10/ 05/ 2006
by Jeffrey Moses
Disasters come in many forms––hurricanes, tornadoes, floods, severe rain or hail, windstorms, fires, earthquakes and others. They may be mild or severe, causing damage to property and danger to health and life. But they all have one thing in common: The risks they pose can be prepared for only in advance. From the moment that a disaster strikes, one can only hope that comprehensive steps for preparedness were taken.
Use the following checklist to help with your preparedness. Some of the suggestions pertain to specific types of disasters. Some are general and pertain to all. In every case, taking action in advance can help safeguard your employees and your property, as well as protect you from undue financial loss.
1. Prepare your facility and employees to minimize the chance of disaster or minimize the impact.
- For fire risks: Installing fireproofing, sprinkler systems and fire alarms. Check all electrical systems, appliances and equipment regularly. Establish a system whereby employees routinely inspect premises for all fire risks. Consult with local fire authorities to instruct employees about risks and preventive measures.
- For hurricane and wind risks: Build or upgrade to and beyond local hurricane or wind codes, upgrade to storm-proof windows and install storm shutters to cover windows. Prepare a hurricane kit (food, candles, flashlights and batteries, etc.) and a comprehensive evacuation plan for yourself, employees and all family members. Don't wait until the last minute to evacuate.
- For flood risks: Know if you are in a flood zone by contacting local authorities. Don't assume that you're not at risk simply because your insurance or county records show that you're not in a flood zone. Have an evacuation plan that you can implement in a matter of minutes when flood conditions are imminent.
2. Make sure that you have adequate insurance for all potential disasters.
- Speak with your insurance agents to ensure that all risks are covered. Fire, wind, hail and other risks are usually covered in general business insurance policies. However, in some areas of the country, wind and earthquake require separate policies. In hurricane-prone areas, separate wind policies may need to be purchased. In all instances and all areas of the country, separate flood insurance needs to be purchased.
- Be sure that your insurance contains provisions for business interruption. This will provide financial support as you get your business back on its feet, enabling you to continue paying bills, salaries and debt obligations.
- Work with your insurance agents to make sure that you are adequately covered. Don't try to save money by pinching pennies in your insurance. Hopefully, insurance is the one thing that you'll pay for, but never need to use. However, if you're involved in just one disaster, proper insurance coverage can more than make up for decades of premium payments.
- Tell you agents that you want to purchase "replacement" insurance. This will allow you to be reimbursed for the entire replacement cost of items lost in a disaster, rather than just for what the items would be worth after considering their age and level of usage.
3. Backup of records, computer systems, important documents, etc.
- Always keep backups of all records, both written and electronic. These include customer lists, sales records and information, service records, financial records, and others. Don't keep all your written records in one place and assume that they will survive a disaster. Make copies and keep them off-site. Also, you should back up computer systems regularly (daily is preferable) using storage devices off-site.
- Consult with suppliers or other divisions in your company to assure continuation of customer service and warranty work. You don't want to lose customers during and after a disaster. Generally, people understand that service may be temporarily disrupted. But businesses that provide essentially ongoing uninterrupted service will keep customers and even gain new ones during the transition.
- Arrange in advance to have adequate cash or lines or credit to handle your needs during the first weeks after a disaster. This can make all the difference if insurance is slow kicking in with payments.
4. Be ready to gather all information required by insurance adjusters. Quick, accurate reporting of losses can speed up payments immensely.
- Quickly gather information and report damage/loss to insurance companies. This could include loss or damage to facilities and equipment, injury or death of employees, potential loss of revenue, projected ongoing costs of doing business (debt, salaries, etc.), anticipated added expenses, such as hotel stays or leasing of temporary facilities, etc.
- Compile a list of companies and individuals who can repair damages to facilities and equipment. If you have ongoing relations with these companies before a disaster, they'll give you higher priority after the disaster when everyone will be vying for their services.
- Set up in advance quick access to lines of credit and other finances. These may be needed immediately after a disaster. Even a few days without adequate cash can mean the difference between a smooth or rough transition back to normal operations.
