September 2019’s Hurricane Dorian Highlighted the Importance of Updating Disaster Plans
While the East Coast largely avoided Hurricane Dorian’s wrath, the strong, unpredictable storm highlighted the importance of disaster planning, particularly for small businesses. In addition to weather, businesses can be impacted by everything from earthquakes to fire to terrorism. Even the loss of electricity or internet service for a significant time period can be crippling to many companies.
Although the causes of natural disasters are out of our control, businesses can take steps to minimize the fallout. The close call with Dorian reminds companies to update disaster and business continuity plans. While the specific policies and procedures would normally be specifically tailored to the nature of your state’s business and any specific regulations that govern them, there are certain issues that all disaster plans may address:
Widespread service disruption: Businesses should prepare for a potential widespread lack of basic services within their service areas, i.e. telephone and internet services, electricity, fuel, and water, by identifying generally suitable alternative emergency facility locations and envisioning a process for and the logistics of facility relocation. When considering alternative locations for facilities, such planned geographic diversity can help employees focus upon the logistics of getting up and running in the event of an actual regional event.
Telecommunications services and technology: Business continuity plans should certainly consider how to keep technology and telecommunications systems up and running. Options to consider include planning for using multiple providers, secondary phone lines, cloud technology, temporary phone lines, and mobile telecom units.
Data protection: Plans should address the storage and protection of business and customer records, including multiple backups of digital documents and offsite storage (at least 50 miles away) of physical documents.
Communication plans: Businesses should consider and plan for alternative means of communications with customers, vendors, service providers and regulators. It may be helpful to have emergency communication protocols and even draft emergency messages already available so as to allow communications to take place quickly and efficiently.
Regulatory and compliance considerations: Businesses in some industries, such as financial firms under the oversight of the Securities and Exchange Commission, are required to adopt business continuity plans. Of course, it is imperative to understand the need for any specific requirements and ensure the plans meet them.
Insurance policies: Businesses should consider the reminder presented by Dorian’s near-miss and review their insurance policies to determine whether they may sufficiently cover disaster-related costs related to business resumption and relocation lost income, and emergency expenses. A key coverage is for business interruption, which provides coverage when the insured suffers a loss of income from a disruption of business operations.
Expense and production reductions: On both the expense and production sides, businesses should anticipate the need for and envision temporary or permanent cutbacks, including reduced production, employee layoffs and reduced costs. While such measures would obviously be unpleasant, expense and production reductions consistent with the requirements of law and the provisions of agreements may preserve liquidity and may prove to be critical for survival.
Reviewing and testing: Of course, businesses should never “set it and forget it.” Conducting employee training, performing annual plan reviews, and conducting stress tests can also increase the likelihood that your business will be ready when disaster strikes.
Scarinci Hollenbeck’s Crisis and Risk Management Group assists businesses with all aspects of emergency preparation and response, including the development and implementation of disaster response plans, internal policies and procedures, evacuation plans, and more. For assistance, we encourage you to contact one of our attorneys.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.
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