Batten down the severe weather hatches for a more resilient business
For many organizations severe weather is the biggest potential cause of major disruption. While damage may be unavoidable during a severe weather incident, there are many steps that can be taken to enhance resilience. Andy Bryson provides some useful checklists…
In 2017, the East Coast of the US and the Caribbean suffered major disruption and damage as a trio of hurricanes struck over the course of one month. In the space of 31 days, Hurricanes Harvey, Maria, and Irma combined to make 2017 the most severe hurricane season since Katrina, Wilma and Rita devastated New Orleans, Louisiana and the Gulf Coast in 2005. Hurricane Harvey alone caused an estimated USD $180 billion of damage, requiring over 31,000 federal personnel on-site to help deal with the aftermath – a clear indication of the destructive force of hurricanes.
The 2018 edition of the World Economic Forum’s Global Risks Report highlights that extreme weather events are the most likely of the Global Risks discussed in the report to affect businesses in 2018, and the second most impactful (only weapons of mass destruction could cause more damage and disruption according to the report).
Given the scale of the threat that extreme weather events pose, it is imperative that organizations prepare quickly and effectively, to deal with the potential damage and disruption they may cause.
Ironically humans generally have short memories and often underestimate the likelihood of risk, a concept known as ‘Gambler’s Fallacy’. Typically, people are prone to thinking that once a disaster has struck it won’t happen again in the foreseeable future. The reality is that hurricanes strike on a regular frequency. For businesses, this means proactivity holds the key to building business resilience.
Proactive risk management – asking yourself the right questions
When deciding how to manage the threats posed by damaging weather events like hurricanes, businesses need to ensure that sound data is used to determine the best course of action.
Questions that risk managers and the C-Suite should be asking themselves should include:
- Which of my locations or suppliers are potentially exposed to this threat?
- What would be the impact on the business if these exposed locations were unable to operate for an extended period?
- Can the activities at potentially impacted facilities be replicated elsewhere?
- How quickly can operations be re-established after the event?
- Is there an alternative source of supply?
Hurricane risk mitigation
When a hurricane strikes, the majority of damage is understandably caused by wind and water related impacts. If the building envelope is compromised, for instance when the roof is damaged or destroyed, wind and rain are able to easily enter the facility, causing major damage to both the interior as well as to equipment. With this in mind, businesses need to consider improving the wind and debris impact resistance of the building envelope before a hurricane occurs. To build this resilience, steps that can be taken include:
- Improving the wind resistance of a roof using additional fasteners in the corners and along the perimeters, typically areas where a roof will start to fail in a strong wind.
- Reinforcing doors and other openings to increase resistance to the high external wind pressure developed during severe windstorm events.
- Adequately securing heavy roof-mounted equipment, to minimise the risk of items being blown over and causing damage both to the equipment and to the roof fabric.
- Evaluating the location of key electrical equipment in areas prone to flooding or storm surge, and where possible relocating or protecting this equipment through temporary or permanent flood barriers. Additionally, during the storm event, power should be temporarily isolated where practical.
- Temporary relocation of production critical machinery and equipment away from low-lying areas. This will reduce the risk of flood damage causing an extended delay in returning to operations.
In addition to making physical improvements within facilities, businesses must ensure that employees and management are adequately trained to react appropriately in the event of a hurricane or other extreme weather event.
These actions should form part of a solid business continuity plan, and should focus on:
- The required steps that need to be taken before the storm hits.
- Making sure that contact lists for post-incident recovery resources are up to date and available.
- The procedures that need to be taken in the immediate aftermath of a storm or hurricane.
- Which vital business processes should be re-established as a priority.
- Making sure that recovery efforts focus on the identified business priorities.
In general, it may be impossible to prevent a hurricane from causing damage and disruption. That said, sound risk management decisions involving investment in physical improvements to buildings and infrastructure, in combination with proactive business continuity planning, can certainly minimise the impact of such an event and will help to ensure continuity of supply to customers.
Supply chain management
For all types of extreme weather events and natural hazards, businesses, risk managers and business continuity experts need to ensure that key suppliers also implement proactive risk management strategies throughout their operations.
A recent report from PwC highlighted that 90 percent of businesses are unaware if key suppliers even have business continuity or risk management plans. When coupled with the fact that 75 percent of surveyed businesses suffered at least one major supply chain failure a year, it is paramount that businesses become, and remain, aware of potential risks within their supply chains.
Suppliers will have variable responses to a customer’s risk management requirements. They may not have the capability or capacity to manage risk to the same standard that a customer’s own sites can achieve. If this is the case, then solutions may need to be explored within the supply chain. For example, increased inventory may need to be reserved, or alternative suppliers who can supply products at short notice should be identified. These solutions can help mitigate supply chain risk.
In general, though, businesses should have effective plans to manage key supplier exposures as well as customer demand if a primary supplier is unable to function normally. This should include a clear plan for how to communicate to customers if delays are expected – vital for businesses aiming to retain brand reputation and customer loyalty.
Building supply chain resilience is a major asset for businesses, particularly for mitigating the risk of events such as hurricanes. Hurricanes usually hit large geographic areas, so multiple suppliers could be affected by a single event. However, the good news is that hurricane prone areas and geographies are well understood. Provided a company understands its supply chains, there is time to ensure that key suppliers and partners have the right processes and protocols in place to manage risk, helping to ensure that the end supply to customers suffers minimal disruption.
At FM Global we believe that resilient businesses are successful ones. Resilience is the greatest asset that an organization can have – and by implementing appropriate risk management practices backed by sound data and research, an organization can recover as quickly as possible following an event.
Andy Bryson is Operations Engineering Manager, London Operations, FM Global. Based in Windsor, Andy leads the Operation’s Engineering Team with the goal of delivering risk engineering solutions to clients across the United Kingdom, Ireland, Scandinavia, Southern Africa and the Middle East. Andy has worked at FM Global for many years, in both the Engineering and Underwriting divisions, and has significant experience in providing engineering solutions for risk management issues.
This article first appeared on Continuity Central. Click here to read.