New-style disasters highlight importance of planning

Over the past nine months, businesses have been challenged with a number of scenarios – SARS, blackouts, unusually harsh floods and hurricanes – that have not normally been included in operational and technology recovery planning. According to the insurance Practice of KPMG LLP, this has had an effect on insurance companies' willingness to bear all of the risk of their customers' exposures, and is leading to limits on business interruption policies, greater awareness of what will be excluded and overall, higher premiums.

"Businesses today are far more sensitive to their exposure to disaster than two to three years ago," says Neil Parkinson, a partner in KPMG's insurance practice. Transferring a risk by purchasing insurance is only one alternative in handling a risk. If it becomes more expensive or less available, you can either retain more of the risk yourself, or do more to mitigate it. Larger businesses have commonly retained some risks rather than insuring them, but not everyone can do this.

Mike Moszynski, KPMG senior manager specializing in disaster recovery, says companies are starting to realize the importance of pre-planning. Here are his tips on how to better prepare for potential disasters:
• Focus on planning. Plans should evolve over time as companies learn continuously from previous events, such as SARS and the blackout. Even though it's impossible to anticipate when a disaster will happen, recent disasters have taught us the importance of having a plan in place.
• Inform all employees who to call and where to go in a crisis.
• Keep senior executives informed and have them trained to execute the plan within the first four hours after a disaster strikes.
• Understand what the company's critical resources are i.e. people, technology, third party resources.
• Communicate to employees throughout the organization on a timely basis. Employees need to be informed before a disaster under what circumstances they should come to the office or stay at home.