Industry Market Trends

Why Your Plant Needs a Disaster Plan

Oct 02, 2012

Hurricane Isaac may have cost as much as $2 billion in damages and lost output from shuttered facilities, emphasizing the need for disaster planning to keep industrial production losses at a minimum.

Hurricane Isaac, which struck the northern Gulf Coast of the United States in late August, likely cost as much as $2 billion in damages. Yet it could have been a lot worse. For example, economist Bernard Weinstein of the University of North Texas estimates the economic damages from Hurricane Katrina in 2005 at $250 billion.

These disturbing reports highlight the value of disaster planning for industrial firms. What are some of the key guidelines and best practices for disaster preparedness?

Security and risk-management publication CSO notes that disaster planning has a strong psychological element, pointing out that using the phrase "disaster recovery" for the process of getting over an emergency might actually contribute to complacency because a "disaster" could seem like something that is very unlikely to occur. Instead, the term "business continuity planning" might encourage a better mindset, because it "suggests a more comprehensive approach to making sure you can keep making money" in spite of an interruption, whether major or minor.

In practice, these two terms are often combined to describe a single business continuity/disaster recovery (BC/DS) plan. This plan should "encompass how employees will communicate, where they will go and how they will keep doing their jobs" when an interruption occurs. The details will depend on the individual situation of the business and its various facilities.

An important step toward formulating the BC/DS plan is conducting a business impact analysis (BIA), CSO advises, to "identify the business's most crucial systems and processes and the effect an outage would have on the business." The level of impact on the business will help determine the level of preparation required and the amount of money that should be spent on it.

Cintas Corporation, a provider of first aid and safety products, stresses the importance of creating a written emergency action plan and keeping it up to date, according to Material Handling and Logistics News. Such a plan should be posted in a public area and direct employees to shelter facilities in case of earthquake or tornado. The company should hold regular training sessions and drills, including fire drills, says Cintas.

Industrial companies often have hazardous and toxic materials on site, and employees should be trained in how to handle such materials under both routine and disaster conditions. Cintas recounts that in 2011 "more than 150 workers at an Arkansas processing plant were hospitalized after human error led to the accidental mixing of two chemicals." Training and provision of safety equipment and protection gear are crucial elements of preparedness for incidents involving chemicals.

Small and medium-sized businesses also need to give more consideration to the vulnerability of information technology (IT) systems, according to research from security software company Symantec. Symantec found that only half of small and midsized businesses had a plan in place to deal with an outage or disruption in their technology systems, and among those who had no plan, 41 percent said it hadn't even occurred to them to formulate one.

For example, the headquarters of Scott Metals Inc. in Carnegie, Pa., suffered a flood in 2004 that wiped out all of its computers. The recovery period took about three months and the downtime and damage cost the company as much as $400,000, the Pittsburg Business Times reports. Scott did have a data backup system in place, which helped avoid a total IT loss. This is as far as many small companies go in developing an IT disaster plan, but "a more robust plan can help a company lessen downtime and make them a more attractive supplier to bigger companies or a wider variety of industries."

As we point out, creating a disaster plan can be a complicated effort and greatly depends on the individual needs of the business. If you're convinced you need to move forward and develop a plan, we suggest you review this detailed checklist and sample plan provided by Printing Industries of America.