The National Oceanic and Atmospheric Administration (NOAA) recently issued its forecast for the 2019 Atlantic and Pacific Hurricane Seasons. Specifically, NOAA forecast 9-15 named storms, 4-8 hurricanes and 2-4 major (Category 3+) hurricanes between June and November for the Atlantic Basin. It also forecast 15-22 named storms, 8-13 hurricanes, including 4-8 major hurricanes, through November for the Eastern Pacific Basin.
Although NOAA indicated its forecasts are “near normal” for the Atlantic Basin and “above average” for the Pacific, even one storm making landfall in a populated area can have dire consequences for local residents and businesses, as well as their trading partners and customers.
Business leaders and managers whose enterprises and key trading partners are located in areas vulnerable to catastrophes need to plan effectively and well in advance for any potential disaster. Here are five keys for effective disaster planning and management.
1. Develop and test an emergency response plan.
Create a team of key personnel and external resources needed to prepare for and respond to a disaster affecting your operations. Besides members from your risk management, executive, legal, accounting/finance, IT, HR, operations, and communications, the team should include your insurance broker, risk consultant, claims adjuster, and restoration contractors for emergency repairs of damaged facilities.
Have multiple contact information (including office, home and cellular phones; business and personal email) for each individual and create call trees to contact everyone on a timely basis.
Designate an internal leader, such as the risk manager or CFO, and alternates to coordinate response and claims teams, and oversee the plan’s implementation.
Next, carefully assess the potential vulnerabilities of each facility, such as wind damage, flooding, and fire. Conduct a comprehensive evaluation of your organization’s facilities and locations situated in regions prone to hurricanes so you have a full understanding of business interruption and asset values at risk from these events.
A key lesson from past storms: Planning must address not only wind-related loss, but also storm surge, flooding, extended power outages, and interruption of land line, cell phone and internet access, as well as the potential for sustained site inaccessibility.
List all measures needed to prepare for such events in advance, as well as to respond at each stage as they unfold, including pending, immediately prior, during, following, preparation of the insurance claim, process management or repair and restoration through full recovery.
Develop a project flowchart or playbook so everyone involved understands the plan and their responsibilities. New planning “apps” on mobile devices can ensure all team members have ready access to all required details as storms approach and their actions are needed.
Rehearse the plan and test it using tabletop exercises. Be sure to update it regularly to account for any changes in personnel, operations, and activity.
2. Know emergency procedures and resources.
Well in advance of any event, contact the local Emergency Management Office to gain an understanding of community evacuation plans. Have a citizen band radio system at each facility to track storms and obtain critical government notifications.
3. Engage employees.
Inform all employees of your hurricane and natural disaster plan and have supervisors explain elements that apply to them, including their individual responsibilities when storms occur in areas where they live and work. They should know facility shutdown procedures, including how, when and by whom they are to be implemented and communicated.
Prepare for events that occur when employees are at any facility; make sure they have access to adequate emergency supplies (such as 72 hours of nonperishable food, potable water, first aid kits, lighting and communications devices) and safe locations onsite if they need refuge from floodwaters or structural collapse.
4. Safeguard facilities and critical equipment.
Plan to protect or secure outside equipment and inventory. Safeguard windows against breakage with permanent storm shutters or cover them with marine plywood as storms approach. Divert water from holes in foundations, doorways and sills, and other openings. Inspect roofs, HVAC systems, elevators, and loading docks for potential exposures.
Be prepared to anchor or move yard structures and equipment (trailers, cranes, loose yard storage, high profile materials, storage racks, etc.) that may be vulnerable to high winds. If sites contain drums of hazardous chemicals, move them to sheltered areas.
If your inventory includes perishable goods, have back-up generators for refrigerators/freezers or arrange transport to another facility. If possible, move susceptible equipment to higher levels.
5. Create a detailed business continuity plan.
Building on the measures taken in the emergency response plan, work with your team to create a comprehensive business continuity plan. Set priorities by identifying critical operations where any downtime or outages will have the greatest impact on the company’s revenues and business, including potential loss of market share, customers and key employees.
Be prepared to move records, computer equipment, and other sensitive equipment/valuable items to other locations in the event of a pending disaster. Additional advance steps include:
-Create electronic back-ups of critical paper documentation.
-Prepare for disruptions in telecommunications, including email and internet access.
-Plan for electric power outages and utility service disruption. Fill diesel engine-driven emergency generators and fire pump fuel tanks. Maintain extra supplies of fuel.
-Develop a system to advise customers and suppliers of a potential disruption in operations, as well as for keeping them informed of progress in restoring operations after an outage.
-Check key suppliers’ plans to address any disruptions in service or the supply chain.
All measures should be documented, communicated to individuals involved, and the entire plan should be reviewed and updated regularly.
Besides helping protect employees and properties, emergency response and business continuity plans are a key part of a company’s property and business interruption insurance application process. Often, evidence of comprehensive and robust preparation may have an impact on the availability and cost of related insurance protection.
With appropriate planning, businesses can help minimize the potential impacts of hurricanes and other disasters on their operations. As the 2019 hurricane season progresses, these measures can reduce the chances of storm-related employee injuries and property damage, as well as accelerate recovery and reduce potential losses.
Peter Jagger, a managing director, Aon Global Risk Consulting, works with the firm’s clients on their pre-loss and post-loss planning and risk mitigation. During an insurance industry career that has spanned more than 25 years, he has been involved in claims program design and development, and the preparation of property claims for a variety of industries. Previously, at Aon, he served as director of Property/Casualty Claims/Specialty Services responsible for the oversight and management of the property and casualty claim staff. Over the years, he advised clients around the world that have sustained losses due from such large-scale disaster events as Hurricane Georges, Super Typhoon Pongsona, Hurricane Katrina, Hurricane Wilma, Hurricane Ike, Thailand flood, and Super Storm Sandy.