small
business
When
disaster
strikes
Having a plan
in place can
save the life of
your business
PREPARING
FOR
the worst
■ Develop a communication
plan for employees.
■ Back up all critical
data online.
■ Take digital photos of all
valuables and information
technology equipment.
■ Keep insurance data
online.
■ Consider having two
Internet providers, one
for backup.
■ Do a role play with staff
simulating a disaster.
For more information
Business Continuity Institute
( www.thebci.org)
Disaster Center
( www.disastercenter.com)
Risk Management
Resource Center
( www.eriskcenter.org)
paid in three days, while some unprepared businesses waited years for theirs.
Devising a recovery plan pays off whether or
not a disaster happens. Childs notes that her company’s insurance costs were reduced in “double digits” because its recovery plan demonstrated that the
company had decreased its risks. Moreover, because
large businesses want to make sure that their suppliers can deliver during an emergency, having a
disaster plan helped Childs Capital maintain business accounts and secure new ones.
Developing a business continuity plan also
helps a company’s staff cope with the emotional
difficulties triggered by a hurricane, earthquake,
fire or other disaster. “Having a plan in place gave
us a sense of competence. We anticipated disruptions. We had more of a sense of control and didn’t
panic,” Childs says.
GAR Y CORNHOUSE/GE T T Y IMAGES
Childs advises small businesses to back up
information technology and make sure the data is
accessible electronically. One software company
stored its intellectual property, necessary to complete a $25 million contract to develop code, in a
safe deposit box in a bank near the World Trade
Center, which was destroyed. Childs recommends
that small businesses use a professional data center
and have redundant sets of data online so businesses
aren’t totally dependent on physical assets.
Most plans will cover almost any disaster. In
case of a bird flu pandemic, however, businesses
should encourage telecommuting, because staff
shouldn’t work in urban centers, where the disease
can be easily transmitted. Every business must
develop its own unique business continuity and
disaster recovery plan. Restaurants, for example,
must consider endorsements (add-ons) to their
insurance for food spoilage. (During the New York
City blackout in 2004, restaurants lost $50,000, on
average, due to food spoilage.)
According to a study by the Federal Emergency
Management Agency, 90 percent of businesses that
fail to reopen within five days of a disaster eventually close. Childs surmises, “You either recover
quickly or not at all.”
A 2005 Red Cross study of 204 small-business
executives ( 61 percent of whom said they were not
prepared for an emergency) noted four reasons
why entrepreneurs fail to develop a disaster recovery plan: ( 1) They think it won’t happen to them;
( 2) it’s too expensive; ( 3) it’s too time-consuming;
( 4) they don’t have enough access to information.
“Don’t delay,” Childs advises. “Even if you can’t
get it all done, get some of it done. You can do it
incrementally.” C
By Gary M. Stern
ON SEPTEMBER 11, 2001, Donna Childs, president of Childs Capital, a Wall Street–based eco-nomic-development company, was shopping at a
drugstore at the World Trade Center. When police
evacuated the building, she returned to her apartment in Battery Park City, a stone’s throw from the
fated buildings, where she says everything “was in
total darkness. All I saw was a streaming wall of
gray soot and ash.”
Childs phoned her office, told her 13 employees to return home “because something terrible has
happened at the World Trade Center” and was
forced to flee her apartment, take a ferry to Jersey
City and stay with a friend in Hoboken until the
Wall Street area reopened a week later.
Nonetheless, her business was continually operating. And unlike the estimated 40 percent of lower
Manhattan small businesses that closed due to 9/11,
Childs Capital ( www.childscapital.com), which specializes in aiding poor countries, kept on humming
like a well-oiled engine. Thanks to her experience as
a director at Swiss Re, the largest reinsurer in the
world, Childs, a Costco member, had her disaster
recovery plan in place. That plan saved her business
and sparked Contingency Planning and Disaster
Recovery: A Small Business Guide
(Wiley, 2002), which she co-wrote
with Stefan Dietrich.
In fact, Childs filed her insurance claims immediately and was
Gary M. Stern is a New York–based freelancer and
co-author of Minority Rules: Turn Your Ethnicity
into a Competitive Edge (HarperCollins, 2006).
The Costco Connection
Costco members can find items for home and business disaster preparedness, from food to electronics, at Costco and on costco.com.