your business against a catastrophe
windstorm blows the roof off your building.
in your workshop puts you out of business for five weeks.
Could your business survive a major emergency?
that recover quickly are those that have planned in advanced.
They have also developed and maintained a recovery plan to protect
themselves against legal liability for losses that might result
from a disaster.
a 4-point catastrophe recovery strategy
the risk of damage in advance of an emergency.
the chance of fire. Train employees in fire safety, particularly
those responsible for storage areas, indoor and outdoor housekeeping
and maintenance, and operations where open flames or flammable substances
are used. Ban smoking or limit to designated areas. Modernize electrical
systems-a large percentage of non-residential fires are caused by
Prevent a small fire from becoming a big one. Make sure you have
the appropriate fire extinguishers on hand and in working order.
Locate your business in a fire-resistive building (a structure made
of non-combustible materials with firewalls that create barriers
to the spread of fire) and in a building with a fire alarm system
connected to the local fire department.
storm-related damage. There's no way to lower the risk of a natural
disaster like a violent windstorm or earthquake, but buildings can
be strengthened to reduce the physical damage such disasters cause.
Make sure your premises conform to damage-resistive building codes.
For information about how to retrofit your business premises to
make them safer, contact the Institute for Business and Home Safety
at 813-286-3400 or visit its Web site,
a disaster recovery plan.
duplicated records. If your accounts receivable or other business
records are damaged, revenue will be lost and recovery will be slower.
Reconstruction of data is difficult, sometimes impossible. To avoid
such problems, back up computerized data files regularly and store
them off the premises. Keep copies of important records and documents
in a bank safe deposit box and make sure they're up-to-date. Compile
lists of equipment you own or lease, by type, model and serial number.
Under several federal laws, if you fail to maintain accurate business
records and to safeguard those records, you may be held liable.
critical business activities and the resources needed to support
them. Many businesses can't afford to close down while the premises
are being repaired because the people who once depended on their
services or products will quickly find a replacement.
Decide what you must do to retain customers. If you cannot afford
to shut down your operations even temporarily, determine what you
require to run the business at another location. Which activities
would be continued and which employees would be needed to carry
out the work? What equipment, machinery, tools and supplies would
be required? Are your employees highly skilled? Could you easily
rehire workers if you were forced to lay off a part of your workforce?
alternative facilities, equipment and supplies, and locate qualified
contractors. Plan for the worst possible scenario and do your research
before a disaster strikes.
Consider a reciprocity agreement with another business. See if you
can make arrangements to share facilities with someone in the same
business in a different community.
Sometimes two businesses can make arrangements to help each other
get back into operation in the event of a loss by lending space
and equipment or selling part of their merchandise. You should also
look into the possibility of leasing or buying used equipment and
If your business can be operated from almost and empty office or
store, you may not need to make advance arrangements for alternative
facilities. Make lists of firms that can supply equipment, tools
and raw materials, and, if you own a store, the merchandise you'll
need. The more specialized the item or service, the more important
it is to locate a dependable source in advance.
Contractors are in great demand after a widespread disaster. Even
if the damage is on a small scale, you'll get back into business
faster if you've identified the kinds of services you'll need to
renovate your damaged premises and the reliable firms that can provide
these services. Don't forget that the site has to be cleaned up-water
and debris removed, for example-before renovations can begin. Try
to get an advance commitment from at least one contractor to respond
to your needs.
computer systems and data. Data storage firms offer offsite backups
of computer data that can be updated regularly via high-speed modem
or through the Internet. For computer hardware, check with your
vendor about replacement equipment and repairs in the event of a
disaster. Contracts with service providers to repair damaged equipment
and programs should also be considered.
Set up an emergency response plan and train employees how to carry
it out. The first steps that must be taken after a disaster are
emergency measures. Knowing what to do when a disaster strikes reduces
Make sure employees know whom to notify about the disaster and what
measures to take to preserve life and limit property losses. These
should include whom to contact for medical assistance, how to call
the fire department and evacuate the building and any special precautions
that should be taken before leaving the premises. Different types
of disasters may call for different kinds of measures.
the things you may need initially during the emergency. Do you need
a back-up source of power? Find out whether a generator can be used
to run your computer system. Do you have a back-up communications
system? When the electric power is knocked out, telephone lines
may still function but electronic communications systems such as
e-mail will not. If you're likely to have cash-flow problems, check
into the availability of loans and extensive credit.
Keep on hand a first-aid kit, a supply of flashlights, batteries,
candles and candleholders and matches. Are you likely to need food
and water? Businesses in hurricane-prone areas of the country should
plan to get cash from the bank if there's a storm warning in case
damage to local banks shuts down automatic teller machines. Decide
how to secure the premises after the disaster and what building
supplies you might need to cover holes in the roof and windows to
prevent rain damage.
out each step of the plan and assign responsibilities to employees
in clear and simple language. If you employ workers whose native
language is not English, assign someone to make sure those workers
understand what they're required to do. Distribute copies of the
plan to each employee.
Practice the procedures set out in the emergency response plan with
regular, scheduled drills.
a list of important phone numbers and addresses. Make sure you get
in touch with key people after the disaster. The list should local
and state emergency management agencies (they may also provide help
in planning for natural disasters), major clients, contractors,
suppliers, realtors, financial institutions, insurance agents and
insurance company claim representatives. Keep copies off the premises-at
home and at a more remote location in case the disaster is widespread.
on a communications strategy to prevent loss of customers. Whether
you decide to wait out the reconstruction period or relocate to
temporary premises, current clients and those who use your services
or products regularly should know how to get in touch with you,
and when and where you except to reopen for business. Otherwise
many people may assume that you'll be out of action for a long time.
Among the possibilities to explore, depending on the circumstances,
are posting notices outside your premises or elsewhere; contacting
clients by phone, by e-mail, or by regular mail; placing a notice
in local news papers; and asking your friends and acquaintances
in the local business community to help you disseminate the information.
Consider the role the media play in a crisis. If your company is
likely to be interviewed, have a written plan for dealing with reporters.
To improve your media skills in a crisis, watch talk shows and news
programs to see how other people handle such situations.
your insurance program.
sure you have sufficient coverage to pay for the indirect costs
of the disaster-the distribution to your business- as well as the
cost of repair or rebuilding.
For a business, the cost of a disaster can extend beyond the physical
to the premises, equipment, furniture and other business property.
There's the potential loss of income while the premises are unusable.
In addition, if you can't afford to close up shop during the repair
period, there's the extra expense of keeping the business going
at a temporary location. Your disaster recovery strategy should
include a detailed review of your insurance policies to ensure there
are no gaps in coverage.
Insurance: Take a look at your property insurance policy. Is your
property- the building and its contents-insured for current replacement
prices? Don't forget to insure any improvements you've made to the
property, such as new storage cabinets and carpets.
There may be limitations on what the policy will pay for certain
items. If you need higher amounts, discuss this with your agent.
Typical property insurance policies exclude coverage for floor damage.
If you're located in a flood zone (check with your local municipality
or bank about this), you'll probably have to buy a separate policy
from the National Insurance Program. The Federal Emergency Management
Agency provides useful information on flood insurance on its Web
site at www.fema.gov, or by calling at 202-646-4600. If your building
is damaged beyond repair, you may have to tear it down. In addition,
the federal government requires buildings in flood zones that don't
conform to flood plain building codes to be torn down if the damage
exceeds 50 percent of their market value. Consider purchasing an
Ordinance or Law endorsement to help pay for the extra costs of
tearing down the structure and rebuilding it.
Interruption Insurance: After every disaster, some businesses are
forced to close their doors because they didn't plan for the costs
of a disruption to their operations.
Business interruption insurance compensates for income lost when
you have to vacate the premises due to disaster-related damage (you
must be covered for the physical damage that caused the disruption).
Like other kinds of insurance, the price is related to the risk
of a fire or other disaster damaging the policyholder's premises.
Business interruption insurance covers the profits a business would
have earned, based on its own financial records, had the disaster
not occurred. It also pays for the operating expenses that continue,
such as payroll, even though business activities have come to a
temporary halt. Make sure the policy limits are sufficient to cover
your company for several weeks. After a major disaster, it can take
much longer than many people anticipate to get a business back on
Expense Insurance: For some businesses, the cost of relocating can
be greater than the revenue loss. Extra expense insurance reimburses
you for what you spend, over and above your normal operating expenses,
to avoid having to shut down during the restoration period. As with
business interruption insurance, the price of extra expense insurance
varies with the industry and the likelihood of disaster-related
on a regular basis all the components of your disaster recovery
strategy-fire safety and emergency preparedness measures, business
continuation and building repair plans, and your insurance program.
Communicate changes to key employees.
need help in identifying hazards and assessing risk or more information
on how to develop a disaster recovery plan, call your insurance
company and ask for loss control services.
information, call the National Insurance Consumer Helpline
(NICH) at 1-800-942-4242