Better safe than sorry—that's the mantra of many companies when they seek a site for their next facility and directly confront the possibility of natural disasters. "When it comes to site selection for a corporate facility, everything from tornadoes to earthquakes to hurricanes to snow can be operational threats," says Rick Weddle, president and CEO of the Greater Phoenix Economic Development Council. As a result, companies usually follow some types of "natural disaster" criteria when they consider sites. Additionally, they ask for geographic information from local officials with whom they are collaborating on the project.

"It's a very top-of-mind issue for companies," says Weddle. "In fact, site selection isn't really 'site selection' so much as 'site elimination,' particularly in the very early stages. Companies look more at the risks associated with a new facility—such as hurricanes on the Florida coast or earthquakes in California—then they plan accordingly." For example, when Weddle was based in Stockton, California, he plotted out high-risk zones based on earthquake maps for companies interested in the area to help guide their choices. Meanwhile, for chipmaker Intel Corp., disaster-proofing criteria are part of the company's "overall assessment of a site's stability and the predictability of operations," says John Kelly, the company's public affairs manager. "No site selection criteria can anticipate all such disasters, so we do our best to help minimize risk down the road," he adds.

An Ounce of Prevention…

This careful approach seems to be working. Last year, the Institute for Crisis Management's (ICM) report showed that the catastrophe category—which encompasses accidents and disturbances caused by natural disasters—accounted for only 4% of all the problems that companies endured. This figure represented a one percentage point drop from the previous year. In fact, it's a substantial change from 1995, when catastrophes were responsible for 9% of all crises, says Larry L. Smith, president of ICM, which focuses on crisis communications management and consulting. "The downward trend may be a degree of luck, but it is also likely to be down a little because of better planning, better preparation and better facilities," he says.

According to Regina A. Brassil, director of marketing for disaster recovery solutions provider Agility Recovery Solutions in Atlanta, one thing companies should examine is how extensively they will likely be affected by a natural disaster in the region. For example, if a catalog company fulfills most of its orders during the winter holidays, the firm should probably avoid setting up shop in a snowstorm-heavy locale. And if a company does choose a risky location, some pre-planning can help. For instance, Brassil cites a South Carolina bank that opted for a coastline site, realizing that hurricanes were likely. When a hurricane did strike, the bank was prepared, stocked with generators and generator fuel, becoming the only bank in the area to restore ATM machines within 24 hours after the storm passed. "As a result, their market share and customer base soared," says Brassil. "So while they were located in an area highly prone to weather issues, they made plans based on their perceived risks and it paid off."

Some Tips

Along with assessing the impact of the most likely natural disasters, Brassil also has a few other recommendations for companies choosing high-risk locations. For one thing, she urges companies to limit the risk as much as possible. "If you are locating the business near a river, position the building on higher ground with the parking lot sloping downward away from the building," says Brassil. Moreover, she encourages companies to protect workers' health and safety and arrange for their speedy evacuation in the event of a natural disaster. And Weddle adds, companies should devote time to reviewing and learning about the region and the environment in which they plan to set up a facility, making inquiries and utilizing tools such as ratings (most commonly from insurance providers), and hurricane and earthquake maps. In particular, he urges companies to look into a region's emergency preparedness. Finally, don't forget to take advantage of readily available resources, says Brassil, including the local business community, chambers of commerce, business associations and the national weather service.

Meanwhile, Smith asserts that every firm should develop three crisis plans—a crisis operations plan, a crisis communications plan, and a business recovery plan. "Each of those plans should include appropriate sections to deal with all vulnerabilities, including those related to geographic risks," he notes. "A company that operates without all three plans is gambling that nothing will ever go wrong, and the odds are against them."

Source:

Disaster-Proof Location Decisions
Bridget McCrea
Plants Sites & Parks, Nov. 2003
www.bizsites.com/2003/november/article.asp?id=489