiate a support agreement in contingency planning, but a good understanding of options should be included.

3. Insurance coverage should be reviewed at least annually and replacement costs should be carefully analyzed. Be sensitive to cost increases driven by fluctuations in construction costs or costs of raw materials. Also, consider the total impact of lower value office equipment and fixtures. Individually, much of this equipment represents minimal book value, particularly if fully depreciated. Collectively it adds up it if must be replaced on a large scale.

4. Customers' consigned materials and equipment insurance coverage should also be reviewed both at project launch and periodically for interoperability with your own insurance coverage.

5. Business continuity planning should consider that structural damage, insurance claim adjuster lead-time issues or negotiations between insurance companies may delay access to parts of a facility or to specific equipment. Backup strategies should include provisions for hard copy documentation and designs/programming for unique pieces of custom equipment, including older equipment.

6. Contingency planning should also consider design data along with internal and supplier lead-time issues for tools, jigs and fixtures, particularly those that are older and therefore harder to reconstruct. The biggest challenge in a catastrophic loss is not necessarily the cost of replacing these items, but the lead-time associated with the replacement process.

7. While larger companies generally have a well-defined crisis communication plan for the media, smaller firms may do very little regular communication with local press. In the event of a disaster, this will change. Have a basic crisis communication plan and a means of communicating with all local media organizations. Make sure employees know your internal policies regarding communication with the media.

8. Develop a spreadsheet to assess recovery activity status. This living document should be easily shared with recovery team members and should list activities by focus segment, person(s) responsible, date open, date due and date closed. Open items and new additions should be reviewed by relevant team members daily initially and at least weekly later in the recovery process.

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