Disaster Planning – Part 2

In Review

In Part 1 of this 3-part series we discussed the reasons why every business, including the real estate rental business, should have a disaster plan and the preliminary steps to take toward developing an emergency action plan. In this part of the series we briefly discuss the development of the plan.

Develop a Plan

An emergency action plan is your plan to stay in business. An emergency action plan is a written procedure for dealing with the threats you’ve identified. Some components of your plan will be prescribed by statute or regulations, while others will be based on good business sense.

The three main components of an emergency management plan must address the issues of human resources, physical resources, and business continuity. Many parts of the plan will be common to most disasters. You do not have to have a completely separate plan for earthquakes, power outages, or tropical storms, although the details may vary somewhat.

The small business owner that operates from a physical business office location has already given some thought regarding who to call “in case of emergency” by designating emergency contact information provided to law enforcement or city business registration offices. In many jurisdictions this is actually required to be posted in a prominent location, usually on or near the front door, to show who to call when the security alarm goes off, the front door to the office is left unlocked, a passerby notices an apparent break-in, or some other event. If you have designated an emergency contact, it is advisable to make sure your contact person knows that he is the designated contact and, just as importantly, is willing to accept responsibility for that task.

The contact person is usually a person that you trust as a family member, an associate, or a reputable service agency. Consider having that family member or associate assist you in writing a complete emergency management plan. Despite the complexity of some businesses and the need for a more detailed disaster plan, there are really only four basic events to plan for. When you write your plan, consider what to do if:

• Part of your business is disrupted or become unusable,
• Your entire business, structure and contents, is destroyed,
• There is a significant disruption of business services such as power outages, and
• Your business is in a geographic area that is rendered uninhabitable for an unknown length of time.

There are a number of different ways to create your emergency plan; however, all emergency plans tend to have the same basic elements. According to the National Safety Council, emergency actions plans should contain the following minimum elements:

• Clear, written policies that designate a chain of command, listing names and job titles of the people or departments who are responsible for making decisions, monitoring response actions, and recovering back-to-normal operations.
• Names of the people responsible for assessing the degree of risk to life and property, and who exactly should be notified for various types of emergencies.
• Specific instructions for shutting down equipment and production processes and stopping business activities.
• Facility evacuation procedures, including a designated meeting site outside the facility and a process to account for all employees after an evacuation.
• Procedures for employees who are responsible for shutting down critical operations before they evacuate the facility.
• Specific training, practice schedules, and equipment requirements for employees who are responsible for rescue operations, medical duties, hazardous responses, fire fighting and other responses specific to your work site.
• The preferred means of reporting fires and other emergencies.

Your procedures should be completely documented in writing. They should be specific, detailed, logical, and follow an orderly progression. To be effective, your plan should be understandable and readily interpreted by the average person, using a “plain English” style in a common sense format.

Even for small business owners there may be statutory and regulatory requirements that govern what actions to take in an emergency.

To be effective, the plan should make sense for your particular business. The value of good, common sense cannot be discounted when writing your plan. A plan that looks good on paper, with lots of words and diagrams, is meaningless if it doesn’t take into account the true operations of your business.

Common sense business planning for any size and type of business must include document safeguarding. What customer or client information records are kept? In what format? In what location? Are records backed up on a regular basis? Where are the backup copies kept?

Loss of business records could be a costly event. Financial data, insurance policies, deeds, contracts, and other business information are typically stored onsite. A section of your disaster plan should address the issue of loss prevention of vital business records. Some documents could, of course, be re-created or copies obtained from official records, but that could be costly and delay reopening the business.

Are there other business documents that if lost or destroyed could put you out of business such as vital information that is critical to the operation of your business, original documents that do not exist in another form or copy, or data retention required by law?

There are various safeguards for record protection including, printed copies stored elsewhere, fireproof watertight storage containers, scanned document files stored on the Web or on portable devices stored elsewhere.

Insurance

Insurance is an important component of any risk management and disaster preparedness planning. Insufficient or failure to provide the right kind of coverage can in spite of the rest of your good efforts, wipe out your business.

In general, the basic business insurance package consists of four fundamental coverages. They are workers’ compensation, general liability, auto, and property/casualty. There is also an added layer of protection over those, often called an umbrella policy. In addition to these basic needs, one can consider business interruption coverage and life and disability insurance.

Insurance is not a one-size-fits-all issue. You need to understand what your risks are, how much liability you can handle, and what you need to cover. A good insurance agent is important to this task.

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