PROPERTY LOSS CONTROL: BUSINESS ALLIANCES PLAN NEW WAYS TO WEATHER STORMS

On a recent Wednesday morning in Wilmington, N.C., local risk managers and emergency management officials talked about preparing for emergencies.

Not because a tropical storm was moving up the coast. Not because damaging winds and rains were about to blitz Wilmington, a coastal town hit by two hurricanes last year.

The meeting spelled a change in risk management for Wilmington. Proposed was the charter for the Wilmington/New Hanover Disaster Recovery Business Alliance or DRBA, a public/private partnership that promises better disaster relief by reaching a difficult goal: getting businesses running as soon as possible after a disaster.

Disaster recovery plans that involve businesses working together are becoming more popular as risk managers in more communities realize their organizations' interdependence after catastrophes.

"Planning an island of stability in an ocean of chaos does not work" as a model for catastrophe planning, said Stephen Baruch, one of the three co-founders of the DRBA, a not-for-profit alliance based in Palo Alto, Calif.

"Contingency planners look at internal planning," Mr. Baruch said. "If there's a disaster, they ask, 'Will this building survive?'" Now, Mr. Baruch said, they need to ask, "Will the business in the building survive?"

The private sector appears to agree with Mr. Baruch's thinking. Businesses often depend on each other as well as government for vital services during emergencies such as a hurricane.

"It's a cyclical relationship," said a spokeswoman from Carolina Power & Light Co. of Raleigh, N.C., which had 792,000 customers without power after Hurricane Fran hit Wilmington last September. "We need resources businesses offer in order to get power back on and they need power back on to provide resources."

"Businesses are not typically involved in planning," the spokes-woman said. "But they're the ones with the food and gas and housing" that make it possible for Carolina Power & Light's linesmen to respond to an emergency, she added.

With a budget of $270,000 per year and funded by the Electric Power Research Institute also of Palo Alto, Mr. Baruch and his two co-directors crisscross the country and spread their message of comprehensive planning for disasters. Mr. Baruch works for EPRI.

Wilmington is one of five communities to respond. The others are Tulsa, Okla.; Evansville, Ind.; Memphis, Tenn.; and Westchester County, N.Y.

Mr. Baruch said most risk managers have done sound internal planning for their physical plants. What they need to think about now, he emphasized, is external planning.

"How do you get a business back on line?" echoed Will Brothers, chief-natural hazards planning for the North Carolina Division of Emergency Management, who helped plan the recent Wilmington meeting. "How do you get workers back to work if there is debris on the road?"

The variety of industries in Wilmington, Mr. Brothers pointed out, from banks to a nuclear power plant to a port that is used to ship munitions to Africa and Europe, makes Wilmington "one of the most vulnerable parts of the state," said Mr. Brothers.

Towns and municipalities across the United States are turning to comprehensive planning for emergencies.

"It seems like there has been a large number of natural and man-made disasters recently," said Dennis Kirschbaum, executive director of the Public Risk Management Assn. in Arlington, Va.

With 2,100 members including cities, towns, school and utility districts, Mr. Kirschbaum said emergency planning is a "hot topic" among municipal risk managers.

Something new has been added to plans for disaster recovery, Mr. Kirschbaum said. Responding to "terrorist-type risks is an emerging area" for municipal planners, he said. After mentioning the recent floods in North Dakota and bomb scares in Washington, Mr. Kirschbaum asked, "How is what happened in Oklahoma City different from an earthquake?" referring to the 1995 bombing of a federal building that killed almost 170.

Driving the movement for comprehensive catastrophe planning is the need to reduce the costs of disasters, said Gary Loomis, emergency operations team leader for the city of Los Angeles.

"The move nationally is toward mitigation efforts. The federal government and (Federal Emergency Management Agency) have said they can't afford recovery and reconstruction costs" from natural disasters, Mr. Loomis said.

The key to business resumption, said Mr. Loomis, is to take time to develop a plan that provides for catastrophes.

Basic points to cover, he said, include storing computer records offsite; having an alternate facility if your physical plant is not habitable; and storing enough food, water and clothing to be self-sufficient for 72 hours.

Hiring a director with knowledge of key local industries and disaster recovery planning is the first step for many municipalities in comprehensive catastrophe planning.

At the recent meeting in Wilmington, Mr. Baruch announced that the state of North Carolina and North Carolina Power & Light each gave $25,000 to kick-start the alliance. The $50,000 would be used to hire a part-time director under his supervision, Mr. Baruch said.

The Wilmington/New Hanover DRBA plan will be completed by early 1998, according to Mr. Baruch.

"To be a DRBA, the industries have to have done an internal plan to show how vulnerable they are," said Mr. Baruch. They then do external planning, focusing particularly on their supply base, and realize how much more planning they must do, he added.

In 1995, Orange County, Calif., became the model for DRBA, Mr. Baruch said, and many companies, including a few in the Fortune 500, soon became aware of the shortcomings of their disaster plans.

Local businesses in Orange County tended to have suppliers in common, Mr. Baruch explained. "They each used the same office of the Postal Service," he said. If an earthquake destroyed the post office, how would these companies be able to do business? he asked.

DRBA still is young, and since it started in 1995, none of its five members has had to respond to a disaster, Mr. Baruch said.

Big cities also are investing in new plans and agencies to reduce the costs of business interruption. In March 1996, New York Mayor Rudolph Giuliani created the Mayor's Office of Emergency Management and hired Jerome Hauer as director. Mr. Hauer, a native New Yorker who worked in Indiana as the director of the State Emergency Management Agency from 1989 to 1996, leads an agency with 38 staff members and a $3.1 million budget.

The agency can work as a "catalyst for coordinating the city's response to any major, multiagency incident," said Mr. Hauer last week in his downtown office. He kept one eye on the local 24-hour news channel as he spoke about the agency's comprehensive disaster plans.

Along with "hazard-specific plans" for heat waves, hurricanes and snowstorms, Mr. Hauer's agency is expected to work with businesses throughout the city. "Clearly, having the plans in place helps mitigate losses," he said.

The Mayor's Office of Emergency Management can help New York City's businesses by cutting through red tape, Mr. Hauer said. When a fire broke out in NBC's Rockefeller Center Studios last October, the network panicked: It was set to broadcast the major league baseball playoffs and the network was down.

"We were able to work with the buildings department, the Land Marks Commission, Consolidated Edison, the fire department," Mr. Hauer said.

His staff worked with inspectors from various city agencies to obtain waivers on temporary wiring hanging outside NBC's building.

"They were able to get permits for certain things in hours," Mr. Hauer said.

Indianapolis and Boston have separate agencies to respond to emergencies, Mr. Hauer said, and Detroit and Los Angeles are planning to establish them.