Friday, November 9, 2012

Superstorm Sandy Affects Business in Ways Seen and Unseen

I can advise someone over and over that crisis planning is essential to for-profit and not-for-profit organizations of all sizes. Some get it. Some think they get it but don't really. Some are in denial. Some stare as if I am part of a zombie invasion.

K. V. Kurmanath, author of "Sandy lesson: Plan or Perish" in today's The Hindu Business Line, focused on information technology and business recovery, but the same advice can be stretched to include any organization's crisis operations and crisis communications plans. (http://www.thehindubusinessline.com/features/weekend-life/sandy-lesson-plan-or-perish/article4074729.ece)

I'll let the reporter pass along the message I deliver regularly in this blog, as clearly stated in the subhead: "A wake-up call for information technology, communication consumers for evolving robust alternatives in times of crises."

At the Institute for Crisis Management, we strongly encourage organizations to have three plans on their crisis bookshelf: a crisis operations plan that tells what to do physically and who should do it; a crisis communications plan that identifies vulnerabilities, key audiences for each, communications media, and holding statements for reporters in the early moments and sometimes hours after a crisis strikes; and a business recovery plan (aka business continuity plan) that tells what must be done to return to normal business quickly.

The Hindu Business Line, established as a weekly in 1878, noticed, "Several firms were reduced to being silent spectators as their Web sites and networks went offline, denying their customer services.... Having a Plan-B in the form of a well-planned disaster recovery strategy is now on top of the agenda of many IT companies. But experts warn that having a Plan-B such as only hosting data in data centres is not enough. One should have a proper, cost-effective, well thought-out back-up strategy to keep in touch with consumers, customers and relevant stakeholders.

"And, it’s not just about disasters such as Sandy and Nilam. Businesses face challenges every once in a while in the form of political unrest, uprisings and natural calamities. Companies are under tremendous pressure to ensure continuity of services, irrespective of the problems they face."

Any fumble in a crisis could create financial and reputation losses. Chella Namasivayam, chief information officer of iGATE, pointed out that a strong business continuity plan should be in place for natural and other crises in order to minimize disruptions to business.
He strongly recommends an evenly spread out vendor base. “You should not wholly be dependent on any one provider or geographic location. If customers on the East Coast are impacted, back up their critical data to the servers on the West Coast."

Sid Deshpande, a senior analyst with research firm Gartner, said some organizations have begun appreciating the importance of building strong back-ups to take care of emergencies.

“It is not proper to say that all of them are not prepared....  Companies with a strong financial vertical have evolved robust Plan-B strategies. Some other verticals such as retail have not focused yet their attention,” Deshpande said. “Storing data on a remote location in itself might not be sufficient. What if the communication network to those data centres is impacted?"

Employees themselves also must be protected from crises. Otherwise, valuable employees may choose to leave, and positions might be hard to fill. Human resource policies must be worked out in advance to treat employees as well as can be afforded. Will you pay for any time they miss? Can employees be paid if they help with cleanup and restoration? Will employees on paid sick leave and disability continue to receive checks? Will benefits like vacation time, sick days, and 401(k) matching benefits continue to accrue? If you provide health insurance, will employees and families continue to be covered?

All these questions must be considered and written into corporate policy before you suffer a serious fire or explosion, earthquake, or any work stoppage.

"While some businesses have been quick to get themselves back up and running (after Sandy) – in Brooklyn, some restaurants and bakeries have been operating with a skeleton crew to serve locals and rescue workers, while in Manhattan (the non-flooded parts, anyway) some of the poshest restaurants are once again taking reservations.... But many businesses remain closed, and every day they stay closed means no money coming in – or going out to those who work there.These closures will hurt small business owners and hourly workers the most."  (http://business.time.com/2012/10/31/the-hidden-economic-victims-of-superstorm-sandy/)

We all know these owners and workers well. "Many of these people are modestly paid hourly workers, and some will be hit hard by the loss of even a week of income. These are the people you might or might not notice, yet are critical to the functioning of the city: the janitors, the cooks and delivery men, the people who run newsstands and dry cleaners and cobblers and food carts, the people who do secretarial and clerical work in businesses large and small throughout the city. And some are in more obviously important support roles, such as hospital orderlies, private duty nurses, home health aides, nurses and dental hygienists. And if the owners of some of these small businesses can’t get into the city and have to leave their shops shuttered or on reduced hours, they still have to pay the rent."  (http://www.nakedcapitalism.com/2012/10/some-hidden-casualties-of-hurricane-sandy.html)

Ah, yes. The rent and all the other bills that will come due during a lengthy shutdown. Does your organization have a financial contingency for when liabilities continue and sales are zero?

I could list other lessons Sandy should have taught us about crisis planning. Whether your next "Sandy" is a weather-related disaster or civil suit, you need to be prepared with a crisis operations plan, a crisis communications plan, and a business recovery plan. Effective planning is important to a multinational corporation, the recreation center down the street, or the corner grocery store.

1 comment:

Jillian Johnson said...

I'm from Jersey and I can tell you firsthand that Sandy caused a lot of damage to businesses. While the business I work for isn't located near the beach, I know friends who worked for businesses there and unfortunately Sandy took a hold of those business and owners were left with nothing more than broken piles of wood and brick. It's times like these that it's important to not only help out while we can, but also do what we can to prevent these occurrences as well as have backup so we are prepared. Every business should have a recovery plan in order to remain protected in any instance. Business owners who don't have a recovery plan should check out disaster recovery management options.