Wild Fires - What Now?

Questions Yet to Be Asked

For those who survived the first round, having insurance, getting the family out......will come the following questions.

How fast will we get paid?
An important question, where are all the people going to be housed during reconstruction, and don't just consider the burned to the ground houses......for those of you who know.....smoke damage means the house might as well have burnt to the ground, you can't live in them.

What do you mean we did not have enough insurance?
One of the most alarming things to discover on a claim, is you do not have the coverage you think you have. Insurance professionals tell me, many people under insure or do not adjust coverage to meet increased value. How much has your home gone up in value? What about the replacement cost of all your furniture, or do you have the garage sell price for coverage?

How do we "prove" our claim?
You may be surprised at what it takes to prove your claim, and if you can't how long it will take to settle. You could have $2,000 in bedding gone......no proof, no coverage, no payment, and that is one article.

Who is going to loan you money to get by?
The bank who still expects it's mortgage payment? The credit card company that still expects their payment? What will be the demand on local rental housing, any price increases there?

Can you get insurance to rebuild?
Many times insurers will not re-insure after a huge loss, and if they do the rates will be impossible to swallow. What will it cost to rebuild.....think the trades will be in high demand?

These are just a few of the tough questions.....but if you lived in a potential fire danger area, questions you should have thought about before.

WHAT QUESTIONS SHOULD YOU BE ASKING NOW WITH YOUR RISKS, WHAT IF YOU DON'T EVEN KNOW WHAT RISKS YOU FACE?

Our course on Business Continuity and Disaster Recovery will help your business answer these questions.

The Age of Turbulence

I have just started Alan Greenspan's new book, The Age of Turbulence, adventures in a new world.

The introduction itself is revealing, he starts on September 11, 2001 and describes the impact on the world and US economy and what steps were taken to protect the financial markets. He then goes on to describe in broad terms the fact that economies are now global, that countries with low standards of living have higher savings rate then developed countries, and therefore have more capital to deploy, whereas developed countries now have extraordinarily low savings rates, and less capital to deploy. When capital is deployed in lower developed countries by the way of credit it sparks demand, which has an exponential effect on those economies.

For example in an undeveloped country I can now borrow money for a house, that means I will need a fridge, a stove, etc, which will spark more economic activity for all. So some of the biggest payoffs for capital will come in less developed countries. So where do you think capital will flow?

What he is saying in a broad sense is this will create and sweeping changes in the world and its value chains, the changes will be rapid, hence his title "The age of Turbulence". We all remember the impact of his statement on "irrational exuberance" in the US market.

Turbulence means rapid change, your business will need to know how to deal with rapid change and identify what can threaten you business early on. This should be an excellent read.

Food Recall becomes Bankruptcy for Topps Meats

BANKRUPT

Tying together my earlier and recent posts on management priorities and product recalls comes an unfortunate real life example.

In one week Topps has gone from the largest US producer of frozen hamburgers to bankruptcy under the weight of the recall of beef for E coli for what inspectors called inadequate protections at their plant.

The C.E.O. called the event "tragic."

I agree.

Management Decisions - Mixed Priorities

One of the benefits of doing Business Continuity Planning is that it causes managers, who make decisions typically in silo's to rethink their priorities when making decisions.

A decision made in a silo can be disastrous for the business.

A story in a Toronto newspaper today describes a food warehouse that was shut down due to a mouse infestation, they were running rampant in the building, eating food, droppings everywhere, running over the inspectors feet almost.

Now the warehouse is shutdown, there is a food shortage at some of the stores it services where signs had to be posted, and the story has hit the papers, and I am sure the evening news.

In the story, management claims this is the first they have heard of the problem, and it is an isolated incident.

Are you telling me that no-one who worked there saw it? When they did see it that it was not brought to managements attention? That management did not correct the problem?

My guess is, local management had a choice to make, keep costs down to meet siloed goals for operations, rodent control was less important then other considerations.

Now the company has a public relations nightmare on its hands. Yet I am sure, in the silo the decision seemed right, yet at the top level they know that trust and confidence in the food supply chain is crucial to their business.

When managers lose sight of, or have no idea of the corporate goals......decisions like this get made. A manager who had a role in the business continuity program would realize the right decison to make, long before this became a problem.

Organizational Structure and Success

Take the top 3 businesses in any industry, or your industry. Now take a look at how they do business? It is safe to say they did not start or run their businesses with exactly the same processes. HP and Dell build and sell in two very different ways.......Ford and Toyota, Apple and Microsoft.

Their approaches and execution are different. It is safe to say that the most responsive organization to the marketplace is the one that wins most marketshare. The difference though is not in the raw materials of the business, but in the thought structure of how to execute, and the responsiveness is based on the ability to take the thought process from the top to the bottom and execute it rapidly and well.

Speed to market with the "new" idea.

Is your organization set up to communicate quickly and effectively between groups? Do you have a "siloed" business for budgeting, goal setting, and execution - or does each group do it's best to support the entire organizations goal of getting ahead?

Do you succeed because of Stars or Teamwork?

One of the bonuses of doing a business continuity plan is it breaks down the silo's and gets your team focused on communicating and understanding it's priorities and corporate goals.

A simple test to see if you are prepared is go and ask the head of a department to name the top goal and top problem of a sister department they have to work with in the organization.

If they can't........your not communicating well organizationally.

911 What needs to be remembered

Today marks the anniversary for 911. We should remember the people who died, fathers and mothers, brothers and sisters, daughters and sons.

We need to remember emergency workers who died saving and trying to save lives.

I have been to ground zero and taught Business Continuity and Disaster Recovery in a building 3 blocks from the site. The building and the room we held the class in was used as a triage site and a morgue. New Yorkers were in the class.

What needs to be remembered are all of the simple preventable actions and mistakes that were made before and during attack.

You won't hear much about these issues, the media likes to present the heroic efforts - AFTER the attack. These are the stories told. You see it again and again after the bridge collapse in Minnesota, the hero's at the scene......does anyone know the name of the engineering firm who ok'd the bridge? Does anyone know who signed off on the reports? You won't hear about this. What about the mine disaster......hero stories everywhere, but no talk of the preventable causes and shirked responsibilities.

In 911 the mistakes were many, from ill conceived evacuation plans, to insufficient training and testing of emergency responses, to failing communications equipment. The list is long.

Today is a day to remember those lost, and tomorrow is a day you should consider what your leadership will be in protecting your mothers, fathers, son & daughters, brothers and sisters working for you.

Identify your risks and take prudent action to prepare.....it does not cost anymore to get it right than is does to get it wrong.

Respectfully
Ross McLean

Product Recalls and Business Continuity

According to the American Bar Association, the best plan is to take proactive preventive measures by establishing a product safety team.

Next, decide if you need recall insurance, but be careful, you get what you pay for, and you do not want to end up under insured.

Some policy's only cover cost of the announcements, mailings, press, and ads. Other policy's are more comprehensive, and will cover wages and other costs incurred in the recall, but be sure you understand the terms, many policy's require pre-approval on all expenses, so if you method of recovery is different than your insurer's position on what is right are at odds, you may not have the protection you need.

The cost of a recall can be high in direct costs, for example a tire distributor in New York got caught in the recall of Chinese made tires, the estimate is they can afford to replace 10% of the defective tires then they will be bankrupt.

Intel's past recall on Pentium chips had costs exceeding $500,000,000, a ceiling fan company had a recall in excess of $700,000,000, Black and Decker recalled coffee makers to the tune of $49,000,000.

The right insurance can play a critical role.

Bomb Threats - The risk to your business

There has been a recent rash of bomb threats to organizations to extort money. The caller threatens to detonate a bomb if money is not wired to an account. Some business's have wired the money....so expect copy cat type threats in the near future.

The truth is the risk of a bomb threat has a likelier occurrence than a bomb, so you should have a protocol for dealing with bomb threats.

Based on the earnings of your company to empty out a building for 2 to 4 hours could cost your company 50,000 or more easily.

Here is the link http://www.fbi.gov/pressrel/pressrel07/extortion_threats083007.htm

Minnesota Bridge Collapse - Economic Cost & Recovery

Infrastructure problems will be haunting us in North America for the next 30 years. As governments have taken money from capital budgets and used it to support operating budgets.

How susceptible is your business to a major infrastructure collapse? Does your business depend on traffic patterns or major routes for receiving and delivering product?

The estimated cost to the economy around the collapsed bridge in Minnesota is from $500,000 to $1,000,000 PER DAY!

They are looking at 2 years before it is up and running again.

How long could your business survive without a plan?

To learn how to assess the risks to your business, invest in our Business Continuity and Disaster Recovery training course so you can make an informed decision.

Ross McLean

Stats to Make you go hmmmmm

How does your company evaluate and manage risk?

Managing risk is something I have done all of my professional life. You can't remove risk entirely BUT you can eliminate it in great part by limiting the downside or by vastly increasing the odds in your favor through a mitigating action.

I have dealt with cases where my clients assets, or possibly their life is on the line. I more importantly have dealt with risk where my life was on the line.

If a risk had a high danger level and had a moderate to high level of occurrence, I took action in my planning to mitigate that risk, while still going about my life, or my client going about their business.

Lets look at some stats surrounding risk to your business. ( I know very well people can lie with stats, you have to analyze the risks correctly - see my earlier posting on bird flu, that being said though have you analyzed your business in relation to these stats?)

A 2005 study of 1,200 businesses found that 33% had no continuity plan in place. (what some peoples idea of a continuity plan is would make me believe that the realistic number is much higher, in fact I would double it at least)

2/3 rds of the businesses experiencing some sort of serious business interuption reported losing business because of it.

16% of those reporting had losses between $100,000 and $500,000.

26% of those reporting lost business had "no idea" what it had cost them per day.

(eventually someone in the company will know - the CFO, but how those numbers are accounted for is another issue)

93% of businesses who lose their data for 10 days or more file for bankruptcy within a year of the event. This is perhaps the most sobering stat. If you cannot recover within ten days......you will not recover. This is why it is crucial to have a response plan in place and you do not waste precious time in your recovery.

After Hurricane Floyd in 1999, 43% of businesses that closed temporarily - NEVER OPENED FOR BUSINESS AGAIN.

For small businesses of 100 employees or less, only 5% have any form of business interruption insurance.

J. Paul Getty once said "decide what is the worst thing that can happen to your business, then, take all the steps you need to take to ensure that it does not happen."

All the stats in the world don't matter when your business is the one that is affected, plan to make your business, not one of the ones that folds. It's good risk management.

Transformation

Change will and is coming fast at your business. Business leaders who see these challenges coming are now asking themselves "What will we do about .......".

I recently read a blog entry from Tom Peter's where he met with his fortune 100 client and they had a long discussion about what they needed to change......what is the answer and where could they obtain it. The debate raged.....what is our solution.... is it a product, is it a service, how do you buy a transformation?

The answer lies with the executive team, however what is needed is a dispassionate outsiders way to look at your business and assess strategically and tactically what requires change.....or more accurately transformation. Structures have to transform to meet new challenges, business process mapping and understanding of risks and potential responses are critical to making the right move.

I once heard this described as changing a propeller driven plane to a jet plane while it is in flight as the type of challenge facing business today.

It can be done but it will take committed, focused, actions as a team to get it done.

What do you think the odds of success are without a plan?

RISK FOR REWARD

Business is all about risk....good risk.

A good risk is one with a limited or understandable downside and a great upside. So HOW DO YOU LIMIT THE DOWNSIDE?

First you have to understand where you can lose, many companies I deal with do not realize the current exposures they have, let alone new exposures when undertaking a business action.

Sometimes business's get lucky and everything goes well. Sometimes it does not. Sometimes, most times, the results get buried and only the CFO knows too well the cost of a failed initiative, they hide money just for these occasions.

I have been at many presentations where a "great idea" is introduced and the "hockey stick" graph chart comes out showing how only profits and growth can come, but there is rarely an intelligent analysis of the risk and costs and how they will be mitigated.

Actually if most managers went a little further with their thought process and looked at these risks, they would also find ways to mitigate or eliminate the risk and still present their great idea. This idea will have a chance of getting past the CFO whispering to the President after the meeting as to why the idea has not been thought through well, and the idea dies.

You should not gamble with your career or company without doing a full job and conducting a risk analysis first, so you know the downside and how to limit it.

Ross McLean, Security Expert

Leadership and Successful BCP Planning

There is no more important issue to the successful implementation of a Business Continuity program then leadership.

There are two key factors.

First the CEO or leader of the organization MUST understand that it is his or her responsibility to see that the program gets done. They must support the appointed leader in the organization (who carries the water on the project), or the plan will fail or be ineffective. The CEO is the one who has the ability to see that ALL parts of the organization take part and fulfill their responsibilities. This is the reality of the nature of organizations. I cover this area right off the bat in my course. In fact I will tell you if you do not have top level support, don't even bother doing the program, it will fail or be ineffective.

The second key factor is the person or the "Champion" for leading the BCP team to do its work. This is the next most likely cause for failure, if this person does not get the instruction and support needed to do the job.

The foremost comment I recieve from customers who have taken on the job (or been given the job) of doing a corporate BCP plan is that they are "overwhelmed" by the enormity of the job. They don't know were to start, and most importantly they don't know when they are finished. It becomes a thankless task, doomed to second guessing if you do not have a model or a paradigm to follow. The format we use in our training is to lay out the format for a successful program so you know what you need to do, and what information you need to work with, and the steps the organization MUST take to protect itself. Go to rossmcleansecurity.com for more info on the model.

If you look at the failures in Katrina, that is where they started.

I'll spend the month of November discussing the issues of leadership in Business Continutiy Planning in this blog.

Fear of Change as Risk

There is no doubt about it, change and the rate of change that is underway, and that is coming is the Tsunami that is coming to North America.

Change to value chains, change to "labor", change in technologies, change in demographics, and the list goes on and on.

The problem is not just change, but the rate of the change, which requires an intelligent response from an organization. So the questions are;

does your organization understand the fundamentals of your current business? (do you?)

Go ask any 5 senior level or mid level people and ask them if they know what the major objectives of the company are for this coming year, ask them for the 3 greatest dangers to your company, and ask them if they have a plan to deal with them. (what would you say?)

If you get any answers, my bet is they will almost all be different and you will get many "deer in the headlights" looks from your subjects.

If you don't understand the terrain and the battle, you'll lose the war.

How would it be if you asked 5 senior people in your company and you got the same answer, the same battle plan? How would you like to be in that position? How would you feel about your chances of succeeding as a company then?

Companies will and are competing on their ability to accept, and implement intelligent change as a company in a rapid fashion. In order to do this, everyone must be on the same page. What score would you give your company out of 10?

Change is here and it is coming rapidly and in greater strength then many can imagine. Denial and ignorance are not good defenses, it could cost you your job, your company, and the future you are depending on. MAKE NO MISTAKE ABOUT IT, CHANGE IS ON THE WAY FOR YOU!

2006 is your year to wake everyone up and get your ducks in a row, and be prepared to respond quickly, where does your organization stand on knowing how to rapidly and intellegently implement change.....where do you stand as an individual?

If you would like more info. Drop me a line at;
ross.mclean@rossmcleansecurity.com I'll help you get prepared.

KATRINA REPORT - AN ABJECT FAILURE OF LEADERSHIP

When a crisis strikes - who do you want leading you?

The person you select to lead your Business Continuity Team should be a person who has dealt with crisis before, repeatedly in their life. Why?

Because once you dealt with them enough, you realize you want to avoid them at all costs, and what the intelligent leader does is start the next day making sure this problem and other similar ones will not bring such havoc and destruction to their lives and businesses.

If you think the only way to deal with a crisis is to respond to it after it happens, you will fail every time - guaranteed.

You must be proactive, have a plan, be prepared to execute the plan, and then deal with what happens when the plan goes off badly with further intelligent contingencies.

PROACTIVE VS REACTIVE

I find it interesting that the person in charge of Homeland Security has a background as a prosecutor and a judge. While these are honorable professions, I am hard pressed to find a background that is so far from what is needed in crisis planning and response. A prosecutor and a judge both have a habitual professional style of acting after the fact, that is what their job is. They wait for the crime the charges and all the facts to be brought to them before they make any judgement to act. Even then they act only on the facts, well after the fact if you will.

The head of homeland security even said, he waited after he got the first warning that the levee's had broken (even though that was over 12 hours after it had occurred), and he still did not act, he said he knows that often times the first reports are not correct in emergencies, so he did not act. WELL DUH!

In a crisis you have to act and act fast without 100% knowledge of all the facts. Ask any business leader.....it is rare they are 100% sure when they are making business decisions in the comfort of the boardroom, don't expect to have all the answers and info when disaster strikes, you have to act. The sooner and the more intelligent your response the greater your chance for success, and your opportunity to avoid disaster.

You need to have a proactive mindset to manage risks and deal with the response.