Unfortunately, life isn’t always a sunny beach. The horrific images of storm damage from our recent rash of hurricanes are a staggering reminder of the fact that mother nature can be ugly and unforgiving.

As business owner whose company focuses on preparing companies to thrive during major changes, my thoughts turn to the bottom line. Will they be able to rebuild? Where will they find the funding, supplies and people to reopen their doors? What is their backup plan?

Surprisingly, only 33% of the companies we have interviewed have a disaster response plan. A mere 15% have documented processes in place to address fire, flood, electrical events or to identify other sources of failure to the physical facility, infrastructure and data storage.

The barrage of recent Hurricane Harvey coverage showed waterfront boat storage facilities that were crumpled like aluminum foil. Boats were scattered about like toys in a child’s playroom. These images prompted me to wonder if these businesses had a disaster response plan. Were they among the 67% who planned to develop said plans when they had a few minutes to spare? 

Odds are that most of the businesses destroyed by Hurricanes Henry or Imra did not have their account records backed up to the cloud or to a safe off-site facility. In the case of the boat storage facilities, it would be nearly impossible for them to contact customers to let them know the status of their prized vessels. This can lead to loss of rental income—even from customers whose boats were undamaged.

More than 60% of the companies we interviewed have three months or less of reserve funds. That doesn’t take into account the cash on hand needed to cover insurance deductibles or costs that aren’t covered.

While some businesses have income replacement insurance, coverage tends to end when the physical facility reconstruction is complete. Businesses often experience a modest-to-significant delay between the day the facility reopens for business and the day it returns to pre-disaster customer base. Twelve years after Hurricane Katrina, New Orleans has roughly 600,000 fewer residents than its pre-hurricane population.

Less than half of our research respondents have developed a business continuity plan. Moreover, plans that do exist are often basic and lack full off-site backup of critical data. We’ve also found that, the smaller the business, the less likely they are to thoroughly test their disaster response plans. Sadly, smaller businesses are the ones who can least afford the downtime that results from missing key components of disaster response planning.

Here are a few actions for you to consider in response to a major disaster: 

• Perform a full disaster risk assessment of your business. In addition to the physical property, it’s important to consider data and internet security. A risk assessment will also help you prioritize your emergency planning, based on the most prevalent threats.
• Review your finances with the effects of an extended revenue disruption in mind. Work with your bankers and financial advisors to explore options.
• Conduct an insurance coverage review. Inadequate insurance coverage can lead to major financial loss if your business is damaged, destroyed or interrupted—even if just for a few days. Understand what your policy covers and what it does not.
• Keep your team informed. Your plan should be clearly documented and distributed to the management team. A printed copy should be stored off sight and include employee contact information and team responsibilities during crisis.
• Develop a communications plan. Detail how your organization plans to communicate with employees, local authorities and customers during and after a disaster.

While you can’t prevent natural disaster, you can minimize the fallout with some advanced planning. Don’t wait until you have a few spare minutes. Set time and make it a priority. Your livelihood could very well depend on it.   

About Corporate Insight Strategy
Corporate Insight Strategy supports corporate excellence by providing company executives with a suite of products designed to measure transitional resilience. CIS products augment traditional financial analyses with domain-specific process assessments and enable companies to survive and thrive through impactful changes.

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