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Continuity plans put to the test by Katrina

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Continuity plans put to the test by Katrina

When Hurricane Katrina cut a broad swath through the Southern United States last August, many risk managers were made painfully aware of the strengths and weaknesses in their emergency response and business continuity plans.

While some plans helped organizations quickly restore their operations, others lacked the guidance companies needed to respond to such a large catastrophe.

Here are some lessons that risk managers and consultants said were learned:

  • Even the best plans will not work without adequate support.

    Some emergency response plans were ineffective because of a lack of coordination and knowledge of disaster preparedness among those with responsibilities for emergencies, said Ralph Tiede, the Weston, Mass.-based manager of loss prevention for the Liberty Mutual Property unit of Liberty Mutual Group Inc. Among the problems was the unavailability of the emergency building supplies and generators that risk managers had counted on, Mr. Tiede said.

    At Houston-based Heliport Energy Co., though, good coordination coupled with autonomy among emergency response personnel helped the company resume its offshore oil and gas exploration operations shortly after Hurricane Katrina struck, according to Gene Campbell, Heliport's risk manager. Emergency personnel began making arrangements for replacement equipment and replacement housing for rig workers the day the storm hit, Mr. Campbell said.

  • Alternative facilities must be located far enough away to ensure that they are not affected by the same disaster.

    An oil company that located its backup information technology center 30 miles outside of New Orleans lost both its primary and backup facilities, according to Jim Green, the managing partner of consultant Business Risk Solutions L.L.C. of Hernando, Fla.

    One company with a facility in the New Orleans area and another in Alabama opted not to purchase business interruption coverage because it had planned to shift operations from one facility to the other if a loss were to close either site, said Jim Lawler, senior vp at Aon Risk Services Inc. of Louisiana in New Orleans. But the damage that Katrina inflicted at both sites forced the company to shut down all operations, he said.

  • Whenever possible, make any necessary evacuations before disaster strikes.

    After New Orleans flooded, HCA Inc. had to arrange for helicopters to whisk patients and staff off the rooftops at the hospital facility it runs with Tulane University, said James D. Hinton, vp-risk and insurance at Nashville, Tenn.-based HCA. "We learned you may not be able to evacuate after the storm hits," Mr. Hinton said.

    As a result, when Hurricane Rita threatened the Houston area one month later, HCA evacuated its three hospitals before the powerful storm hit.

But HCA might have "over-reacted" in Houston, Mr. Hinton acknowledged. In future emergency weather situations, HCA hospitals may be encouraged to release their soon-to-be-discharged patients early and evacuate those extremely ill patients who could be moved safely if moving them during an emergency would jeopardize their health, Mr. Hinton said.

For the remaining 80% of a hospital's patient census, "the best thing to do is just sit there," because hospitals, as demonstrated by the minimal damage sustained by the HCA facilities in the New Orleans area, are "generally pretty solid buildings," Mr. Hinton said.