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WASHINGTON-A new business alliance is assessing how best to prepare for and manage the disruptions that natural catastrophes can cause.
Rather than emphasizing only physical property loss control, the Palo Alto, Calif.-based Disaster Recovery Business Alliance is urging business leaders, public emergency management officials, risk managers and others to view the entire business "lifeline" that must be restored before an area struck by disaster can recover.
"Clearly, an effective comprehensive plan is what you need, and you can't do that in isolation. You have to know what the utilities are planning to do, what the phone company is planning to do and what the government agencies are planning to do. You can write the best plan in the world for your business, but if you don't coordinate it with everybody else, it doesn't necessarily work," said Millie Workman, risk manager of Mueller Industries Inc. in Memphis, Tenn., and Business Insurance's Risk Manager of the Year in 1992.
Ms. Workman has been active in the Business Emergency Preparedness Council, a Memphis-based alliance that was founded in 1990, went dormant a couple of years later and was re-established last year (BI, Nov. 25, 1996).
The Memphis group has been working with the DRBA on matters of common interest, Ms. Workman said.
"I think there are several things groups like this can bring about. Awareness is the biggest one," said Ms. Workman.
"Disaster recovery planning is something that most people probably think is a good idea, but there's still a lot of the attitude that 'It can't happen to me,'" she said. "Sometimes companies are not as aware of their vulnerabilities as they should be. We think in big terms, such as earthquakes and hurricanes, but there are so many other things that can have an impact on your business."
"Unless business recovers, the community never fully recovers," said Mary L. Carrido, president of MLC & Associates, an Irvine, Calif.-based business consulting firm and a director of the new alliance.
Ms. Carrido said she and the Disaster Recovery Business Alliance's other founding directors hope to incorporate the organization as a non-profit group later this year. They also hope to start up business disaster recovery alliances throughout the country.
When there is a disaster, the alliance will "come in as sort of a Red Cross" to help get businesses back in operation, she explained.
"Everybody talks about public and private sector partnership-the DRBA truly is public/private partnership," she said.
According to its charter, the DRBA hopes to, among other things, "provide ongoing research" into what the private sector should do to mitigate losses from a wide range of disasters; act as liaison with public agencies, trade groups and researchers to "advance shared goals of hazard mitigation"; and to provide programs, leadership development and other services to a "network of regional alliances and their members."
The DRBA already has won the support of the National Emergency Management Assn., which is a society of state emergency management officials. The two groups signed a memorandum of understanding to work together in Washington last week.
"This gives state (emergency management) directors another tool in their toolbox" to deal with economic impact on communities of disasters, said A. David Rodham, president of NEMA and assistant secretary of Massachusetts' executive office of public safety.
Without planning to get businesses up and running as quickly as possible after a disaster, "the second disaster will occur," said Roy C. Price Sr., Hawaii's vice director of civil defense. The second disaster comes in the form of lost tax revenue and unemployment, said Mr. Price, a past president of NEMA.
The DRBA's approach differs from traditional contingency planning, said Stephen Baruch, team leader of the Palo Alto, Calif.-based Electric Power Research Institute's Community Initiative and one of the three founding directors of the DRBA. The Electric Power Research Institute is a non-profit research facility supported by the utilities industry.
Contingency plans usually only address facility survival rather than business continuation, he said. The DRBA approach looks at community infrastructure and recovery, he said.
"The purpose is to provide a true collaboration between the private and public sectors, to exchange information both before, during and after a disaster, and it's the missing link between the public and private sector that will help mitigate and reduce losses," said Mr. Baruch.
After Hurricane Andrew struck South Florida in 1992, Southern California Edison Co. sent a team of employees to the hurricane-damaged area to see what they could learn from Florida's experience. The team found that the missing link in recovery was getting businesses back in business quickly, Mr. Baruch said.
"Communities don't rebuild until their businesses rebuild," he said.
The DRBA's multipoint approach to disaster mitigation includes a focus on how to strengthen links between entities rather than on internal corporate planning; placing an emphasis on "lifelines and key economic players"; a stress on recovery and reconstruction rather than emergency response; and stressing restoration of normal commercial channels rather than disaster relief.
Large-scale disasters have a "significant ripple effect," said Janet W. Gorman, the group's third founding director, principal of The Workman Group of Pasadena, Calif., and executive director of the state's Orange County Disaster Recovery Alliance. The Orange County alliance, founded in 1995, is developing a comprehensive regional business recovery plan.
"Traditionally, it seems that the focus has been on insured property damage. That implies that the only losses result from direct hits on facilities. In that aspect of loss, there's a great deal of energy placed on mitigation of those losses," including improved building codes and construction techniques, she said.
"Our focus is a little different. Our concern is really broader than that. We're looking at the hit to the system to which these businesses are part," she said.
That "system" often goes unnoticed, she pointed out. "As long as everything works fine, we don't notice it."
Then comes the disaster, links are cut, and business connections are lost, said Ms. Gorman.
In fact, the typical business is more likely to suffer from the ripple effect of a catastrophe than from a direct hit, she added. "Our work focuses on whole regional areas. That's why these alliances that we're forming are so important to us."
The DRBA looks at "core systems," she said. The DRBA seeks to get representatives of such systems-major employers, trash and waste disposal, utilities and the like-as initial members in an alliance. Such lifeline systems would be the first to be restored after a catastrophe. According to the DRBA's founders, the private/public planning partnerships will help accelerate economic recovery after a catastrophe occurs.
Supporters of the DRBA's approach are ready for any criticism that such a public/private partnership amounts to a disguised form of "corporate welfare."
"This is a clearinghouse. Government is not forcing this or playing any favoritism," said Ms. Carrido.
Dale W. Shipley, Ohio's emergency management director, said working with industry to help prevent businesses and their employees from becoming disaster victims might "help me better perform my job of taking care of victims."
For more information on the DRBA, contact Stephen D. Baruch at the Electric Power Research Institute, 3412 Hillview Ave., Palo Alto, Calif. 94303-0813; 415-855-8912; firstname.lastname@example.org.