Harvey. Maria. Irma. Nate.
It may seem like just another roll call, but these names are just a few of the
members of a dangerous class: hurricanes and tropical storms tracked during
the 2017 storm season that resulted in hundreds of deaths and billions of dollars
in property damage. And that’s not including the many other disasters—from
earthquakes and flooding events to volcanic eruptions and tornadoes—that
threatened people and businesses across the globe this year. But 2017 isn’t an anomaly; in fact, it barely breaks the ranks of the most disaster ridden years on record. Instead, it’s just another reminder that no matter where you live or work, your only protection from a disaster—and the immense costs of dealing with the aftermath—is a robust response and recovery plan.
Just on the Horizon
Although we concentrate heavily on preparing for man-made issues, such as hacking events, employee errors, or systems outages, natural disasters are a greater threat than many realize. According to the 2015 Disaster Recovery & Business Continuity Survey by EvolveIP, environmental disasters are the second-leading cause of incident and outages, with some 34.5% of serious disruptions to businesses attributable to events such as floods, fires, ice storms, and earthquakes.
The Business Continuity Institute’s Annual Horizon Scan Report for 2017 echoes that
sentiment, stating that the top three causes of costly business disruptions are
unplanned IT and telecom outages, adverse weather, and interruptions to utility
supplies, all of which are directly or secondarily tied to severe weather events.
Dealing with Disaster
Despite the frequency and incredible costs of natural disasters, companies do their best to cope. 34.5% of serious disruptions to business are
attributable to natural disasters.
Numbers six and eight of the top ten—transport network disruptions and supply chain
disruptions—also are heavily impacted by natural disasters in any part of the business’s supply chain, even those across the globe. But the problems don’t stop as soon as the storm or tsunami subsides. Companies that experience one disruption or disaster also are more likely to experience such an event again. According to EvolveIP’s report, more than 40% of respondents that had suffered a business disruption in the last year had experienced more than one such incident in the last 5 years. This is especially true for organizations that are located or do business in areas that are more
susceptible to natural disasters, such as those along fault lines, in high-risk flooding areas, or in flat plains prone to tornados and wind storms. And a full recovery is not necessarily assured, even for those with a disaster recovery plan. In the same study, some 11.5% indicated they had suffered from permanent losses after an
incident, while another 13% stated that despite no permanent losses, they were able to only partially recover—if they recover at all. According to the Federal Emergency Management Agency, an estimated 40% to 60% of small businesses may never reopen following a natural disaster, and large businesses, although less susceptible to bankruptcy, also may face significant financial hardship.
The Costs of Catastrophe
According to the National Centers for Environmental Information, as of October 6, there were 15 weather and climate disaster events with financial losses exceeding $1 billion in the United States alone. If we see continued activity in the United States, 2017 just may overcome the current record of $16 billion-plus disasters in a single year, which occurred in 2011. Globally, the numbers are even more staggering. The Pacific Disaster Center estimates that the total global financial losses resulting from the 2017 hurricane season alone exceeded $369 billion USD. And those storms represented only a small portion of the many disasters that occurred this year—and will continue to occur globally. Monsoon-related flooding in Bangladesh, India, and Nepal, for example, affected more than 40 million people and businesses, many of which still are struggling to recover. Such severe flooding, a common occurrence in Southeast Asia, is estimated
to cost that region some $215 billion each year by 2030. On the other side of the world, the recent earthquakes in Mexico also are projected to cost billions. According to an announcement by President Enrique Pena Nieto, the two major earthquakes in September could cost the country upward of $2 billion (38.1 billion pesos) and
could result in a loss of an estimated 0.1% to 0.3% of Mexico’s gross domestic product in the third and fourth quarters of 2017. Although many have insurance coverage to help offset such losses, the economic impact on individual businesses still can be extreme.
According to the Poneman Institute’s Data Center Outage Report in 2016, the cost of an unexpected data center outage—such as one that may result from a natural disaster—can cost anywhere from $926 per minute to $17,244 per minute. And the large majority of those costs are directly related to the business disruption and lost revenue during the
outage.
The total global financial losses resulting from the 2017 hurricane season alone exceeded $369 billion.
40% to 60% of small businesses never reopen following a natural disaster. ‘The Earth Started to Move Furiously’ Although we can estimate the financial toll of a natural disaster, the real impact of such events on individuals and businesses alike is difficult to understand unless you’ve lived through it. “You can always be prepared intellectually but not always prepared to handle emotions by the book,” Lula Salazar, owner and general director of Pay Per Box, said of her experience with one of the most devastating natural disasters of 2017: the September 19 earthquake in Mexico. Coming on the heels of another, even stronger earthquake in Oaxaca—which clocked in at an 8.1 on the Richter scale and killed more than 100 people—the 7.1 earthquake on September 19 hit
Mexico City and the states of Puebla, Mexico, and Morelos, ultimately killing an estimated 369 people and affecting millions more. That morning—the anniversary of another major quake in 1985—the Mexican government requested that citizens conduct an evacuation
“Never forget how valuable human life is. No matter what.
Lives cannot be replaced, but a records management
business can be restored.”
—Lula Salazar, owner and general director, Pay Per Box
exercise. However, only hours later, those who had previously been practicing experienced the real deal. “That day at 1 pm, the earth started to move furiously before the (earthquake) alarm sounded,” said Salazar. “Cell phones were out of service, though WhatsApp was working in some areas and became a way of mass communication, along with fixed phones. Chats showed how buildings were falling down.” Because of the lack of communication, many Pay Per Box employees were unsure whether their family members were safe following the disaster. Although the company let employees go to check on their loved ones as soon as it was safe, because of the resulting traffic jams
and lack of public transportation options, some had to walk for 6 to 8 hours to reach their homes, said Salazar. “Every affected city was in chaos. They were paralyzed for about 3 weeks while rescue teams looked for people who were still alive buried in the rubble. Buildings were collapsing when nobody was expecting. Schools and buildings located in the worst affected areas were closed until they were inspected by the authorities.” However, despite having eight record centers within the affected
area, Pay Per Box avoided the worst of the damage because of the carefully selected locations of their buildings. “Fortunately, all of our premises are located in more secure zones, where the soil is solid,” said Salazar. “All our buildings were validated to be in perfect condition to let people in to work, so we were able to open our services the next morning.” Most importantly, however, the company did not suffer any human losses, she said. “The day after, only two workers were absent due to the fact that their homes suffered some minor damages, but their families were safe. All the Pay Per Box families were safe. That was the best present given to our company.” Victor Hernandez, director of operations for Safe Data Resources, said his staff wasn’t quite so lucky. Although the company’s buildings did not suffer substantial damage—“a couple of our facilities reported minor damages … (and) only one frame from our shelving got twisted,”
he said—one of their employees suffered the loss of his home and another the death of a relative.
Communicating with Customers
Both Salazar and Hernandez cited regular evacuation drills as one of the key factors to ensuring the safety of their staff during the disaster. “When the earthquake started, our people evacuated the buildings, just like they do in every monthly drill, so everybody knew what to do,” said Hernandez. “Our task groups in charge of evacuation in every location did a great job following procedures during the very strong movement of the
earth,” echoed Salazar. “Their responsibility is to control every one of our employees and help them evacuate safely as soon as possible. And none of our personnel were injured.”
But once the buildings were evacuated and the safety of staff was assured, the real work began: notifying customers of what had occurred. “A couple of hours after the earthquake, a broadcast email was sent to all of our clients informing them we had suffered no damage and were operational,” said Hernandez. However, some wanted more assurance, and “one client requested a formal statement confirming
their records were safe,” he said. Pay Per Box followed a similar procedure, sending a personalized e-mail to every customer to inform them that their information was
“safe and sound,” said Salazar. Hoping for the Best, Preparing for the Worst Although evacuation and communication went smoothly, the evacuation did bring to light a couple of needed changes to the company’s disaster plan, said Hernandez. “We learned a couple of lessons from the experience. We have not reviewed our disaster recovery plans in the last couple of years, and must do so,” he said. “We (also) have not audited our people to face a disaster scenario. (Now) we have programmed audits of different sections of the (disaster recovery [DR] plans) on a monthly basis.” In addition, Hernandez realized one detail that had gone unnoticed until disaster struck. “Most of our information is housed in the cloud, but oddly enough, our DR plans are located in a server inside our main
facilities,” he said. “We are transferring that to the cloud to ensure we can access them in an event where we cannot go into the facilities.” Salazar’s plan also includes a review of what could be done better after future disasters. Once work recommences, she said, the quality management team holds a meeting to ratify or modify procedures, as necessary, to ensure the best possible response moving forward. The most important policies are unchanging: “Inspection and maintenance are the most important procedures (and should be) done two times a year,” Salazar said. “Invest in the best uaranteed equipment. And if certification in procedures is not feasible, (following) quality management best practices helps to maintain safe operations for your personnel and customers.” No company or individual can be completely prepared for a disaster—“there may be different surprises each time there is a disaster,” Salazar said—but there is one important maxim to remember no matter the challenge. “Never forget how valuable human life is. No matter what,” said Salazar. “Lives cannot be replaced, but a records management business can be restored.”
