Preparing Businesses for Natural Disasters

The Philippines is the no. 3 country in natural disaster risk, according to the World Risk Index 2011 by the United Nations University. This is no surprise because not only are we visited by numerous typhoons yearly, we are also located in the Pacific Ring of fire, an area where a large number of earthquakes and volcanic eruptions occur. Despite the high risk, however, it seems that companies still have inadequate preparation for natural disasters.

Uncommon they may be, but it is just a matter of time before a natural disaster strikes and the result may be catastrophic for the company. For example, an Ondoy type typhoon comes along only once every few decades; but it is inevitable that a tropical depression of this category will occur.

However, there are limits to a company’s resources because trying to insure against every risk will be too costly. The best guide is to study the history of natural disasters in your area and to see what are likely to occur and their possible effects. I enumerate some of the most common calamities that may be encountered:

• Typhoons. They are the most common natural disasters, but often times our preparation is still insufficient. The reason for this is that the strength and impact of typhoons vary greatly. Furthermore, the storm signals do not indicate the quantity of rain, which is the cause of flooding and the bulk of the damage. Metro Manila was only under signal no. 1 when Ondoy wreaked havoc with unprecedented flooding.

While the worst rarely occur, this is not reason enough to be complacent. It is better to prepare for the worst, than to be caught flat footed. Take precautions by anticipating potential flooding. Have pallets where inventory and other company assets are stacked so that they will not be reached by the flood. Secure or take down anything that may be blown away by strong winds.

• Fires. Fires are far less common than typhoons, but in the urban areas, they cause more damage. The most commonly cited cause is faulty electrical wiring, so have yours checked every two or three years. Have adequate and working fire sprinklers and fire extinguishers and make sure everyone knows how to use them. Install smoke detectors in key areas so that fire will quickly be detected. If there are already smoke detectors, they must be checked regularly to ensure they are still working. Also, critical documents must be stored in fire proof vaults.

• Earthquakes and tsunamis. Unless the quake is extraordinarily strong, most of the danger will come from heavy objects that may fall. They should be secured to the ground to minimize the danger. Have your building checked for structural failure if there are cracks. For those in tsunami prone areas, always be tuned into possible tsunami warnings from the fastest source.

While I had offered some specific solutions above, there are certain measures that can be applied to almost any type of natural disaster.

• Have adequate insurance. It is not only the amount of insurance coverage that should concern you but also the things that are covered. One of the provisions that must be included is the Acts of God clause, which covers damages due to natural causes. Do not just insure against damage to property, but also against losses arising from business stoppage. This is covered in Business Interruption Insurance. Read all the fine print in your insurance policy and have someone knowledgeable explain the parts you do not understand. Pay particular intention on how to file claims. You must have documentary proof of the losses you suffered, and should know how to go about this.

• Practice responding to emergencies. Have regular fire and earthquake drills. Not only will each person know what to do during these situations, but this will also greatly reduce panic which is the most fatal reaction in an emergency.

• Design facilities with safety features and in compliance with the Building Code. Have convenient fire exits, earthquake resistant structures, generators and others facilities that are useful in disasters.

• Have fall back suppliers. During the recent earthquake and tsunami in Japan, companies world-wide were affected because they had a lot of suppliers in Japan they could not readily replace. Nurture secondary suppliers that you can tap in case your main supplier cannot deliver. Looking for another supplier may take a long time especially when you are purchasing a specialized item.

• Have an alternate location planned in case you cannot work in your present location. Like the selection of a supplier, finding an acceptable location, even if only temporarily, may not be easy. Many aspects must be studied and doing it in haste may lead to another disaster.

• Have a clear succession plan. In case key personnel will become disabled or deceased due to a disaster, there must be a plan for someone capable to take his or her place.

• Keep your fire policies in another site. It would be terribly inconvenient to have your fire policy burned along with your office building.

• Have all your computer files backed up and stored off site. Since everything may be damaged in the office, it is important to also have back-up files in another place.

• Have well-stocked first aids kits, emergency food and water supplies, and equipment. This may prove a life saver in case of injuries or a prolonged crisis. In flood prone places, it may even be justified to have life vests or compact boats.

• Reserve cash for contingencies. It is of the highest importance to have cash reserves for extraordinary needs. There is no way to anticipate all the potential dangers and having cash on hand can serve many purposes.

I have tried to list down every major thing that came to my mind, but it is certain that the list above is far from complete. Hopefully though, it may serve as a starting point to get you thinking of the important need for preparation against natural disasters — not only to save company assets, but the lives of your people, too.

*Originally published by the Manila Bulletin. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.

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