Jun. 5--With the start of another tempestuous hurricane season, businesses -- large and small -- might want to dust off their hurricane preparedness manuals. After all, the consequences of not having a Plan B if a hurricane knocks out the power or destroys a building can financially drown a company.
Consider this: In the first year after Hurricane Andrew, about 50 percent of affected business in Florida went bankrupt, said John Phelps, director of risk management at Blue Cross and Blue Shield of Florida. That number rose to about three-quarters in the second and third years after the hurricane struck, he said.
A major reason: Business went under because they couldn't recover or do so fast enough.
"They lost business," Phelps said, "employees found jobs elsewhere."
About 68 percent of local small businesses say they do not have a current and effective recovery plan to deal with disasters like a hurricane, according to a CenterBank survey of about 7,500 area firms.
Jacksonville-based W&O Supply last year learned the importance of having a disaster plan -- the hard way.
Hurricane Katrina wreaked havoc on the distribution company's Mobile, Ala., warehouse, ripping off the roof and knocking down the walls. The warehouse was shuttered for two weeks. W&O's New Orleans warehouse suffered minimal damage but the extensive damage to the city kept the distribution center closed for nearly five weeks, Chief Financial Officer Peter Osterman said.
In the end, Katrina cost W&O more than $1 million in lost revenue. The company estimated its recovery and rebuilding tab totaled upwards of $500,000 before insurance payouts.
This hurricane season, W&O has instituted measures -- including the relocation of communication infrastructure to a more secure off-site location -- to keep its operations humming.
"You can be out of business if you don't have the necessary resources and precautions to weather the potential impact of a hurricane," Osterman said -- a dire warning on the eve of the 2006 Atlantic hurricane season, which could churn out up to 16 named storms including six major hurricanes, according to the Associated Press.
How to Prepare Your Business
The Times-Union has compiled tips from the U.S. Department of Homeland Security's Federal Emergency Management Agency and CDW Government Inc. that businesses can follow to help with recovery if disaster strikes.
1. Identify and appoint a team of first responders to tackle disasters.
Blue Cross has a team of about 21 emergency responders. The team, which includes workers from human resources, claims processing and IT, are available 24/7 to respond to adverse events like a hurricane. They evaluate the situation and decide what needs to be done to support critical business operations like customer service and payroll processing.
2. Back up sensitive data and store copies of it off-site.
The MPS Group houses its Information Technology infrastructure, including servers, at a Southside building which can withstand Category 4 hurricanes. If a hurricane is expected to hit the First Coast, MPS overnights back-up tapes of sensitive information like payroll data and customer and employee databases to a site in Atlanta. The company sends a team of employees with the data. If local operations get hit, MPS can keep paying employees around the country and place clients with its contract workers.
3. Have backup generators and alternate power supplies for critical applications.