On June 9, there was an explosion at Con Agra Foods Slim Jim plant. Thirty-eight employees were injured and three employees died.
A series of explosions erupted at the Columbus Chemical Industries plant in Columbus, Wis., on May 11. There were no serious injuries.
On Sept. 18, 2008, Mike Malatesta, president of West Allis-based Advanced Waste Services Inc. awoke to find out that his processing plant in Pennsylvania was on fire. The plant processed hazardous materials and there was a potential for environmental damage.
What do these three events have in common? They are all potential business-ending disasters. According to the Institute for Business and Home safety, unless you have done preparedness planning, you will probably be included in the 25 percent of businesses that do not reopen after a disaster.
In a recent interview with Malatesta, I was able to determine what steps were taken prior to and after the fire at his processing facility in Pennsylvania. After he was notified of the fire, Mike flew to the site and began to manage the crisis. His goal was to get business back on track as soon as possible. In order to accomplish that goal, he stayed calm, reached out to his partners, began to communicate, and executed the plan he had in place. He worked with local government agencies and personnel to reopen the business.
The result, the business was partially back on stream in seven days and completely operational in four months.
How did Mike accomplish such a quick turnaround? He had a disaster recovery plan prepared and was able to operationalize it immediately.
During our conversation, Mike stressed a number of key things to be considered in the development of a recovery plan. They were, strengthening relationships with your bank, insurance company, legal advisors, regulatory agencies and customers.
You want to be sure that your bank will stand behind you if you experience a major interruption in business. You may need to delay some loan payments until business resumes.
Reviewing your insurance policies on a regular basis will insure that you will be able to recover losses due to an accident or natural disaster, especially if you have business interruption coverage.
Be sure that you are in compliance with state and federal regulations to limit the potential for fines if an accident occurs. Having a positive relationship with the local government will make it easier to get your business quickly back on track.
Lastly, your customers are key. They will need to be updated as to your progress and require your assistance in having their needs satisfied. The last thing you want to do is lose customers during a business interruption. Mike was able to get another company to temporally process his customer’s hazardous waste until he was able to process their waste.
When developing a disaster or contingency plan, you need to involve key managers, your employees as well as your customers, suppliers, insurance carrier and local emergency personnel. Alignment is critical when the team swings into action. Each team member should have assigned responsibilities and be ready to execute them in an emergency. The SBA and Nationwide Insurance have assembled a booklet titled “Expect the Unexpected” which outlines the basics of a disaster plan. The outline is as follows and can be found at www.sba.gov/services.
Employees:
- Establish a single spokesperson to speak to the media and the public.
- Document each employee’s function and emergency contact information.
- Decide who is in charge when regular managers are unavailable.
- Create a phone tree and designate individuals who will initiate the communication process.
- Train your employees on the plan and review it with them regularly.
Customers:
- Identify the likelihood that customers will be present if a disaster strikes.
- Keep communications open.
- Keep a copy of your customer records off -site.
- Have an alternate worksite from which to communicate to customers during recovery.
Suppliers:
- Maintain a contact list of all your suppliers.
- Find out how they plan to supply you, if the supplier experiences a disaster.
- Maintain a list of alternate suppliers.
Equipment:
- Maintain an inventory of all equipment used by your business.
- Keep a maintenance schedule for all equipment, as well as manufacturer and service contact.
Property:
- Make sure your facility meets all local building and fire codes.
- Know where the utility shutoffs are located and how to operate them.
Records:
- Document all processes that make your business run from answering the phones, to tracking finances, to distributing your product or service.
- Develop a schedule for backing up all computer records.
- Keep current copies of all paper and computer files off -site and accessible.
Insurance:
- Insurance coverage can mean the difference between reopening after a disaster strikes or having to close your doors. Meet regularly with your insurance agent to ensure you have adequate coverage and knowledge of how to quickly file a claim.
- Consider a policy that will reimburse you for business disruptions in addition to physical losses.
After you have developed a plan, you need to share it with your employees and manager and train them so you are ready for a business interruption when one occurs. Malatesta held a meeting with his planning team after the fire to discuss ways to improve the disaster plan. As a result of these meetings, changes were made in the design of the new building at the Pennsylvania plant. The office was moved out of the plant and housed in a separate building. Also, design changes were made to better contain any future fire. Continuous improvement is necessary to provide the most effective disaster plan and increase the potential that your company will survive a fire, flood, earthquake or tornado.
