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8 Steps to Create Strong Disaster Management Plans

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A core responsibility of any risk professional is planning for any possible disasters your business might face. These could be man-made, such as a data breach or accidents involving machinery, or natural, like a tornado or flood.

Disasters and crises affect different organizations in different ways—one company might consider something a catastrophe, while another may not even notice a change in its workflow. It is important to look at your own business operations and evaluate what you would consider a crisis. Generally, business crises fall into one of three categories:

  1. A danger to the physical safety of employees or customers
  2. Loss of income or means of making income
  3. Events or people negatively affecting your business reputation

In many cases, the crisis may fall into more than one of these categories. An accident in the workplace that is hazardous to employees can impact the company’s income because the factory has to shut down. This can also negatively affect the company’s reputation if it turns out that the company did not provide a safe working environment.

With even the best risk management programs, no organization can avoid all disasters completely. Risk mitigation often comes down to crafting the best plans possible for the moment disaster inevitably strikes. These eight steps can help risk professionals develop strong crisis and disaster response plans:

1. Define The Types of Crises You Could Face: There is not a one-size-fits-all approach to a crisis management plan. Working out what is likely to affect your business specifically can relate to your geography—areas that get hit by severe storms or earthquakes must include those potential disasters, and what knock-on effects they may cause. For example, storms may cause flooding, loss of power, or blocked roads that make it difficult to reach your premises. The type of crisis can also be specific to your industry. Employees in a manufacturing facility are likely at greater risk in a physical disaster than those working in a tax consultancy, for example. Security should also be a consideration. Is your business likely to get robbed of cash or equipment? Do you have high-profile proprietary information that makes you more likely to be the victims of cybercrime?

2. Triggering the Plan: Including levels of urgency in your plan will help people responding to the crisis pinpoint how significant the event is, and how much of the plan must be put into action. A step-by-step approach for specific scenarios can be helpful and cover dealing with man-made and natural disasters in different ways. The risk for each will be unique to the situation and knowing when and how to trigger a response is key. The plan should include how and when to escalate the response should the crisis worsen, as well as how to identify when the crisis has passed. It can be helpful to use red, yellow and green system to indicate severity and urgency, and this classification approach is easy to adapt to any scenario.

3. The Base of Operations Location: Accidents or natural disasters may cause your usual place of business to close temporarily or permanently. In your plan, designate a backup command center in an alternate location for dealing with the crisis until you can get back to work. This location can be your company’s operations hub, a point for gathering after a crisis, or where you know your sensitive and important data backs up. If a natural disaster has made travel dangerous or roads impossible to navigate, you will also need a virtual base of operations—some possibilities include message boards, chat apps or email. With so many employees working remotely because of COVID-19, this may be easier to implement now.

4. The Chain of Command: Ensuring a clear chain of command so that there is no arguing or confusion when people and the business are at risk. Wherever possible, appoint a back-up for each person in charge so if someone cannot perform their duty, it falls to the next in line.

5. Internal and External Communication: When a crisis compromises an office or business, communication can become tricky. Have a clear set of rules for how you get information to and from your employees, what information you must and must not share with those outside of the company, and how to achieve that. This part of your crisis management plan can save lives and stop rumors from spreading.

6. Necessary Resources: Though this will depend on the nature of the business, consider first aid and safety equipment if you are likely to have injuries or get cut off because of poor weather. Also, think about alternate communication methods if mobile phone towers go down or the electricity gets cut, as well as access to your sensitive data, such as employee contracts and supplier agreements.Include all necessary resources you would need to operate and highlight any alternate replacements. For example, if a storm knocks out your power, you may have a generator.

7. Training: It is no good putting a crisis management plan together and not giving the relevant people the training they need to execute it. For example, the people you name as first aid providers or unit leaders need to know what is expected of them and undergo the necessary training. If you have safety equipment on your premises, like fire extinguishers or emergency release valves for machinery, you need to educate all stakeholders how these work.

8. Testing the Plan: Finally, test that your plan actually works. Review it with staff and conduct safety drills regularly—every two months at least. Look for any weak points or flaws in the plan before an actual crisis.While it may not be possible to anticipate everything a disaster brings, you can set up several response plans and test each one individually. These plans can tie in with your standard safety drills, or stand alone, depending on the nature of the event anticipated.

A crisis management plan is integral to every business, no matter its size, scope, or sector. By preparing for various potential disasters, you can take action when needed without putting your organization, employees, or yourself at unnecessary risk. 

Open Offices and Holidays: A Parade of Risks

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‘Tis the season for many businesses to stay open through the holidays and for some to take part in the tradition of partying or watching a parade warmly from behind office windows. That’s why businesses located near public events should inform employees of how their offices will be impacted during the holiday season.

Parades pose various operational risks to property owners and businesses, both inside and outside their buildings. On Nov. 23 alone, at least five large parades will inch their way through the streets of major cities like Chicago and Detroit. Macy’s anticipates 3.5 million spectators to pack New York City’s streets for its annual Thanksgiving Day Parade. That means 2.5 miles of barriers and street closings in the “frozen zone” between 77th and 34th streets, and businesses in the country’s most congested city should prepare for some disruption.

Theresa Morzello, the managing director for asset services for CBRE in New York City, has advised many companies who stay open or host events coinciding with parades and holidays. She said the first steps in mitigating disruption involve communicating with the event organizers and disseminating that information to tenants.

“This way they’ll know, for example, if one of their building’s entrances will close because of a parade,” Morzello said. “We also make sure that employees and their guests know the protocol for providing documentation for entering and exiting. That is usually handled in advance and lists are provided to security. And there are protocols for what to do when someone doesn’t have it. These are all things we do on a daily basis, but amped up a few levels because of the holidays.”

Morzello also said that property managers often try to utilize vacant office space because there is less potential for damage or disruption there. Wherever the gathering takes place within CBRE’s properties, she advises tenants to consider the following:

Hire elevator operators to help keep guests on their assigned floors.

  • Obtain a temporary alcohol license, if necessary.
  • Confirm that outside caterers are insured.
  • Address if the windows are operable and ensure they are kept closed.

But parades and crowded events are not relegated to big cities, as many major retailers take part in the festivities. Acadia Realty Trust manages hundreds of retail and office properties in the U.S. and Kellie Shapiro, vice president of risk management said clearing a physical path is the first step to mitigate safety risks during a high-traffic season.

“We issue a moratorium on any work during the holiday season. We email tenants reminding them to get everything done before Thanksgiving,” she said. “From then until New Year’s is not the time to have scaffolding and things like that.” She added that capital improvements are suspended across most of Acadia’s portfolio to avoid interfering with tenants’ operations during their busiest season.

Businesses can easily lose track of who’s coming and going during the busy holiday season, Shapiro noted. Acadia’s focus is on knowing its vendors, and she reminds tenants to be diligent about vetting third-party contractors for the sake of safety and reputation.

“You can protect your company by being diligent about who you bring in to your site. You should know who your contractors are – you don’t want to let some criminal just walk right in because you handed over the keys to your building,” Shapiro said. “You would hope tenants, if they saw something suspicious, would pick up the phone. We’d all like to secure something 100% but you have to know your limitations.”

Public safety in the U.S. has been headline news, considering the recent high-profile violence involving weapons and automobiles in just the last two months in Las Vegas, California, Texas and Manhattan. In a recent interview with Risk Management Monitor, Rezwan Ali, risk solutions group head of security at Falck Global Assistance, discussed how businesses and employees should review their emergency plans during high-volume times. He maintained, however, that the odds of being impacted by a terror attack is very low.

“When participating in larger events, such as the Thanksgiving Day Parade in New York, people tend to focus only on the parade and their phones taking pictures and posting on social media,” said Ali. “However, it is important to stay alert and aware of one’s surroundings. Not just to be prepared for terror, but also to prevent being a victim of crime. It is recommended to download apps either provided by the authorities or by media outlets that generate alerts allowing you to get direct notifications should anything happen in your vicinity.”

Keeping Parades and Events Safe for Businesses and Employees

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Holiday parades will be marching down many U.S. city streets during the next six weeks, with millions of revelers expected to attend. And while these are historically joyous occasions, safety is a top concern for businesses located near the festivities—especially considering the high-profile violence that has recently dominated headlines. Rezwan Ali, risk solutions group head of security at Falck Global Assistance, which advises companies about security, safety and travel risks, spoke about the challenges and best practices faced by businesses and employees located near parade routes.

Risk Management Monitor: How are companies responding to the rise in low-tech terrorism and violence?

Rezwan Ali: Companies have become more aware of the need for crisis management. Recent terror events in cities such as Paris, London, Las Vegas and New York have shown companies that duty of care is much more than just health and safety – it is knowing where your employees are traveling and aiding them if affected by terror or violent events. As companies become more globally oriented, their employees are required to travel more, which expands the company’s duty of care responsibility and creates a need for travel risk management. In recent years, there has been an increase in the demand for travel risk management, which originates in a company’s acknowledgement of providing duty of care services to travelling employees to mitigate the possible impact of attacks on the business, its reputation and employees.

RMM: What steps can businesses take to prevent disruption?

RA: The best way to mitigate disruption caused by terrorism is to be prepared at both the business and individual level. On a business level, companies should implement a crisis management process and a contingency plan. A crisis management process includes appointing a crisis management team and training the organization using various scenarios. The contingency plan provides guidelines on how to maintain business as usual when a crisis occurs and works in parallel with the crisis management process. On an individual level, training can provide employees with tools to cope with stressful situations and alleviate the impact of an incident. When employees know how to manage demanding situations, the effect on the company will also be minimized.

RMM: How can businesses located near a parade route or major event protect their employees?

RA: All businesses should have emergency and evacuation plans, which can be applied in the event of emergency. These plans should cover procedures for evacuating the office, safe areas and roles and responsibilities. Businesses located in areas identified as potential targets for terror attacks should incorporate specific emergency measures related to terrorism into their plans. They should also ensure that all employees know and understand that the emergency plans exist.

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These plans could include guidelines for what to do should a terror attack take place outside the office, as well how to react in the event of an active shooter. It is crucial that these plans and procedures are trained, exercised and tested.

Having an office in an area prone to various incidents requires the company to be informed of relevant developments. Sound intelligence can alert the company of an event, enabling quick initiation of applicable plans.

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Many companies use their network to provide intelligence or rely on local media to provide alerts. Regardless of the information, it is important to use trustworthy sources to ensure validity. The company can choose to develop a trigger system that determines whether the alert should activate any emergency procedures.

RMM: How likely is it that someone will be a victim of terrorism or violence during a large event?

RA: Although terrorism has severe consequences, the likelihood of being a victim of terror is low when compared to other risks such as traffic accidents and illness. The impact of a traffic accident on the individual can still be high, while the impact on the business will be minimal, in most cases.

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 What makes terror so dangerous is not likelihood, but the fear of it happening. Terror literally means “fear,” and it is the uncertainty and severity of terror that is pivotal for how we perceive it. Employees may express a somewhat irrational fear that must be addressed and taken seriously by the company, as it affects the employee and his/her work.

Making the Most out of a Crisis

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CALGARY, ALBERTA, CANADA—Suppose your company experiences a major hurricane, tornado or fire: Property is destroyed and your business is stalled, meaning customers are left waiting. But there are buildings to be rebuilt and equipment to be replaced, and the claims process hasn’t even started. This is when the risk manager’s skills at placing the company’s insurance coverage and negotiating for the best payout can not only demonstrate their true value, but can put the company back on course, according to experts here at RIMS Canada’s annual conference.

“When there’s a serious property loss, this is the time for the risk manager to shine, because up until then it’s about premium, premium, premium,” Tom Parsons, manager of risk management at Fairmont Raffles Hotels International in Toronto said during a RIMS Canada Conference session. “Up until a serious loss occurs, I don’t think you feel the impact that you can give back to the company. Because what we do is buy insurance, so it has to work. It is what you helped craft and build into your policy through the years. You have created a policy that is robust, and that is going to cover everything—you hope.”

Among the examples cited was a soft drink bottling plant flooded with eight feet of water following a hurricane. While the company’s high-speed bottling equipment was damaged and would need to be replaced, explained Jeffrey Phillips, managing director in PwC’s U.S. forensic advisory practice, the issue was that floodwaters were highly contaminated due to a number of chicken and hog farms in the area. As a result, the company determined that the building could not be used for any type of food processing and would need to be demolished. The insurer, however, argued that the walls could be sealed, containing any contaminants. The company had found a competitor to do some of the bottling, but it wasn’t enough to fill their orders, Phillips said.

Because delivery of the new bottling equipment was slated to take months, there was also a large business interruption period being covered, he said. This is when innovation came into play. The bottling company was able to show the insurer that buying another plant rather than rebuilding would put them back in business sooner, cutting back on their losses. The insurer agreed and sent them a check. As a result, the company purchased a larger facility in a better location.

“They were up and running in six months—the business interruption had stopped,” he said. The better location also meant reduced shipping costs and the company gained market share. Because the company was able to make the case to its insurer, both came out ahead in the long run.

Phillips recommended that companies negotiating after a crisis “communicate, communicate, communicate” with their insurers.

They should also get their insurers to sign off on major contracts such as scope of work, rates and overhead and discuss changes to operations or facilities with the adjustment team and agree on scope of property damage repair or replacement whenever possible.

Insurers will typically push to return the facility to pre-loss condition, “unless you can prove the changes will save them money,” he added. “Insurers will not be creative for you, they don’t know your business or your goals.”