November 14, 2011 | last updated June 4, 2012 12:25 pm
TALKING POINTS

Businesses can't deny bad things do happen

Kate Novick

As it made its way up the East Coast during the last days of August, Hurricane-turned-Tropical-Storm Irene tested our resiliency. And then again, so did the freakish winter storm two months later in October, causing more severe impacts to Connecticut than Irene.

We saw three-quarters of a million in Connecticut without power, plus towns with no gas stations open, businesses with limited or no internet access, significant roads closed, many employees trapped at home, businesses unable to communicate with consumers as well as employees, and on and on. Those who did make it in to work each day after the storm experienced delays in communications and challenges with other business-as-usual activities.

Was this a one-two punch of freak events or is this an indicator of something here to stay?

If you asked a random person walking down the street, you'd probably get an answer like this: "These two freakish storms happening two months apart is not normal. This won't happen again."

If you ask scientists and risk managers, you get this answer: "Our risks are not what they used to be." Evidence-based research indicates that what we are experiencing is an emerging new class of disasters due to changes in our climate.

As a result, many insurance companies are already updating their risk models. It was reported in a study conducted by Ceres, a consortium of public interest groups, that most insurance companies "believe that climate change will increase their losses."

What does this mean for business?

The consequences of not being prepared for emergencies have never been greater. Yet, the denial or minimization of future emergencies is a big reason why businesses are not prepared. "It's not going to happen here," or "It's not going to happen again" are common beliefs, yet are based on a false reality as evidence shows. One of the top reasons why businesses fail is that management and leadership are in denial about something critical. Emergencies do have the ability to end businesses. Just take a look at the businesses impacted by Hurricane Katrina years after the event.

While not every organization embodies the characteristics of resiliency, every organization can learn skills to become more resilient. Here are some suggestions to building a more resilient business:

• Define the opportunity of risk mitigation and emergency preparedness. Make the connection between risk mitigation and emergency preparedness and how these efforts sustain or maximize revenue, increase resiliency of the business, and improve customer relationships.

• Recognize that there is a nearly immediate return on investment for all risk mitigation activities, including those that are targeted for large emergencies. While there may be a reluctance to invest more in risk mitigation and emergency preparedness, much of it can be achieved without significant capital expenditures. Plus, many risk mitigation activities — such as establishing alternate work sites, updating call-down lists more frequently, and enhancing emergency power generation — address multiple hazards from minor to catastrophic. The return on investment can be significant and can begin quickly.

• Support a culture of risk awareness, mitigation, and emergency preparedness. While culture is an intangible set of beliefs and values shared by an organization, use significant disruption events to set a new standard for acknowledging risks, identifying new ones, and brainstorming of ways to reduce those risks throughout all levels of the organization.

• Identify the risks to your business. While it is impossible to be aware of every risk to your business, it is possible to be aware of the key risks (e.g., supply chain vulnerabilities, computer network located in flood zone, facilities vulnerable to power outages, etc…). Maintain an acceptable level of risk awareness by updating your knowledge as people, systems, facilities, resources, and the surrounding environment change.

• Mitigate risks. Include representatives of all parts of your business to innovate ways to mitigate risks. Once corrective actions are recommended and approved, manage them systematically through documenting the risk, the recommended corrective actions, the persons responsible for each corrective action, the target completion date, and its status.

• Develop plans for those emergencies posing risks that cannot be fully mitigated. Risk mitigation needs to occur prior to emergency planning to avoid planning for emergencies posing risks that could otherwise be mitigated. This saves time and money. But then, having a plan in place prior to an emergency occurring reduces loss of life, property damage, business disruption, and manages your reputation. It's not the plan itself that is going to prove most valuable during the emergency phase, it is the knowledge gained by you and your employees during the planning process and your risk mitigation activities that is going to protect your business prosperity during these uncertain times.

Kate Novick is the managing director of Gradient Planning LLC in Middletown. Contact her through the website at www.gradientplanning.com.

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