Whether it’s a rapid wildfire, man-made fire or any other disaster, waste and recycling companies should have a detailed and tested disaster response plan in place, as well as ensure full coverage in the event that damage and/or injury occurs.
Jay Shelton
Disasters can strike anytime, anywhere, and often with little to no advance warning. It’s important to understand the types of disasters companies face, including natural vs. man-made. Every owner should have a recovery plan in place that’s specific to exposures based on company size, geography (e.g., coast vs. inland, heat vs. cold weather), technology, history, human error, physical and regulatory. The following are specific types of disasters companies should consider preparing for:
Natural Man-Made
Tornado Fire and Explosions
Hurricane Terrorism/Bomb Threat
Earthquakes Act of Vandalism
Severe Storms Industrial Accidents
Foods Transportation Accidents
Wildfires
Disaster recovery planning is a process of preparing for natural catastrophes that may result in business interruption, property loss, financial loss and potentially loss of life. Try to imagine the challenges and struggles your business would face in the wake of a natural disaster like Hurricane Katrina or Superstorm Sandy. It’s scary to even consider. What’s scarier is that a small fire or flood could have the same effects as Katrina or Sandy if it forces you to shut down. A good recovery plan should help to ensure the survival of the organization, protect corporate assets and control financial loss, and then facilitate the resumption of business.
Starting a Planning Process
Start the business continuity planning process by establishing a planning team. Typical goals of your plan should include:
- Protecting the safety of employees, visitors, contractors and others at risk
- Maintaining customer service by minimizing interruptions or disruptions of business operations
- Protecting facilities, physical assets and electronic information
- Preventing environmental contamination
- Protecting your organization’s brand, image and reputation
Also identify any critical operations that would, if disrupted, hinder the ability to deliver goods and services. Here are a few tips that may help when putting together your continuity plan:
- Set goals for what you want to achieve within your strategy. For example, create answers to questions like: “Where do we move if the disaster is too great?”
- Develop a plan for each type of disaster and how to continue work immediately following one.
- Ensure everyone in your organization knows and understands the plan that’s been made.
- Establish a planning team.
A Living Document
First, a waste and recycling company must understand that a disaster plan is a living document that must be maintained and updated periodically to ensure it can be executed when a disaster occurs. The midst of a disaster is not the time to update phone numbers and other essential information. It’s important to clarify the various disasters that can be encountered given the season, location and other outside elements. Creating a comprehensive business continuity plan addresses steps specific to your organization and areas of risk. A few examples include utilities backup, mutual aid, disaster recovery services, data backup, as well as internal and external communication procedures. There are four major steps to creating an effective business continuity plan:
- A threat assessment allows a company to understand what disasters will have the greatest impact on the business.
- Critical function identification is key to determine what operations could be disrupted and how to navigate through it.
- A business impact analysis helps a company prioritize the resources and effort.
- Prevention and mitigation planning creates a sequence of steps an employees need to take to prevent damage and restore operations. Being able to effectively implement and maintain the plan is essential, so tests should be conducted annually.
Minimizing Your Risk
In 2011, an Illinois-based manufacturer of water gardens suffered the effects of a disaster after their roof collapsed post-snowstorm. As soon as the disaster occurred, all of the chief executives fell in line under a single leader, which allowed for things to move faster in the decision-making process. The team understood the desperation of the situation. They moved into a temporary location, used a forensic accountant and created a temporary call center. They have since recovered thanks to their disaster planning.
A major plastics recycler with well-known clients like Starbucks, was having work done to the facility’s roof in Ohio. A contractor left a tool behind that started a fire, burning 75 percent of the facility down. After the fire, the recycler approached their insurance broker for help on what to do next. Security was hired to manage and protect the recycled product. The broker also recommended bringing in a third-party adjuster. However, because the company didn’t have a disaster plan in place and chose to stay underinsured, the recycler is now suffering a major financial setback.
Having a Plan in Place
Whether it’s a rapid wildfire, man-made fire or any other disaster, waste and recycling companies should have a detailed and tested disaster response plan in place, as well as ensure full coverage in the event that damage and/or injury occurs. Otherwise, your business could quickly become subjected to a $1 million (or more) loss that will severely impact bottom line.
Jay Shelton is the Senior Vice President of Risk Management Services at Assurance Agency (Schaumburg, IL). He is an expert in integrated and enterprise risk management across multiple business industries. He has hands-on experience in performing a full range of risk, insurance management, and compliance functions as well as extensive experience in emergency response, business continuity planning, cyber risk mitigation and breach management. He is a member of the Risk Insurance Management Society.
Jay can be reached via e-mail at [email protected] or visit www.assuranceagency.com.