Practice Makes Prepared

Without practicing your emergency and disaster preparedness plan, are your retail facilities a disaster waiting to happen?

BY AL BERMAN (left) & ANTHONY PIZZITOLA (right)

One hundred years ago there was serious blame-gaming and fault finding. The captain was blamed because he ignored seven warnings from crew and other ships that icebergs were in the path of the famous ship. The shipbuilder was blamed because millions of substandard rivets were used to hold the sections together. The architect was blamed because he failed to speak up when the space in lower levels was decreased to increase the height in first class. But blame is the oldest game in existence. When asked why he ate the forbidden apple, to whom did Adam point?

Disasters occur in three forms: natural, manmade and technological. In the case of the famous Titanic, the disaster was manmade and voluntary avoidance was a key contributor. But when gazing upon the Titanic’s artifacts at a recent exhibition, I was not as concerned about blame focusing as I was realizing that manmade disasters are equal in headline stature to natural disasters. Intentional or not, certain manmade disasters can change the way we do things. How often do we now say 9-1-1? The difference between mega manmade disasters and the computers going down is the latter can be prevented by thorough facility inspections to determine the risks, the probability and the impact. Equally important is implementing permanent measures to control the risks to prevent or at least mitigate the damages. But people have convenient memories and most forget their struggles with disasters.

Practice, Practice, Practice

At a recent presentation I asked a group of business people if they had an Emergency and Disaster Preparedness plan. Most were left penniless from hurricanes Gustav and Ike. Hands shot up to the ceiling. When asked if they had practiced their plan, everyone looked the other way. A comprehensive plan for small businesses takes only 1 to 2 hours to practice. Strapping down rooftop equipment and boarding up windows is half the battle when faced with a hurricane. Many think their landlord will secure their businesses before and after disasters, but think again. Many landlords think they have no obligation for enacting preparatory measures, but they should re-read their leases.

There is no sensemaking for not being prepared. Why permit a disaster to provide the waymaking to bankruptcy? As facility professionals, we can assess the lifecycle of equipment and certain elements in the facility envelope. Without launching measures to protect the facility, we permit disasters to determine the lifecycle of the entire facility and — in unfortunate occasions — the people inside them. Yet in today’s perilous economy, executives are hesitant to invest dollars on zero return opportunities. Many executives view Business Continuity Management as an expense based on incidents measured in a probability matrix, not a guaranteed event and a return. But the facts dictate that disasters are not an opportunity but a definite. Fire trucks have sirens for a reason.

Look at Potential Disasters Through a New Lens

Disasters do not wait for dress rehearsal nor do they excuse lack of preparedness. The hurricane statistics have been published, and based on historical data the majority will find their way to shore. Hurricanes cannot be prevented but your business can outsmart a hurricane. A preparedness plan designed to safeguard the facility and then relocate operations into a rental space outside the destructive path will enhance business continuity. But your business facility may have to confront Goliath face-to-face. When Hurricane Ike hit Galveston, Texas, in September 2008, the restaurant chain Whataburger was prepared because it had practiced. The facility was a fortress and within hours and the benefit of a generator, Whataburger was the only establishment open on the island. Not thanks to luck, but thanks to preparedness and regularly exercising the plan. Once you start looking at disasters through a challenging lens rather than a lens of defeat, you engage a campaign and a plan to win. Winning is a team effort.

Unlike natural disasters, manmade disasters require a physical search-and-destroy approach. As facility professionals, we have been trained to visit our establishments annually and roll-up capital budgets and inspect for basic maintenance issues. Within the same simple visit, at least 10 potential risks can be identified and the wheels of correction and control set in motion. The result is no longer a “disaster waiting to happen.” A simple conference call with your colleagues, vendors and inspectors will help generate a list of items that are threats to your business centers, industry specifics and geological region. From that premise, control measures can be implemented.

PS-Prep is the New Sustainability

And if you do stay awake at night contemplating the “what ifs” regarding disasters that are in your shadow, a new sheriff has arrived designed to make your life easier. The U.S. government is attempting to create a certification process to help improve the preparedness of private sector companies. This is a first attempt at the legislative level to provide demonstrable preparedness on a voluntary basis. In August 2007, the U.S. passed Public Law 110-53, which was signed by President Bush. Title IX, sections 523 and 524 of the law “Implementing Recommendations of the 9/11 Commission Act of 2007,” calls for voluntary certification of private companies. The law, commonly known as “PS-Prep,” calls for the Department of Homeland Security (DHS) to designate a standard or standards that companies can use to demonstrate their preparedness.

With the designation of the standards in place, the next step was to create Certification Bodies (CBs), or those individuals who could accredit companies as being in compliance with one of the designated standards. This was accomplished by the establishment of accreditation rules (Rule 37) by the ANSI-ANAB, the agency appointed to oversee accreditation by DHS. Rather than spend time on providing information on the accreditation process, will be the definitive source.

A set of standards and an accreditation process were implemented (see http://www.anab.org/media/22066/ar37.pdf for more information). Companies who were deemed certified under this process would receive recognition (not endorsement) on a DHS website. The response has been less than enthusiastic, because most U.S. industries already have stringent BCP requirements. This is especially true in the financial services (banking, brokerage and insurance), energy and healthcare, where regulations supersede standards.

Yet there are compelling reasons to gain certification. The most persuasive of these is that it will make one’s business more attractive to its customers, by demonstrating that a company will be there even if a disaster hits. The issue of supply chain resilience is at the heart of company sustainability. In an economy whose supply chain is so geographically and politically diverse, an incident in one part of the world can reverberate in the rest of the globe’s ability of companies to meet their customer’s needs.

Halting Production is a High Risk and Cost

The March 2011 tsunami and earthquakes in Japan highlighted the vulnerability of the supply chain. Companies such as Apple, Ford, General Motors, Volkswagen, Boeing, Nokia and hundreds of others had production delayed or canceled as a result of this event. A certification of the preparedness of suppliers would help companies make a decision as to which sources to use for procurement of goods and services. Without a standard of preparedness, it is very difficult to understand an organization’s true ability to respond to adversity. Whereas, adherence to a recognized standard that is certified by a recognized accreditation body provides a high level of credibility.

This credibility presents the challenge of ensuring that the CBs demonstrate the competency needed that would be acceptable to corporations. Keep in mind that the PS-Prep CBs will provide an additional audit that may or may not support the company’s annual external auditor process. Toward this end, CBs should do the following: Complete recognized training in the particular standard for which an organization is seeking certification; demonstrate a prescribed number of years of relevant experience (at least 5 for a lead auditor); maintain skill levels through continuing education; be subject to a certification renewal process; and be affiliated with a respected credentialing organization.

As a general safety measure, organizations should not seek certification without the concurrence of their legal counsel. This will ensure that the organization is fully cognizant of any liability associated with outside certification.

Demonstrated sustainability is the goal of all organizations. It requires depth and breadth of the internal and external components of the production cycle. Using recognized standards and practices will not only help to achieve this goal, but will also demonstrate this capability to suppliers and customers alike.

Reputational Risk?

Equal to quantifiable losses, organizations face reputational and qualitative losses when disasters strike, especially when the speeding train provided numerous warnings before leaving the station. Similar to people, corporations are not shock-resistant to disasters. Just as people panic in the immediate seconds after a disaster, so do corporations in their attempt to decipher the reasons and to prepare an official response to the public.

Sustainability is guaranteed through constant vigilance, disaster preparedness and practice, and taking measures to ensure your organization and supply chain are in compliance with designated standards. Your credibility and reputation are only as good as your level of sustainability. Your name will never be chronicled for avoiding disasters but could be for navigating uncharted waters and ignoring warnings.