3 Ways a Business Contingency Plan Can Help in a Disaster
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Here's a scenario for you: You’re in Hawaii on vacation enjoying the warm weather and idyllic beaches when you get an audible and visual alert on your phone – BALLISTIC MISSILE THREAT INBOUND TO HAWAII. SEEK IMMEDIATE SHELTER. THIS IS NOT A DRILL.
(Actual alert message I received in January 2018)
After taking a few moments to process the information, what do you do? While it may seem like an unbelievable scenario prior to it happening, like all potential disasters it becomes very palpable when it becomes your reality.
This particular event happened to me while vacationing in Hawaii earlier in the year. As it was ultimately a message sent in error by the Hawaii Emergency Management Agency, I have the benefit of reflecting on the event safe and sound from my office in Chicago (I will go into my personal response later in the article).
One of the primary lessons I took from my experience is the real need to have a contingency plan when faced with a potential disaster.
Thankfully in business, we’re able to use historical data to have a good sense of what damaging events may take place, how best to prevent them, how they could affect your business operations, and what to do to ensure the safety of all personnel.
Putting a solid business contingency plan in place has several benefits for any organization:
1. A contingency plan can serve to prevent panic.
I saw firsthand the effects of panic on people. Many folks around us started crying and began running in all different directions. I heard several cars with screeching tires accelerate on the roadways apparently neglecting traffic safety laws in an effort to seek shelter or be with their families. I don’t blame any of these folks for their reactions.
In the business world, however, the last thing an owner wants is employees (or management) reacting erratically during a time when controlled responses are so imperative.
2. A contingency plan will minimize your losses.
Knowing how to respond to a specific scenario, like a catastrophic fire, can greatly help to reduce the amount of damage done. Not only will your employees be safer, but you will have a plan for an alternate facility to get back up and running, or a new supplier for a critical component of your product, in addition to having reviewed your exposure to adequately transfer the risk to an insurance carrier so your business is quickly indemnified appropriately.
3. You could pay less on your insurance (risk transfer) costs.
One of your broker’s main jobs is to “sell” your company’s risk to insurance carriers. As stated, a contingency plan has the potential to reduce your losses which provides beneficial information for your broker to share when negotiating your insurance costs.
So, what was my plan during the phony incoming missile strike? Frankly, I had no idea what to do. While my wife and I did our best not to outwardly panic, I certainly felt a significant level of dread. The first thing I did was scan the buildings in our proximity to look for any sound structures, bizarrely wishing that I had paid more attention to the buildings around me prior to this. Then a group of us who hadn’t run away or weren’t on the phone calling their families went on to every news source available to find any piece of information they could.
Of course, since it wasn’t a real missile there was no information to find. In the moment I realized I really had no one to call for information, no authority that I knew could help in the interim, and no real plan of action to ensure our safety.
Thirty-six minutes later the alert was rescinded, and my blood pressure started to normalize. It’ll definitely be a vacation we’ll never forget. While there was no real way to predict this specific scenario, for difficult events we can anticipate, you want to be sure you have a business plan ready to go and a trusted advisor you can depend on in a time of crisis.
Next time I go to Hawaii – well, maybe I should bring a bottle of SPF 5,000.
At Assurance, our brokers and safety consultants work with companies nationwide to improve their risk profile and safety procedures, and continuously work to reduce your total cost of risk. Contact us for assistance today.
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