Failing to Prepare for Severe Weather is Expensive
The kids are staying at home due to snow, and the roads won’t be clear for a few days – let's just hope that the power doesn't go out! Sound too familiar lately?
This year's winter has experienced extremes that some areas of the country have not seen for decades. The northwest corner of the country witnessed 20-year snow records being broken, while the Chicago School District closed schools for two days as temperatures dropped to 16 degrees below zero.
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What is extreme weather costing us this year?
The January 2014 Global Catastrophe Recap report (based on Aon Benfield's Impact Forecasting catastrophe model), estimated that direct economic losses caused by severe weather will total $3 billion, while insured losses will top $1.4 billion. (See how this compares to the total losses from disaster in 2013). Although these reported figures are alarming, it is important to note that everyday disasters, like supply chain interruptions, leaky pipes, and power outages are also critical to consider. Disasters are troubling at every level, so preparedness planning needs to account for “simple, everyday problems,” just as much as major catastrophes…both can be expensive.
What are the common problems that businesses face from severe weather?
Supply Chain Interruptions – Unfortunately the movement of goods is always interrupted during a snowstorm. FedEx trucks are often the only vehicles on the road during a snowstorm because the company realizes how valuable their shipments are for businesses – and they have a contingency plan (in most cases) to continue deliveries during a storm. But, what about materials you rely on that are being shipped by a different carrier? Or what about the products that never make it on a truck because the manufacturing facility experiences a power outage? Planning for these types of “what if” scenarios are a critical part of your business continuity strategies.
Employee Access – How many employees does it take to run your business operations? That number is tested quickly during a storm. Employees have various degrees of comfort in driving to the office and it’s often unpredictable when a snowstorm hits whether they will be able to make it in or not. Setting up a remote office outside the impacted area is just one way to counter the impacts weather can have on productivity. Another option would be to ensure each employee is able to work from home.
Perishable Goods – Transit suppliers know that “time means money,” but also realize that a spoiled shipment of perishables (i.e. foods, liquors, pharmaceuticals, etc.) during a storm can be a headache for all involved. So, how do you prepare your shipments when a storm is looming? You need to ensure that warehouses and transit suppliers have the means to address heat or cold temperature swings, and have accessible insulated containers to help address fast temperature changes. Making sure your suppliers, partners, vendors, and supply chains also have a disaster plan in place is key.
Structural Damage – Are you familiar with how fast the gutters of your building fill up with snow and ice? This type of weather effect can quickly cause property damage that won't always be apparent until the actual damage occurs (i.e. the roof collapses). Businesses occupying older buildings especially need to be aware of leaking roofs, ice dams, broken pipes and need to be ready with a plan should an event occur…this is especially important for hotels or medical facilities that have the human element to worry about during a disaster. Having a resotration partner to call that you trust can prove to be one of the most critical elements of your disaster planning.
How can you shore-up your plan?
Start with a Pre-Loss Risk Assessment. Risk Managers need to know what assets are at risk and what safety concerns need to be addressed. The beauty of a risk assessment is that it helps you understand what is pressing, as well as establish your top priorities when preparing and dealing with the aftermath of a disaster.
Once you know your risk elements, a business continuity plan will help your business react better during times of chaos and help reduce recovery costs. Nowadays, infrastructure protection plans are becoming more common – in fact, just two years ago only 15 states in the U.S. had climate-protection plans which address flood, fire, and other elements…currently 36 states have plans. Why not “jump on the bandwagon”?
Click here to learn more about how Interstate can help you address your business continuity planning.