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by Philp
Jan Rothstein, FBCI
For residents and businesses in the northeastern United
States, with the possible exception of snowplow operators, the winter
of 1995-96 was a bummer. Curiously, from the business continuity perspective
recurring, disagreeable weather (as opposed to short-term, extreme weather
such as tornadoes, hurricanes or blizzards) does not seem to fall into
the 'disaster' category.
What is a 'disaster,' anyway? It is any event which substantially
disrupts 'business as usual.' Fires, earthquakes, power failures, extended
computer outages or network failures are, in general, no-brainers when
it comes to identifiable disaster causes. The past winter, on the other
hand, brought one humongous storm preceded and followed by 'only' harsh
storms, icing, and other less than desirable conditions. Curiously, despite
near-record snow accumulations, ski resort businesses in the region were
apparently affected adversely by the storms which seemed to appear almost
every Friday, preventing skiers from getting to the slopes on prime ski
weekends. Talk about your 'no-win' situation!
Looking Back
Management
executives of one consulting client, a medium-sized manufacturing company,
had the insight to examine the overall impact of this past winter on their
business. They had based their continuity program on a business impact
assessment which concluded that they could reasonably tolerate an outage
generally up to two business days without substantial impact. When they
looked back at this past winter, they discovered some interesting facts
which caused them to reexamine their assumptions:
- On seven separate occasions, they had met their
explicit criteria for declaring a disaster and had not done so;
- On three occasions, there was direct, bottom-line
dollar impact in the mid- to high-five figures; and,
- Aggregate dollar losses directly attributable
to yucchy weather approached one million dollars within a sixty-day
period.
Looking deeper, they discovered several contributing
factors which they had not previously considered 'disaster' related:
- Quantifiable lost productivity directly attributable
to storm days or early dismissals was dwarfed by easily overlooked,
indirect productivity losses such as re-doing project plans; rescheduling
meetings; revising commitments; a rise in sick and personal days; employees
talking about (or worrying about) the weather instead of their work;
and, re-doing work which became obsolete because of weather delays.
- The only time their contingency plan was explicitly
consulted in the course of the winter was in early January when the
staff business continuity planner was snowed in at home by the biggest
storm of the season and wisely decided to sit down and read over the
plan rather than to shovel his driveway.
- Overtime made necessary more than a month after the
worst of the storms cost the company over $100,000 additional.
In considering productivity loss, morale is a factor
which should not be ignored - a senior manager in this company observed
that many employees seemed lethargic and unfocused which he attributed
in part to 'cabin fever.' She noted half-jokingly yet painfully accurate
that her impression was that the entire company was "...in a funk" and
exhibited many characteristics which, in an individual, could be considered
symptoms of clinical depression. Keeping in mind that this particular
company is somewhat enlightened and sophisticated in addressing business
continuity, what can the rest of us learn from their situation (aside
from moving to a warmer climate)?
- A 'disaster' can sneak up on you and your organization
- it does not always grab your attention; some 'disasters' are only
recognizable in hindsight.
- A contingency plan - and, in particular the
plan's activation criteria - must be flexible enough to address circumstances
which had not even been considered when the plan was designed or tested.
- The disaster declaration process needs checks
and balances to ensure that the organization does not fall into the
trap of denial. In assessing business impact, the indirect and intangible
losses may far outweigh direct losses.
Here's hoping for a warm and sunny summer!
Copyright (c)1997-2003, Rothstein Associates Inc. All
Rights Reserved.
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