Recent emphasis on disasters has tended to divert public attention from low-severity, high-frequency occurrences to high-severity, low-frequency ones. The unfortunate consequence is that business owners often forego contingency planning for disasters, believing them to be catastrophic in scope and beyond their control. In fact, the “disasters” most likely to be experienced are of the mundane variety: human errors, equipment failures and third-party failures. There are procedures that can be instituted to mitigate the disruption from such disasters. Those procedures will build more resilient and robust business processes, along with the ability to recover from the larger-scale disasters. Moreover, you will likely realize an immediate return on your investment in contingency both in the form of improved operational efficiencies and reduced insurance premiums. In my own experience, for example, I have been able to negotiate more competitive business insurance premiums by demonstrating a robust business protection scheme addressing not only serious hazards and natural disasters, but also more common disasters.
Third-party failures, for example, disrupt services that you need to operate your business, such as electrical power. This failure can occur independently or as a consequence of a larger disaster, such as a storm. Recall the disruption to businesses in the power outage of August 2003 that left 50 million people without power. Were you prepared then? According to the International Energy Agency, North America faces the risk of renewed power blackouts in the second half of 2005 because utility groups have under-invested in electricity generation and transmission capacity. In the event of a power failure, a power protection plan should address a variety of factors.
Continuity of Communication
When power was restored after the major blackout of 2003, many people were surprised to see that TiVo had recorded their favorite programs during the blackout. That is because the cable signal is independent of the electrical supply. Cable modem, therefore, is perfectly suited for contingency planning and relatively inexpensive. During a power outage, your battery-powered laptop can stay connected via cable modem for $25 or so a month.
Analog phone lines work if your area is experiencing a power outage as the lines are powered by the phone company. Since nearly everyone has a cellular telephone, it is the natural backup solution for your land-based circuits. The question is how to automatically connect land- and cell phone-based service so the cell phone service would take over if the land lines failed. The problem is that once the land lines have failed, it is not possible to forward land-line calls to the cellular phones. In addition, cell phones can also fail in a major power outage as towers to relay signals will be depleted of reserve power.
The solution is developed by thinking in reverse. Provide a cell phone number as your general contact number. Program the phone such that incoming calls are forwarded to the land-based phone when the cellular phone is switched off. If your land-based line fails, simply switch on the cellular phone. Thus, in a localized disaster the cell phone now provides service. In a broader disaster such as a large-scale power outage, when cell phone stations are depleted of power with which to relay signals, use an analog phone to receive and make calls without interruption. (Remember that the phone must be directly connected to the analog line; a hand-held phone will be disabled by a power outage.) In addition to ensuring the continuity of your business operations, this is a good contingency solution for an elderly or disabled relative for whom the telephone is a lifeline.
Another way to ensure that business is running like usual is to sign up with a voice mail provider that delivers messages over the Internet via e-mail. Also consider an integrated voice and fax service. This service often costs less than a regular phone line. Single providers of only voice mail or fax delivery via the Internet are usually not cost-effective. Since the Internet has been designed to automatically re-route traffic if one or many paths no longer work, having an Internet access point (such as from a battery-powered laptop through a cable modem) allows access to e-mail, voice and fax messages. If both the land-based phone service and cell phone service fail, calls or faxes are now forwarded to the integrated service number. The system can also be configured in such a way that it automatically sends a short notification message with a summary of voice or fax messages to a designated cell phone or pager. This service provides additional value as it also reduces unnecessary calls to the cellular phone.
Computer Protection
Even when electrical power is available, there are quality issues, like peaks in voltage as well as micro-outages. Use an uninterruptible power supply unit (UPS), which is similar to a surge protector, but also includes a small buffer battery. The battery will supply energy for about 10 minutes after the electrical supply is terminated. This is sufficient to finish important work and to shut down the system. Most units support an automatic shutdown before the battery is completely depleted. Some buildings supply self-generated backup power. Please note that this power is usually much “dirtier” than power from the outlet. Under these circumstances, consider using a UPS unit that is designed to smooth out erratic electrical supply.
Certain office buildings have back-up generators that provide low levels of power for up to 14 hours after termination of the central electrical supply. During power outages, people often work with electricity delivered from a backup generator, without the benefit of a UPS unit, and damage their computers in the process. Also, remember to turn off appliances and equipment during a power outage as power supply may be erratic when it is initially restored.
Of course, all of the basic measures for preparation apply (keeping battery-operated radios, extra batteries, non-perishable foods, flashlights, bottled water, etc.). Viewed in this way, disasters are not so overwhelming and even simple steps, such as the ones outlined here, can significantly mitigate your risk and protect your business.
A thorough business protection plan should address risks such as third-party failures, including electrical power and Internet service party providers. It should also set forth the efforts you have made in training your employees. Share that plan with your commercial insurance carrier and invite their critique; you may be able to demonstrate that your business is a superior risk worthy of more competitive premium rates.
