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Companies revise continuity plans in wake of hurricane losses

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Preparations to quickly restore company operations following widespread disaster can fall short when employees are overwhelmed with emergency needs at home, suggest risk managers who have battle-tested their business continuity plans.

Developing a strategy to communicate with workers should they flee their communities also is critical, risk managers agree.

Mississippi Power Co. learned those lessons when Hurricane Katrina flooded its Gulfport, Miss., facilities and destroyed entire neighborhoods that housed many of its 1,250 workers, said Michele Guido, business assurance principal for Southern Co., Mississippi Power's parent company.

Some employees lost family members as well as their homes. Many workers fled the area and never returned. Mutual aid agreements with other utilities helped restore power within 12 days. But restoring corporate business functions has proved a tougher challenge as employees have struggled with personal losses, Ms. Guido said.

As a result, Mississippi Power is making sure it is better prepared for the future. Following Katrina, it began building a hardened facility farther inland, and has arranged hotels and shelters to house employees and their families in case of future catastrophes.

Plans also call for sister company employees to operate storm shelters for local employee families. That way, employees needed for critical operations can report to work knowing their families are safe, Ms. Guido said.

Also, employers should realize that employees may need assistance with rebuilding their homes and their lives for a long time after a catastrophe, Ms. Guido said.

Employee issues

Contingency plans commonly consider a facility's physical survival but overlook the impact on workers, said Jim Green, an independent consultant who facilitated property disaster preparedness workshops for Liberty Mutual Group.

"While getting back in business may be the most important thing to the business owner or management, they have to understand that employees have issues as well," Mr. Green said.

Absenteeism because workers are home dealing with their emergencies following a catastrophe "is a real issue for a lot of companies," said Leonard Resto, director of risk management for telecommunications company Global Crossing in Florham Park, N.J. "You are going to take care of your family first and work will come later."

Even before Hurricane Katrina, Global Crossing had instituted an annual review of its preparations three months before the start of hurricane season, Mr. Resto said. Additional preparations occur as storms approach.

As Hurricane Katrina neared New Orleans, Global Crossing positioned emergency equipment, housed volunteer employees from neighboring states in nearby communities expected to remain out of the hurricane's path, and moved local employees' families to safe areas.

Safeguarding families allows employees to focus on assuring the company's network continues to operate, Mr. Resto said. Workers from surrounding states can help fill gaps for local employees tending to their families.

As a result of its preparations, Global Crossing's network and equipment facility located across from the Louisiana Superdome remained operational despite Katrina's devastation of New Orleans, Mr. Resto said.

In another instance, Hurricane Katrina led Marriott International Inc. to refine its emergency planning and the way it communicated with employees at 11 New Orleans hotels and other hotels in the affected Gulf Coast region, said Penny Turnbull, Marriott's senior director of business continuity planning in Washington.

Because many workers usually contact their individual worksites rather than corporate headquarters, communications with the dispersed workers proved impossible, especially because hotels were closed and phone lines were down, Ms. Turnbull said.

Marriott's innovative communication measures included printing T-shirts with its corporate emergency phone numbers. The T-shirts were given to emergency shelter workers to wear so Marriott employees might see the phone numbers and call their employer.

That way workers could learn where to obtain paychecks, how to access their employee assistance program and get instructions on how to return to work, Ms. Turnbull said.

The effort proved effective, but Marriott has since created an e-mail address and Web site, in addition to the existing telephone number, to provide employees with information during an emergency.

Greater planning for employee welfare would have benefited Dana Corp. when its plant in Pensacola, Fla., faced Hurricane Ivan in September 2004, said Dennis L. Bennice, the company's head of risk management at the time.

Ivan reached the Gulf Coast as a Category 3 storm.

The Toledo, Ohio-based automobile parts maker had a property loss prevention plan with guidelines tailored by local managers to meet the Pensacola plant's specific needs.

Ivan struck on a Friday and their efforts assured that the plant would be producing parts on the following Monday, Mr. Bennice said. The efforts included sending trucks loaded with compressors, generators and supplies from two similar plants in other states to the affected plant. The trucks--loaded with equipment identical to the Florida facility--approached from the east and west to increase the probability of reaching Pensacola should public infrastructure damage cause delays.

While those efforts proved successful, the strategy was designed to protect property rather than focusing on disaster recovery with consideration for the workforce's status, said Mr. Bennice, who now is vp in the large-account practice for broker Hylant Group Inc. in Toledo.

"We did send (employees) relief funds and supplies to help them get back on their feet, but there are always things you can do better," Mr. Bennice said.

One idea he suggested is having engineers that evaluate and recommend improvements for a company's facilities do the same for workers' homes--especially if they are in an area prone to natural disasters.

If companies were to take such additional steps, that could "pay off in spades," Mr. Bennice said.