Disaster can strike at any time, arrive in many forms, and cause lasting and even fatal damage to businesses that aren't prepared.
The Ready Campaign, a federal disaster preparedness program, lists more than two dozen types of catastrophes, including floods, fires, hurricanes, tornadoes, earthquakes, tsunamis, pandemics, utility disruptions, extremes of hot or cold, supply chain disruptions, riots, terrorism and cyber attacks.
The impact of such emergencies on otherwise-healthy businesses is very often devastating. Citing statistics from the Federal Emergency Management Agency and the Department of Labor, Ready.gov warns that 75% of businesses without a plan to continue operations after a natural disaster fail within three years. That includes 40% of small businesses that never reopen, and an additional 25% that close within a year.
Disasters can result in lost revenues, lost employees, lost customers, lost suppliers and lost confidence from shareholders, investors, lenders and other stakeholders, explains Edward Colson, emergency management expert and owner of Ready Northwest, a national emergency management and business continuity firm headquartered in Portland, Oregon. As a result, he says, “more businesses and executives are starting to realize the implications on a company's bottom line of not having a disaster plan in place."
While it's not a fun topic to talk about, it is a necessary one – and one that can protect your business from a worst-case scenario when you least expect it. Learn more about how to safeguard your organization and team members as best you can.
“To be prepared for disruptions and disasters, you will need to do many things that will not ever make you a profit, but doing nothing may cost you far more in the end.”
- John Clouse
Preparedness planner and consultant
Steps to Prepare for Disasters
1. Evaluate risk
The first step in disaster planning is to assess the risks you are most likely to face and your ability to survive them. Not all businesses face the same threats. For instance, a company in a low-lying coastal area is more prone to floods than one built on top of a hill far from any waterway. However, sometimes less obvious threats can also be relevant.
Consulting local emergency officials is a good way to begin identifying the most likely risk scenarios. Checking local weather records and paying attention to recent world events, such as problems with supply chains and political unrest, are also good ideas.
2. Assess your readiness
The details of what constitutes readiness vary by type of business and type of threat. But for flood threats – the most common type of disaster – it's suggested that businesses start by asking the following questions:
- Can you operate without any business equipment that could be damaged or destroyed by water? Examples include common gear like computers and copiers as well as special tools like credit card readers and x-ray machines. Include access to essential data here as well.
- Can you operate without access to utilities such as electricity, water, natural gas, telecommunications or internet?
- Can you operate if you can't get access to your building due to high water or road closure?
- Can you meet payroll if business income gets interrupted? For how long?
- Will employees be able to get to work if transportation systems are disrupted?
- How will customers, vendors and suppliers reach and park at your facility?
- Have you priority ranked any disaster-related shortcomings? What needs to be addressed first?
- Do you have enough parts and supplies to operate without resupply from vendors?
- Will you be able to ship products or supply services to customers?
- Will you still have all your customers and clients post-disaster?
- If you have to close for a few to several days, will you be able to reopen and survive?
Your answers as well as questions will be different for different businesses. For instance, many will need to address how they can continue to meet health and safety or other regulations in the event of a disaster. Others might have to find ways to cope with drastically lower or higher demand for their offerings from customers impacted by the disaster.
3. Prepare a response
After assessing risk, businesses can get ready to handle the expected difficulties from disasters by preparing a response. Here are broad guidelines for addressing potential problems.
- Protect people first. Employees, customers, suppliers, vendors and members of the public who might be on-site during an emergency need to know where and how to evacuate, safe places to assemble, how to shelter in place and what to do if a lockdown is ordered. Train people in first aid, fire extinguisher use, chemical spill containment and other emergency skills. Conduct drills periodically.
- Craft an emergency communications response. Know how you will exchange information with emergency services and others before, during and after a disaster. Employees may need to be told whether, when and how to come back to work. Suppliers may need to know where and how to make deliveries. Backup communications methods like radios can supplement the normal channels of telephones, emails and social media.
- Protect the facility. Be sure fire and smoke alarms are functioning. Sandbags, plywood, pumps and other equipment can prevent or minimize damage during and after an emergency. Contact providers of cleanup and remediation services so they can be on hand quickly and reliably when needed.
- Arrange for financial support. This may consist of a line of credit or lending relationship with a financial institution. It may also consist of learning about and being ready to apply for assistance from the Small Business Administration or another source. Businesses should also check to make sure hazard insurance is adequate.
Emergencies often call for out-of-the-box thinking. For instance, you may want to consider arranging with other businesses, potentially even competitors, to share facilities. By offering others access to your unused offices, spare warehouse space and other resources during an emergency, you may find you can count on them for help in time of need.
The Disaster Preparedness Bottom Line
Assessing your readiness for any of the wide range of disasters that could affect you can be a daunting task. The American Red Cross's Ready Rating Program is designed to help many types of organizations become better prepared. The free, self-guided program is available online and can guide readiness assessment, response design and testing of disaster preparedness plans.
No matter how you approach it, preparing to survive catastrophe will take money and time. Preparedness planner and consultant John Clouse says it's worth it. “To be prepared for disruptions and disasters, you will need to do many things that will not ever make you a profit," Clouse explains, “but doing nothing may cost you far more in the end."
