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Natural Disaster Risk Management Plan for Businesses

Natural Disaster Risk Management Plan for Businesses

Business Risk Management After Natural Disaster: Strategies and Resources for Business Leaders

A natural disaster can have devastating effects on your business operations, your employees, and the local community at large. As such, it is prudent for any business leader to have plans in place to manage their affairs and perhaps even serve their community in the event of such a crisis. What natural disasters you should prepare for will depend on factors such as the geographical area you are located in and what type of operations your business runs. However, at the bare minimum, you should have a generalized plan of action to address your business interests in the event of a large-scale emergency.


A Business’s Role in the Community Following a Natural Disaster

Businesses play many important roles in their communities, circulating money and resources into the local economy, affecting local culture, and influencing the quality of life of their employees. Depending on the type of business, they may even play many more roles in their community. For example, a library can serve as an educational resource center as well as an option for shelter.

Businesses can also choose to go above and beyond their natural role in the community, and choosing to do so can be especially valuable in times of crisis. It is not only a matter of moral obligation; it is also often a smart business move. Businesses that are seen to generously help their communities in times of need may be viewed more positively by the community, while those that choose not to may take some blows to their reputation. Furthermore, damage to the community often results in damage to businesses within the community, due to factors such as economic hardship of residents.

How your business can help the community will depend on the circumstances. If you are a food supplier, it could be helpful to donate food. If you employ affected locals, you could donate to help them recover. If you have a physical location, you could offer your offices as shelter. It is important, however, that your efforts genuinely help the community, and are not simply token gestures, as a half-hearted effort will be hardly more beneficial than no effort at all.


Planning Stages

Your strategy for dealing with a natural disaster will depend on your unique business operations, assets, and needs. However, there are some core stages that every business should address when developing a natural disaster preparedness plan.


Business Impact Analysis (BIA)

Before you begin building the plan itself, you will first need to conduct a business impact analysis. A BIA seeks to anticipate the effects of various scenarios on a business, such as loss of sales or increased expenses in the event of a natural disaster. This will give you the foundational data you need to build your natural disaster preparedness plan. There are many ways to conduct a business impact analysis, but a good place to start is a simple BIA questionnaire. A BIA will of course be a greater challenge for larger businesses with more complex operations, as they will need to consider more factors and consult a wider range of insiders for necessary information.


Contingency Plans

A contingency plan is a plan for what to do for the duration of an unusual event, such as a natural disaster. This plan will involve steps that will be taken if the event comes to pass, as well as allocate resources for that possibility. Examples of contingency plans include:

  • Planning of evacuation routes;
  • Installation of emergency equipment;
  • Investment in backup power sources;
  • Planning for adjusted operations in the event of loss of workforce;
  • Insurance that covers potential loss of or damage to inventory or property;
  • Developing remote work options in case the physical location is compromised.


Continuity Plans

A continuity plan is a plan that accounts for actions that need to be taken for a business to resume operations as efficiently as possible following an unusual event. Examples of continuity plan measures include:

  • Allocating additional funds for things like emergency PTO, repairs, and stock replenishment;
  • Building relationships with a variety of other businesses and suppliers to speed the recovery of supply and business operations;
  • Developing remote work options in case the physical location remains compromised;
  • Preparing alternate transportation for goods.


Further Reading

Resources that can further benefit business leaders outlining emergency preparedness plans include:

  • Federal Emergency Management Agency (FEMA): This is a comprehensive continuity planning guide published by FEMA.
  • Ready.gov: This is a worksheet published by the U.S. government to help businesses plan continuity resources.
  • AP News: This is an overview of natural disaster insurance options that your business may benefit from considering.
  • GitLab: This page provides advice for adjusting business operations to remote channels as an emergency response option.


IT Disaster Recovery Plan

An IT disaster recovery plan will anticipate the potential for loss or breach of information during a disaster, and employ strategies to prevent and respond to these possibilities. Potential measures that may be included as part of an IT disaster recovery plan include:

  • Regularly updating software;
  • Creating backups for data;
  • Employing a third-party storage system;
  • Employing a third-party security system;
  • Conducting regular cybersecurity audits.


Incident Management

Incident management is the process by which an IT team strives to return the functions of their systems to normal as quickly as possible. This can be achieved via the following measures:

  • Anticipation of service losses;
  • Creation of channels for user reporting;
  • Solution analysis;
  • Employment of automatic incident notifications;
  • Creation of an escalation strategy;
  • Halting regular operations until full confidence in IT systems has been restored.


Crisis Communications Plan

In the event of a natural disaster, a business should ideally be prepared to provide information and updates to interested parties such as consumers, stakeholders, employees, community members, and government officials. This information could include anything from a timeline for the expected return of access to services to an inventory of lost products. Some measures that may be included in a crisis communications plan include:

  • Identifying your crisis communications team;
  • Investing in spokesman training for your crisis communications team;
  • Setting up a notifications system;
  • Preparing holding statements;
  • Offering easy access to your notifications system and contact information.


Employee Assistance and Support

In the event of a natural disaster, your employees could be negatively impacted in a wide variety of ways, including loss of work hours, loss of personal property, and emotional trauma. By taking care of your employees during this crisis, you will potentially allow them to better do their jobs in the long run, earn loyalty from your employees, and demonstrate ethical business operations to the public. Options for supporting your employees during a natural disaster include:

  • Providing transportation;
  • Providing direct financial assistance;
  • Offering remote work options;
  • Expanding flexibility for work hours;
  • Offering additional PTO;
  • Expanding access to medical care;
  • Expanding access to counseling;
  • Offering care packages;
  • Offering your premises as an avenue for sheltering in place.


Hazard Mitigation

Hazard mitigation refers to steps taken to eliminate hazards or reduce the damage caused by them, especially in a specific scenario such as a natural disaster. Hazard mitigation measures for a business may include steps such as:

  • Structural improvements;
  • Adjustments based on professional hazard audits;
  • Accessibility updates;
  • Employee training for emergency response;
  • On-premises adjustments based on government recommendations for natural disaster hazard prevention.


Risk Prioritization

Risk prioritization is important because it allows you to determine how much of your resource pool should reasonably be dedicated to each potential risk. For example, a business in California would be wise to allocate a significant portion of their resource pool towards earthquake response, but likely will not substantially benefit from hurricane preparations. In contrast, a business in Florida should likely invest in a hurricane response plan, but likely will not substantially benefit from earthquake preparations.

As another example, a bank would be wise to invest heavily in IT disaster recovery plans while carrying few physical products that they would need to worry about being damaged. Meanwhile, a small furniture store would not need to worry as much about IT disaster recovery options, but would be wise to take steps to protect their physical inventory.

In short, while it is a good idea to cover your bases, you should prioritize risk based on likelihood, as well as the impact that it would have on your business. Deploying data analysis systems to consider environmental, health, and safety risks can provide a structured view of risks and how they should be prioritized for any business.


Risk Management

A risk management plan identifies, analyzes, prioritizes, and monitors risks, and establishes protocols to address these risks if the occasion arises. A risk management plan should be a living document that reassesses risks, provides dynamic data analytics, and adjusts the prescribed strategies on an ongoing basis. To develop an effective risk management plan for natural disasters, you should take the following steps:

  1. Designate a risk management team;
  2. Identify risks;
  3. Prioritize risks;
  4. Determine who would be impacted by the event;
  5. Acquire and deploy risk management information systems and risk analytics software for processing and managing data on an ongoing basis;
  6. Analyze relevant data continuously to ensure all processes and plans are up to date and appropriate;
  7. Anticipate potential losses;
  8. Create an easily accessible document outlining the plan;
  9. Clearly outline each risk, the potential damages associated with each risk, the protocols meant to prevent that risk, and the protocols for responding to that risk;
  10. Regularly reassess and update your risk management plan.


Business Insurance Coverage and Natural Disaster Assistance Resources

Resources related to business insurance coverage and emergency assistance include:


General Resources for Developing a Natural Disaster Plan for Your Business

Resources that can help you develop your business’s natural disaster plan include:


Resources for Natural Disaster Risk Assessment

Resources that can help you conduct risk assessments related to the potential impact of natural disasters on your business include: