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Business + Management: Marty Mcghie

When Disaster Strikes

A well-thought-out natural disaster emergency plan could save your business in the wake of catastrophe.




Turn on the news, and more often than not, there’s a breaking story of a natural disaster taking place. As I watch the coverage – whether it be a flood, earthquake, hurricane, tornado, wind, or fire – I always selfishly, yet gratefully, think to myself, “I’m sure glad that didn’t happen to me, and I sure hope it never does.” 

Even though the odds are against it, a natural disaster could indeed involve me (or you!) at some point in time. Of course, we all feel deep sympathy for those affected when such an event does occur. But perhaps these tragic cases should serve as a wake-up call for us. The way I see it, we basically have two choices: One, we can just cross our fingers and hope for the best, ignoring the need to prepare for such a contingency. Or two, we can prepare in the best way possible. 

Your Most Valuable Asset: People

During any type of catastrophe, securing the safety of your employees and any other personnel in your building is your highest priority (next comes your facilities). The most effective way to accomplish this is to have an evacuation plan in place that directs your staff how to exit as quickly as possible. Quite frankly, a well-developed plan will save lives. 

When structuring your evacuation plan, make sure you bring personnel from all levels of your organization to the table; this could include a facilities manager, your safety director, your human resources department, someone from upper management, and others who may be able to offer insight. As you develop the plan, consider multiple scenarios and different types of disasters that could occur at your place of business, and map out exit strategies accordingly. For example, a fire in a specific part of your facility may very well cut off an otherwise available escape route, which would then require a different plan than an earthquake or a flood. Considering various circumstances will help you create the most effective program to get your employees to safety as quickly as possible. Because there are always new staff members being added to a business, make sure your evacuation plan is introduced in a practical way so they’re comfortable and familiar with the requirements.

Practice makes perfect. Once developed, run through the exit scenarios on a regular basis with your employees. Initially, it’s a good idea to train your personnel and hold planned practice drills. But once that’s completed, start announcing drills at random times without giving any notice. You will be surprised how quickly people can forget how to execute your plan. Consistent practice will ensure that both new and established employees are knowledgeable of the proper procedures, and will help immensely if the need for a quick exit ever arises.

A few other points to consider:

  • Make sure emergency contacts are kept current. One simple way to accomplish this is to verify information during your annual reviews with your employees, confirming that their information is up to date (including their emergency contacts). 
  • Keep safety equipment on hand. Be certain that you have proper safety equipment in accessible locations in your building, including first-aid kits, fire extinguishers, eye-wash stations, automated external defibrillator units, etc. Train some of your key staff members regularly so the equipment can be used properly in the event of an emergency. Having this on hand will be of no use unless you have personnel trained to use it.
  • Learn first-aid basics. At Ferrari Color, we hold a first-aid/CPR class every two years taught by an outside company. Employees represented from all departments in our organization attend, ensuring that each of our shifts has at least two people trained in these areas. We hope that we never have to use our training, but we’re prepared just in case we do.

Back Up Your Data

It’s crucial that you have a plan for preserving your company’s data. The destruction of all that information without a backup will often bankrupt a company. Consider how catastrophic it would be for your business to lose months’ – or even a few years’ – worth of data. It would be almost impossible to recover. With the availability of cloud-based storage options (and the relatively low cost associated with this option), there really is no excuse for a business to suffer any significant loss of data. 

Of course, your storage program is only effective if you regularly back it up to your servers. Otherwise, it kind of defeats the purpose, right? 

Plan for Business Continuity

A natural disaster always requires an intense amount of effort, energy, and stress during the initial days, or most likely, weeks and months, after it occurs. Your first priority that needs to be addressed immediately is to account for your people, facility, assets, data, and other important matters. Then, once the proverbial dust settles, your biggest concern will become the ability of your business to continue functioning. Just as proper planning can potentially save the lives of your employees, structuring the right type of business continuity plan can actually save your shop.

The most critical aspect of such a plan is your insurance coverage. All businesses (presumably) have commercial property and casualty insurance. However, it would be wise to review your policy with your insurance company to verify any limitations that may exist when it comes to various natural disaster scenarios. For example, if you live in an area designated as a flood plain, you will likely have some exclusions if a major flood causes damage to your property. You should also review the coverage limits to make sure that if there’s major damage to your building, equipment, inventory, etc., that your insurance will provide you with sufficient compensation to effectively rebuild your organization, whatever that might look like.

Ferrari Color is headquartered in Salt Lake City, which lies upon a major earthquake fault line. As such, our property and casualty insurance excludes damage caused by an earthquake. As owners of the business, we decided several years ago that it would be too risky to the long-term health of our organization to function without earthquake coverage. We ended up purchasing an additional insurance rider written exclusively for that scenario. It is an expensive premium to pay each year, but by adding a fairly large deductible, we’re able to bring the premium cost down to a manageable level – and we’re much more comfortable knowing that if an earthquake hits, we’ll be able to keep the company going. 

Many property and casualty policies also offer business income interruption insurance, also known as business income insurance. This covers the loss of business income during the period of time that it may take for your business to rebuild and begin functioning again. This type of protection can even apply for small disasters, such as a fire that damages some of your inventory or equipment. Property coverage will replace the inventory or equipment in this case, but business income coverage can also cover the profits that you may have lost with a customer not receiving their product. 


Picking Up the Pieces

The good news is that the odds of your business suffering through a natural disaster that puts your employees in harm’s way and/or damages your business are pretty low. However, if you’re among the unfortunate few who end up experiencing such a fate, that bad news then becomes catastrophic news if you’re not prepared with a disaster recovery plan. Take some time to review your plan to ensure that it will safeguard your employees and your assets. Make sure it includes measures to protect your company’s data. If you don’t, this could easily destroy your business, even if your facility is back up and running. And lastly, review your insurance policy with your carrier to address any holes that may currently exist. Properly acknowledging each of these areas could be the difference that ensures your shop’s survival.



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