Preparedness planning: Three vital steps
The single biggest mistake organizations make in preparedness planning is to treat disasters as something outside normal business operations. There is a tendency to see disasters as a class by themselves, one that requires specialized plans and procedures. The truth is that disasters are part of a continuum that begins with day-to-day problems. The processes we use to resolve these problems can be expanded and adapted for use in disasters.
Understand Your Risk
The first step in preparedness planning is to understand the risks that your organization faces. We usually think about risk as a specific event such as an earthquake or a flood and focus our attention on the frequency and magnitude of the event. You really can’t do much about these two factors. The secret to successful preparedness planning is to understand that it is your vulnerability to the event that is important and you can do something about this. Note that we are considering impacts not the cause of the emergency.
Risk is relative. What is a crisis for one organization can be a routine occurrence for another. The difference lies in the vulnerability of the organization to the event. We can change this vulnerability through mitigation. Mitigation reduces the potential impact of the event by reducing or eliminating the harm caused by those impacts. For example, seismically retrofitting a plant in an earthquake zone increases the chance of it surviving an earthquake and thus reduces your vulnerability to earthquakes.
Know Your Organization
Once you understand the potential impacts facing your company, you can consider what these impacts would do to your business. If you are forced to close for a period of time, what will it cost you in lost business, lost discounts, late payment fees, or contractual penalties? In business continuity, we refer to this as a business impact analysis and we use the results to perform a cost-benefit analysis on proposed preparedness costs. But it’s not rocket science – as a good business person, you should know what it costs you to be out of business for a day.
There are other potential impacts that aren’t quite as quantifiable. Would a disaster result in a decreased demand for your services because your clients are affected or will it result in an increase in business because new clients need your services either permanently or short term? How likely are your clients to remain in business after a disaster? This is the type of market forecasting we do every day – we’re just looking at it in the context of a disaster.