OOH … THAT’S GOTTA HURT

Any disaster that puts productivity in a holding pattern can wreak havoc. A new study finds economic havoc is a likely fallout from even a relatively short business interruption.

A recent survey of 461 companies done by the Las Vegas firm Urban Environmental Research found that close to 60 percent of local businesses would classify a two-week closure as "devastating." More than 40 percent of companies responded that a shutdown of two to seven days would be devastating.

"Most businesses haven’t prepared for a disaster," said Sheila Conway, the Las Vegas research group’s managing partner. "Most of these businesses would go out of business after a one-week interruption."

The study also found that 74.4 percent of businesses had never attended a meeting on disaster preparedness; 64.2 percent had never received written information on disaster preparation; and, almost half — 48.2 percent — had never developed a business disaster-recovery plan.

"I am not surprised," Nevada Commission on Homeland Security member Maureen Peckman said.

Being on the commission has made Peckman keenly aware of Nevada businesses’ lack of disaster preparedness. It doesn’t have to be this way, she added.

"A lot of people don’t think of purchasing business interruption insurance. There’s a lot of things you can do proactively to keep your business open," Peckman said.

The Urban Environmental Research study found that 59 percent of businesses here had not purchased business interruption insurance. Almost 70 percent had not bought flood or earthquake insurance, even though the Clark County Department of Emergency Management ranks flash flooding among the disasters likeliest to hit Southern Nevada.

Earthquakes and raging fires could strike the valley, but that nagging flu bug going around the office could do its fair share of damage, too. A communicable disease outbreak is ranked as the top disaster risk facing the county by the Clark County Department of Emergency Management.

The influx of millions of tourists to Las Vegas each year puts the city at risk to be a meet-and-greet place for contagious diseases, said Carolyn Levering, the department’s plans and operations coordinator.

The county department ranked flash floods second on the hazard scale, followed by wildfire.

Power-grid outages are also an especially high risk on the West Coast, Peckman said. A big outage could leave local companies particularly vulnerable; the Urban Environmental Research study found that when businesses responded to a question about electricity, 79.2 percent said power was so vital that they couldn’t operate without it.

And, if lost power and disease weren’t scary enough, a recent Rand Corp. report suggests Southern Nevada businesses should consider terrorism a threat. The study, released in September 2006, listed Las Vegas as one of the top 10 cities at risk for a terrorist attack.

Businesses should embrace disaster preparedness because it can put them in the best position to help themselves, observers say. Levering, for example, said the community’s life-or-death needs would be tough to meet if a full-scale disaster were to strike; police and fire departments already have their hands full with day-to-day heart attacks and accidents.

"We don’t have enough first responders in the first place," she said. "The best we could do would be to call people off duty and bring people over from shifts. Even with all of that, it wouldn’t be enough in a big enough disaster, and that’s assuming the first responders aren’t among the victims."

A disaster needn’t threaten everyone everywhere, Las Vegas Chamber of Commerce spokeswoman Cara Roberts added. Sometimes, she said, disaster can hit one business.

"A fire is a disaster for your business," she said. "The death of a key employee can be a disaster for your business."

Roberts pointed to the Jan. 25 fire at the Monte Carlo as a reminder that disaster can strike in unexpected places. She credited MGM Mirage for its disaster planning, noting no lives were lost. The hotel-casino reopened two weeks ago.

A disaster may be outside a businessperson’s control, but mitigating it isn’t.

"There are things you can do when the incident is unfolding, but 95 percent of it is done in advance, like talking to your insurance agent and getting a free (risk) assessment," Peckman said.

Cooperation can protect the community. Companies should agree with competitors to cover each other’s clients if a disaster strikes and one business is disrupted, Peckman said.

"People think of saving lives, but not of protecting business continuity," Peckman said.

Levering, meanwhile, advises business owners to take care of their employees first, by promoting health and wellness programs, offering flu shots for free, and insuring as many of their employees as possible.

Next, she said, businesses should assess their workplaces.

"Are you prone to earthquakes? Is your building up to code? If it is an older building, is it up to current code?" Levering asked. "Do you have an evacuation plan? Evacuation is more than just getting people out of an area. You have to account for them after the fact.

"Establish a plan and then tell your workers what it is and practice it," the operations coordinator continued. "Once all the planning is in place, you need to take the time to train people to participate in the plan. Present it within the business so people know about it."

Employees need to know where to go when a disaster strikes if they can’t return to their work sites, said John Scott, the U.S. Small Business Administration’s Nevada district director.

Peckman concurred.

"You can tell them to meet at the 7-Eleven down the street," she said.

Scott said the number of businesses that simply don’t prepare for a disaster surprises him. He recommends company officers get employees’ contact information and keep a copy off-site. He also recommends taking a weekend to plan and prepare for the worst.

"Meet on a Saturday, and do some role-playing for each person," he said.

Roberts emphasized the importance of backing up files. Save copies of data and back them up with hard copies off-site, she said. If a business is home-based, a secure facility should hold copies of all important documents and data, she said.

A fire safe is a must for any business or home, she added.

Gary Alu, a security information systems professional, has been doing backup systems for computer data for the last 20 years. He provides high-level backup support for company executives and system administrators.

"I look at backup as a five-year plan," he said of his tax preparation and certified public accounting clients.

Public companies are legally required to maintain backups of e-mails for that long.

Alu recommends disaster recovery sites for backup, and updating systems regularly.

Business owners need to ask tough questions, he said: "’Can we do without this data for a period of time?’ ‘Is it business critical?’ If it is missing, it is going to be pretty catastrophic," Alu said.

To assess disaster preparedness, businesses can get a free inspection from the Department of Homeland Security, Peckman said.

"It’s one of the little-known resources. They will come to your business and do a vulnerability assessment at no charge."

Small companies qualify, too.

"They’ll come to a business that is 900 feet or 9 feet," she said.

Levering recommends following guidelines set forth by the Federal Emergency Management Agency and the American Red Cross. Scott, likewise, said business owners would be well-served by putting FEMA, the Red Cross and SBA disaster guides in three-ring binders for that rainy day.

The Las Vegas Chamber has its own guide to preparing firms for the unexpected, "Open for Business: A Disaster Planning Toolkit for the Small to Mid-Sized Business Owner." The guides are available online.

Investing time now preparing for disaster will pay off later, Peckman suggested.

"It is a small price to pay for people who have spent their wholes lives building their businesses, to keep them open," she said.

This story first appeared in the Business Press. Valerie Miller writes for the Review-Journal’s sister publication, the Las Vegas Business Press. Contact her at vmiller@ lvbusinesspress.com or 702-387-5286.