Dealing With Disasters: What CEOs Need To Know

Disaster preparedness is subject most often discussed in the aftermath of a major natural or manmade disaster.Although most major corporations have comprehensive disaster recovery plans in place, the unprecedented events of Sept. 11 clearly demonstrate importance of updating and testing those plans frequently.

More importantly, experts say, it's the execution of the plan that's most critical for companies to quickly recover in the aftermath of a major crisis.

Here are a few key elements that industry experts attest will help senior executives prepare themselves to lead their organizations in the aftermath of a disaster.

1 Anticipate Worst-Case Scenarios A comprehensive disaster recovery plan should always include securing off-site office space for employees to resume working. This includes purchasing new desktop computers, laptop computers for telecommuters, servers, networking infrastructure, office furniture and supplies.

Experts say the back-up site should be within commuting distance for employees. However, a contingency plan should include relocating to an office that is outside the power grid affected by the disaster. That's especially true for mission-critical IT systems.

"You want to make sure that your recovery site is in a secondary power grid and secondary telephone switching location," says M. Victor Janulaitis, president of Janco Associates Inc., a Park City, Utah-based firm that specializes in helping companies develop disaster recovery plans.

2 Frequently Test Your Disaster Recovery Plan Companies that take the time to test elements of their disaster recovery plan are likely to be better prepared for events such as September 11, experts say. "You can write up a great disaster recover plan, and if you don't test it frequently, it's worthless, Janulaitis adds. He recommends that companies do a worst-scenario test at least once a year.

How much time and money should companies spend on disaster preparedness, including contingencies back-up data sites and call centers? "Executives need to calculate how much it costs them for every hour or day that they cannot process information," says Michael F. LaPorta, national director for the global insurance practice at Deloitte Consulting, New York.

"There isn't any upside to spending on system redundancy or continuous availability; it won't give an insurer a competitive advantage or reduce costs. But it is critical," he adds.

3 Maintaining Communication With Employees Is Essential "Executives need to strike a balance between doing everything they can to help their employees get through a tragedy such as Sept. 11, and to try and salvage their business," says Brendan Ford, a financial services analyst with Datamonitor, a New York-based research and consulting firm.

"Firms such as Aon Corp. and Cantor Fitzgerald Securities turned their Web sites into online communities where employees received information on claims, benefits and worksite relocation."

Companies need to store employee information, such as their home telephone and address, and pager or cell phone numbers, in databases that are located offsite, LaPorta adds.

"This is an area that is often overlooked in disaster recovery plans, but it is critical for companies to be able to find out where their employees are following a disaster and learn if there's anything that they need," he says.

4 Establish Clear Lines Of Authority The September 11 attack on the World Trade Center starkly illustrates the importance of delegating responsibilities when senior-level executives are either killed or missing, or they're unable to quickly travel back to ground zero.

"If the CEO is missing or incapacitated or simply cannot communicate with senior managers, you must have a plan that establishes a temporary chain of command," LaPorta explains.

"Major companies have plans that restrict their CEO, CFO and chief operating officers from flying together on the same airplane, but they need to take this one step further, how they plan to protect all of their intellectual capital."