Hurricane Preparedness for Businesses Part Four: Investing in Disaster Planning

Disaster planning is an investment that can save your company in the event of an emergency, and there are methods of creating a useful plan on any budget.

This is the fourth installment of a five-part series offering answers from Tom Serio, director of business continuity management for Office Depot and Jon Toigo, CEO and managing partner of Toigo Partners International, on the following topics: Disaster Recovery Planning, Protecting Your People, Protecting Your Data, Investing in Disaster Planning and How to Create a Disaster Recovery Plan for Your Business.

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Part 4: Investing in Disaster Planning

Q. Why is it so important for companies to prepare?

SERIO: Preparing for a disaster is about business survival.

Forty-three percent of businesses damaged in a disaster that do not have a sound recovery plan close for good. That figure rises to nearly 60 percent after a year, according to the Association of Small Business Development Centers. Businesses, particularly small- and medium-sized ones, can’t afford to not be prepared. People work hard to build a business. You don’t want to see it ruined, especially when it’s preventable.

Q. How can you minimize the cost of disaster planning?

TOIGO: Disaster planning does not have to be a costly venture.

Depending on the amount of information you need to store – and this depends on what data is most important to your business’ survival – there are a number of affordable back-up media solutions available.

Consider this: A $1 CD or DVD or $20 flash memory drive can make the difference between business survival or business failure. For larger volumes of data, consider using external tape or hard drives, or even a laptop – portable and cost-effective solutions for storing information.

Q. How much of an investment can businesses expect to make in disaster planning?

TOIGO: The cost of your disaster recovery planning measures will depend on the nature and size of your business, the types of preventative and protective strategies required and your budget.

Unfortunately, there is no magic formula for determining how much you should be spending on disaster recovery – and certainly, no golden amount that will save your business. Most certainly, the amount of money spent on disaster prevention and data protection should not exceed the value of your data itself.

The problem with trying to find that magic number is that we don't know the frequency of an outage event to any degree of certainty. There are no actuarial tables for disaster. For example, hurricane centers have about 120 years of hurricane data and still have no way to know when or where a hurricane will hit.

Q. How can money best be spent to ensure protection for your business?

TOIGO: People ask this question a lot. My answer is always the same. Spend your money first on disaster prevention. A high percentage of disaster events are avoidable through sensible things like good security and management and fire detection, annunciation and suppression. Power protection is also important. I like to think of these proactive prevention measures as a way to safeguard your human assets. Protect your people first.

Secondly, data protection is key. Data is your other irreplaceable asset, and without a copy of your critical data, it is impossible to fully recover from any disaster.

Additionally, businesses should plan to invest in creating a disaster recovery team and support the team’s development and ongoing testing of the plan. That way, the plan stays in synch with the business as the business changes and you will always have a cadre of personnel who are prepared to act rationally in the face of a great irrationality.

Q. Is it true that small business aren't preparing for disasters?

TOIGO: Repeated surveys show that fewer than 50 percent of businesses do anything whatsoever to prevent or cope with a disaster.

Small businesses, in particular, assume disaster planning comes with high costs they can’t afford and/or requires specialized skills that they don’t have on staff. Sometimes, small businesses even think that being smaller means that they have little chance of recovering from a major calamity.

This, of course, is not true. It’s the small- and mid-sized companies that tend to be more vulnerable precisely because they don’t think that's the case. The truth is that it’s a lot easier for small businesses to get the job done.

Q. How do you create management buy-in for disaster planning?

SERIO: The key is to build a business case that outlines the value of planning beyond simple risk reduction. Disaster recovery planning is not just “more than insurance.” Consider how the analysis has the potential to improve the cost-efficiency of business operations and technology investments, for example.

Help management prioritize the need for disaster recovery plans by outlining the recovery goals. Keep in focus which functions are critical to the business' survival. Support these efforts by collecting data, analyzing risk and determining your objectives and strategies.

Q. How do corporations differ from small businesses in terms of disaster planning?

SERIO: Disaster planning and recovery is not an issue where the size of your business matters. Whether you have a small business or large corporation, the tactical considerations are the same.

Determine your mission-critical business processes; the technology that supports these processes; the data these processes produce and use; and how and where that data is presently being stored.

Data is the core of the recovery process and it is essential to understand its importance within the context of the business if you are going to protect it.

That said, the complexity of the disaster recovery strategy required in a large corporation is commensurately greater than what is required in a smaller firm. Greater complexity usually entails larger budgetary requirements. A small firm may be able to build an effective recovery strategy quite affordably; a larger firm may be looking at a significant investment.

Q. How can a small business go about physically protecting their location?

TOIGO: As essential to protecting your people and data is protecting the structure that houses them. Inspecting and maintaining the structure of your building should be carried out by qualified professionals. Disaster avoidance commonly includes assessing current physical security and other systems.

Also, make sure you know the details of your flood insurance and other hazard insurance policies, specifically which items are covered and under what conditions. Most policies do not cover flood or earthquake damage and you may need to buy separate insurance for these threats.

But there is good news: Many carriers will actually reduce your insurance premiums for business continuity insurance if they know you’ve taken the above precautions. So, definitely advise your business insurer about your planning.

Q. What is most likely to sustain damage during a hurricane?

SERIO: Facility damage may be the most visual result of a severe storm and is certainly what fills our TV screens before, during and after a hurricane. But the real killer of businesses, relative to weather, is more often flooding and loss of extended infrastructure services such as transportation, utility power and telecommunications.

The National Fire Protection Association says that flooding is the number one cause of disaster across the board. Obviously, with water on the floor, it is dangerous to operate electrically powered equipment.

Plus, after last year’s hurricanes in South Florida – which Office Depot experienced firsthand – months went by after the cessation of storm conditions in which hundreds of thousands of people were without power, land line phone service or Internet access.

Going back to Hurricane Andrew, a few years ago, most banking ATM networks were shut down and people were unable to get cash to pay for repairs to their homes and offices — or milk for their kids.

Bottom line: Hurricanes can play havoc with the extended infrastructure that we depend on and often take for granted. The impact of the storm often goes on for a protracted period of time.

Q. What are some ways to protect your business from losing customers when a hurricane hits?

SERIO: Simple: Be Prepared.

A business’ ability to get back up and running benefits its customers, too. Because Office Depot was able to re-open its impacted stores fairly quickly following the major hurricanes in 2005, our customers were able to come to our stores to charge cell phones, use the Internet, get batteries, copy important documents and more.

These resources helped Office Depot strengthen relationships with its customers and were vital in helping them recover from the storms.

Tip From the Expert:

SERIO: Those who prepare for the possibility of a disaster are much more likely to recover than those who don’t. Bottom line: You can’t afford not to be prepared. It’s the wisest investment you’ll ever make.

Check back Friday for Hurricane Preparedness for Businesses Part Five: How to Create a Disaster Recovery Plan for Your Business.

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