As Californians, we know that it’s not a matter of if, but when the next natural disaster will strike. Losses from the recent Northern California wildfires damaged or destroyed over 700 businesses; others are still reeling from the Montecito mudslides. And the 2017 Mexico City earthquake continues to have experts speculating on Southern California’s “big one,” with expected damage of such an event estimated to reach upwards of $300 billion.
Acknowledging these incidents as well as the possibility of future ones, the United States Small Business Association is now offering loans of up to $2 million to repair and replace damaged or destroyed real estate, machinery, and equipment. And while this offers some reassurance, a disaster preparedness plan is still critical in order to keep your company afloat. According to the Santa Monica Office of Emergency Management, lack of preparation can come at a price:
- Companies that fail to resume operations within 10 days of a disaster are unlikely to survive
- Of businesses that experience a disaster and have no emergency plan, 43% percent never reopen; of those that do reopen, only 29% are still operating two years later.
While we hope for the best, it’s smart to plan for the worst. So we’ve identified five important areas of your business that should be evaluated to stay prepared for whatever may come your way.
1. Evaluate Your Facilities
Manufacturers are constantly working to make the factory floor a safe place to be. But even with the most stringent of safeguards and safety procedures, a disaster can still turn deadly. Three steps you can take to better safeguard your facilities include:
- Installing rollaway shutters for doors and windows
- Double-checking bolts and braces on heavy equipment that could topple over (or installing them if they’re not already in place)
- Ensuring all exits are always accessible (there can be a tendency to block some that are generally unused to accommodate storage, supplies, or equipment)
Some manufacturers also look at their adoption of automation and advanced robotics as part of a disaster plan; while the initial intent may have been to increase efficiencies, these technologies can also keep employees away from dangerous equipment and hazardous material that could become even more life-threatening in the event of a sudden disaster.
In addition to these safety precautions, you should always be sure your facilities have each of the following supplies stored on premise:
- A week’s worth of water and non-perishable food, enough to accommodate the most employees that may be present at any given time
- First aid kits
- Fire extinguishers
- Flashlights and batteries
- Waterproof plastic bags
- Shortwave radio
Some of these may sound like no-brainers, and while they may be present in your facility, they often aren’t checked with enough frequency—supplies get used, batteries die over time, and flashlights break, so it’s important to check your supplies regularly.
2. Evaluate Your Insurance
While small and medium-sized manufacturers usually have some form of commercial property insurance, it’s not likely all-encompassing. Insurance policies should be reviewed annually, and you’ll want to look into the following four coverage policies to mitigate potential damage from disaster.
- Physical loss coverage. These policies cover the costs of repair, replacement, or rebuilding of damaged or destroyed property.
- Business interruption coverage. This policy will allow you to recoup some losses due to property damage if you opt to maintain operations while you repair and rebuild.
- Contingent business interruption coverage. A disaster may not have affected you directly, but it may have affected the operation of your suppliers or business partners. This coverage protects you from losses incurred due to reliance on another company (for example, a winemaker relying on Napa Valley grapes that were destroyed in a wildfire).
- Extra expense coverage. This covers the increased costs you may incur in order to keep operations running despite a disaster.
Are your employees trained in CPR (Cardiopulmonary Resuscitation)? Can they operate an AED (Automated External Defibrillator)? Training for this and other first aid skills can be a literal lifesaver in the event of disaster (of course, they can be useful in non-disaster situations too, offering further benefit).
There are numerous ways to schedule training with a licensed provider at your workplace; for example, the American Red Cross offers customized OSHA-compliant training on-site for small or large groups of employees.
There’s also CERT programs (Community Emergency Response Teams) available in California that educate people about disaster preparedness, training them in basic disaster response skills such as fire safety, team organization, and disaster medical operations. CERT members can assist others in their workplace following an event when professional responders are not immediately available to help; of course, this training could also come in handy outside the workplace giving further incentive for employees to partake.
A few additional steps to consider when it comes to employees:
- Give a set of keys and/or alarm codes to a trusted manager or employee
- Ensure select employees know where main equipment shut-offs are and how to use them properly.
- Entrust some employees with specific responsibilities so they know what to do in the event of an emergency.
- Require each employee provide contact information that is distributed to everyone.
- Encourage direct deposit to ensure employees continue to receive a paycheck if they are entitled to it (the Department of Labor provides guidelines for paying exempt and non-exempt employees following a disaster here; it’s recommended you review this as part of your preparation plan).
4. Evaluate Your Data Recovery Plan
Physical equipment shouldn’t be your only concern. You also need to consider what’s housed inside some equipment—namely, your IT systems. Your computers and servers may be holding years of irreplaceable data and customer records that could become irretrievable in the event of a disaster if your only source of data backup is on premise.
Backing up data in the past took a lot of effort and money, involving physically moving data to another location that wouldn’t be affected by the same disaster potentially wreaking havoc on your main site. But today, Disaster Recovery as a Service (DRaaS) allows you to store critical data in a cloud-based solution. This can be especially beneficial and cost-effective for small to medium-sized manufacturers that can’t afford an IT army to support a disaster recovery plan.
5. Evaluate Your Supply Chains
In the aftermath of disaster, people always come together—even those who would normally be on opposite sides! Before an incident occurs, consider the following supply chain management techniques:
- Reach out to others in your industry, including competitors, about sharing resources in the event of a disaster
- Speak with your current suppliers to see if they have disaster plans in place, and how they intend to continue servicing your company should they be affected
- Create a list of alternate suppliers you may be able to use if necessary
As recent events have shown us, disasters can strike anytime, anywhere, making a disaster preparedness plan crucial to secure your company and employees (according to the Office of Emergency Management, over 60 percent of American workers have expressed concern regarding their employer’s disaster management plans; these worries are not only stressful, but can affect overall productivity). However, by evaluating the five areas we've highlighted—facilities and supplies, insurance, employee skills and pay guidelines, data recovery, and supply chains—both you and your employees can gain a better sense of security. After all, preparation is the best, and sometimes the only, defense!