Catastrophe plan always work in progress

The folks at Narex Inc. were very lucky to have hired Scott Bell when they did.

The disaster recovery/business continuity manager started his job at the Genesee-based company last March. Within a week Colorado was hit by the Blizzard of 2003, a storm the Rocky Mountain Insurance Information Association characterized as “the most expensive winter storm in Colorado history.”

Luckily for Narex, Bell had spent his first week developing snow emergency procedures, so when the company headquarters was buried in five feet of snow, basic operations could continue even when staff couldn’t make it to work.

SPONSORED CONTENT

Exploring & expressing grief

Support groups and events, as well as creative therapies and professional counseling, are all ways in which Pathways supports individuals dealing with grief and loss.

According to a study conducted by Robert Half Management Resources, 57 percent of responding companies currently have a business continuity plan in place to recover from a disaster. But that number is probably optimistic, said Robert Niehoff, a consultant with Broomfield-based BCP Advisors. “If it’s large companies 57 percent may be correct, but for small companies I’d say it’s way high.” Robert Half responses came from U.S. companies with more than 20 employees.

Niehoff continued that testing is critical to evaluate the effectiveness or capabilities of a plan. He guessed that 25 percent of companies with plans may have tested them. Types of test include: desk check, peer review, structured walkthrough, mock disaster and others.

Despite the March blizzard, in which insured damage reached $93 million, Colorado doesn’t generally experience large losses from winter-related storms. By comparison, the next worst winter storm was in October 1997 that had insured damage of $10.5 million.

Below the radar

The most costly catastrophe in state history was a $625 million hailstorm that battered the Denver-metro area July 11, 1990.

These numbers were compiled by the Rocky Mountain Insurance Information Association but include only personal homeowners and automobile claims, not commercial claims, said Executive Director Carole Walker. According to Walker, it’s much more difficult to quantify commercial insurance claims because “commercial policies will vary from company to company and what type of business it is. We don’t put out a number unless we think we can get an accurate one.”

The New York City-based Insurance Information Institute confirmed that commercial insurance claims statistics typically are not compiled.

A catastrophe as defined by the insurance industry is a natural disaster that causes at least $25 million in insured damage.

But Professor Dennis Mileti, director of the Natural Hazards Center at the University of Colorado at Boulder, looks at a disaster not in terms of financial losses but in terms of community response. A disaster is any hazardous event “that exceeds the capacity of the local community to deal with it,” he said.

“If a building is on fire and the local fire department can handle it, it’s not a disaster.” Mileti doesn’t differentiate businesses from the rest of the community. “There is no subset (of disaster) that faces business. They face the community of which business is a part.”

Mileti, along with Professor Susan Cutter, director of the Hazards Research Lab at the University of South Carolina in Columbia, S.C., has put together a database that catalogs all disasters and losses that have occurred in the United States between 1975 and 1998. According to those numbers, Colorado’s most common disasters are flood, high wind, hail, tornado, landslide and avalanche.

So far wildfire has been just a blip on the screen, Mileti said, but “the big one,” much like the major earthquake expected in California, is coming, he predicted.

“We’re moving in the direction of creating a multiple billion-dollar disaster in our future by letting people build in areas that burn,” he warned.

“We know they burn. The really ludicrous thing is we know how to build in those areas such that the buildings don’t burn, and it’s not complicated.”

He said there are only three requirements to building a structure that can survive a fire: a noncombustible roof, noncombustible siding and no combustible material growing on the ground out to a certain distance from the structure.

The problem is, he said “We’re pretending fires don’t happen and not building that way.”

In terms of business continuity, the Disaster Recovery Journal’s online glossary defines disaster as “any event that creates an inability on an organization’s part to provide the critical business functions for some predetermined period of time.”

Since a business disaster could be caused by “any event” — from the worst-case scenario of terrorism to a relatively minor power outage — the best way for businesses to survive is to have a plan, said Ellie Myler, an consultant based in Longmont who works for Valley Forge, Pa.-based Entium Technology Partners LLC. “It’s better to have a plan to deal with any type of crisis situation,” Myler said. “You can evacuate your building, but what happens after that?”

Robert Niehoff knows the “after that” situation very well. Prior to becoming a consultant, he was corporate contingency planning manager for Oppenheimer Funds Inc. He was the man in charge in the aftermath of 9-11 when terrorists destroyed the World Trade Center, where the mutual fund firm occupied floors 31 through 34. Because of planning, Oppenheimer was able to move operations to a temporary location and stay in business.

“I like to say I was helpful in saving a $130 billion company,” Niehoff said.

In their consulting work, Myler and Niehoff start building a business continuity plan by asking the client to list the most critical business functions without which the business could not continue operations. Then they prioritize functions by asking, how long could you go without a particular function — minutes, hours, days, weeks?

They also take into consideration the types of disasters that befall particular geographical areas — Colorado, for example, is prone to winds but not hurricanes. The plan is written around what’s important to the company, including how much it’s willing to spend and how much risk it’s willing to take. Then the plan is tested and revised on a continuous basis because a business continuity plan is always a work in progress. The best-case scenario is for a plan never to have to be used in an actual disaster.

Priority list

As for Scott Bell at Narex, once his snow emergency procedures were tested by real life, he got back to work focusing on the information technology area. Narex provides Web-based solutions to the credit and collections industry, so its business functions rely heavily on data and the Internet. Because of the snow and fire danger of the company’s mountain location, Bell had the company’s data center moved to a collocation facility in a less weather-affected area and set up a secondary data center for critical processes.

Narex was acquired by San Rafael, Calif.-based developer of credit scoring systems Fair Isaac Corp. on July 28 for $10 million cash.

But the acquisition hasn’t affected Bell’s responsibilities. He’s expanded emergency procedures that include an evacuation plan and an emergency supply cabinet. He set up secure procedures to access the company network from home if no one can get to the headquarters.

Next on his priority list is to finish information technology recovery procedures to improve application recovery, he said. Then he’ll address the various business units and write continuity plans for their individual circumstance. Unlike large companies that have departmental continuity planners, “it will all fall on my shoulders,” Bell said. “With such a small company I’m lucky I have an assistant. That’s my contingency plan.”

Bell said the plan should be done by the end of the year. But that won’t be the end of his job. “Then it’s going to be maintenance and who knows. There are always more improvements that you can make. As the company grows, there will be more things to expand upon.”