Can Your Organization Survive a Natural Disaster?

Can Your Organization Survive a Natural Disaşter? MANAGING RISK AND MAINTAINING ORGANIZATIONAL CONTINUITY BEFORE, DURING, AND AFTER NATURAL DISASTERS 25% of businesses do not reopen following a major disaster. TYPES OF NATURAL DISASTERS TSUNAMIS Natural disasters occur when natural hazards result in loss of life or property. TORNADOES TROPICAL LANDSLIDES FOREST FIRE THE IMPACT OF NATURAL DISASTERS ON ORGANIZATIONAL CONTINUITY DIRECT ORGANIZATIONAL LOSSES Damage to Fixed-Assets & Capital Mortality Damage to Raw Materials & Natural Resources INDIRECT ORGANIZATIONAL LOSSES Production of Goods & Services That Will Not Take Place Because of a Natural Disaster Hard to Identify & Measure EXAMPLES ADDITIONAL COSTS INCURRED TO USE ALTERNATIVE MEANS OF PRODUCTION WORKERS UNABLE TO REPORT TO WORK SUPPLY CHAIN DISRUPTIONS POWER OUTAGES W1th the incrensed use of outsoureing in recent years, supply chatns have grovn longer and more complex, and companien heve become more 1nterconneeted. As company 1nterdependence has risen, so has vulnerability to a catastrophte event. JAPAN Earthquake and Rood, 2011 disrupting supply chains worldwide. Forced shutdowns of local computer and auto factories, HOW ORGANIZATIONS CAN EFFECTIVELY MANAGE NATURAL DISASTER RISK AND MAINTAIN CONTINUITY EVERY INVESTED IN DISASTER PREPAREDNESS $1. CAN PREVENT $7 WORTH OF DISASTER-RELATED ECONOMIC LOSSES CONDUCT A RISK ASSESSMENT Aprocess to identifty potential hazards and analyze what could happen if a hazard occurs. HAZARDS BUSINESS ASSETS AT RISK IMPACT ON BUSINESS > Hurricane > Flood > Tornado > Earthquake > People > Property > Supply Chain > Information Technology > Casualties > Property Damage > Business Interruption > Loss of Customers BUSINESS IMPACT ANALYSIS (BIA) Perform a BIA to predict the consequences of a business disruption. BIA is the foundation for investment in recovery ivestment prevention, and miligation strateges OPERATIONAL AND FINANCIAL IMPACTS OF BUSINESS DISRUPTION > Lost sales and income > Delayed sales or income > Increased expenses (eg. overtime labor, outsourcing, expediting costs, etc.) > Regulatory fines > Contractual penalties or loss of contractual bonuscs > Customor dissatistction or defection > Delay of new business plans MITIGATE RISKS IDENTIFIED How can the organiration minmize the risks identilied? SITE SELECTION Selecting a building sibte fora nem office or project that is not subject to natural disasters. COMPUTER NETWORK SECURITY Evaluate computer securty and determine if additional securit is neoded to provent less ef data. UNINTERRUPTIBLE POWER SUPPLY Mitigate business disption in the event of a power outage PURCHASE INSURANCE Reduces firancial impact of business internuption, loss or damage to a facity or equipment Example: 1.7. RECOVERY FLAN - strategies should be developed to restore hardvare, applicntions, and dete in tine to meet the needs of the busines recovery. INVEST IN A RECOVERY PLAN 60% 30% OF SMALL BUSINESSES DO NOT HAVE A FORMAL EMERGENCY-RESPONSE PLAN OF BUSINESSES THẠT BACKUP THEIR DATA DO SO BECAUSE OF PRIOR EXPERIENCE LOSING DATA CRITICAL VARIABLES FOR THE LONG-TERM SURVIVAL AFTER A NATURAL DISASTER THE DISASTER'S IMPACT ON THE ORGANIZATION'S CLIENTELE IF THE ORGANIZATION IS IN A DECLINING INDUSTRY, ITIS LESS LIKELY TO RECOVER THE EXTENT OF FINANCIAL RESOURCES LOST BY THE ORGANIZATION THE AVAILABILITY OF SUBSTITUTE GOODS OR SERVICES THE OWNER/OPERATOR'S ABILITY TO ADAPT TO THE NEW BUSINESS ENVIRONMENT REFERENCES http://msmonline.bu.edu HURRICANE