Volume 9, Issue 3
Summer 1996


From the Perspective of Ed Devlin


As the Disaster Recovery Journal’s September Conference in Atlanta approaches, Business Continuity Planning stories flourish. For example:

Hurricanes - Help on the way.
As Hurricane Bertha slashes the Virgin Islands and moves toward the U.S. mainland, hurricane forecasters are looking forward to the use of a new airplane to help them figure out where the storms are headed. This new airplane, a Gulfstream G-IV jet that can fly up to 30,000 feet higher than tracking planes now fly, will help them determine more quickly where storms are headed, giving residents more time to prepare. Last year, Hurricane Opal intensified rapidly in the middle of the night, and Santa Rosa residents were surprised to wake up Oct. 4 with a hurricane bearing down on Navarre Beach. Beginning in August, the new jet will send out foot-long probes to take upper atmosphere readings on wind, temperature and humidity. Upper levels are really the steering forces that dictate direction. (05-31-96)

Power Outages - Is Your Backup Power System Ready?

In May, 300,000 customers of Delmarva Power & Light in parts of Delaware, Maryland and Virginia lost their electricity after a substation failed. The outage closed businesses and schools. Traffic jams were caused by malfunctioning traffic lights. (05-15-96)

In July, electricity and phone service was knocked out for more than 1.5 million customers from Canada to the Southwest after something caused power lines to fail in a chain reaction. The blackout snarled traffic, forced hospitals and air-traffic controllers to use emergency measures, shut off air conditioners and even darkened some casinos as temperatures soared into the 100’s in some areas. Outages were reported in at least eight states and Canada. (07-03-96)

Bomb Update - Attempted Bombing Pays Off With Jail Sentence.

Joseph Bailic was found guilty by a jury of trying to bomb the Internal Revenue Services office in Reno, Nevada. The bomb, consisting of 100 pounds of fertilizer and kerosene, was left in a parking lot at the IRS building. The bomb was to have been triggered by a fuse, but the fuse failed to activate. Bailic faces up to 50 years in prison for his conviction on counts of conspiracy, attempted destruction of a government building, and the use of an explosive device while committing a violent crime. Sentencing was set for Sept. 6.

Hazardous Spill Evacuation

Hundreds of people near Alberton, Montana were evacuated from their homes and 90 went to hospitals for treatment after a tank car derailed. The tank car was filled with chlorine gas, and 170,000 pounds of the gas was released. Chlorine gas is especially dangerous for people with respiratory problems. Two people were in critical condition. (4-12-96)

Crisis Management Activities

Kellogg Co. - Regain Market Share. Kellogg Co. chairperson, Arnold Langbo, announced on June 18 that prices would be reduced on 16 brands that account for two-thirds of the company’s U.S. cereal business, including popular cereal brands such as Frosted Flakes, Raisin Bran and Fruit Loops. The price cuts were Kellogg’s attempt to regain the 4 percentage points in market share that it lost after the April 15 cuts by the Post Cereal Co. that average 20 percent on Post Nabisco brands. Kellogg now has 32.5 percent of the cereal market and Post gained 4 percentage points to capture 20 percent. (06-18-96)

Prudential Insurance Co. of America - Repair of Reputation. In June, Prudential said that it would overhaul the way it sells life insurance policies to individuals. This move is designed to polish an image tarnished by allegations that it mislead customers into policies that they did not need. The company said salaried underwriters would be in direct contact with customers during the application process, a responsibility traditionally assumed by the company’s field agents. Prudential said its new sales procedures would help customers better understand the coverage they were buying. In a prepared statement, William F. Yelverton, CEO, said “At the same time, we believe this new process will help make certain that our customers will receive a better understanding of the protection products they buy.” Federal and state regulators are investigating charges that Prudential agents lured customers into replacing their policies at added cost, a practice known as churning. (6-18-96)

ValuJet - Liability Issue.

Three shareholders are suing the airline, charging top executives made false statements about the airline’s safety record before and after the crash in Florida on May 11. The shareholders cited 10 examples from company documents and public statements. One was ValuJet’s April 11 press release in which President Lewis Jordan said “ValuJet’s safety record is certifiably among the very best in the airline industry.” But they say a report released by the FAA after the crash showed ValuJet has had more accidents since 1990 than all but one other airline. The shareholders want to recover losses from the stock’s drop. ValuJet peaked at 343/4 in November. The stock fell 31% between April 10, when ValuJet slowed its growth because of increased FAA scrutiny, and May 10. The stock fell 23% to $1311/16 after the crash.

Management’s Accountability.

The three Air Force officers, who oversaw the transport jet carrying Commerce Secretary Ron Brown and 34 others that crashed in Croatia, were relieved of duty in June. A Pentagon spokesperson indicated that the action against Brig. Gen. William Stevens, Col. Roger Hansen and Col. John Mazurowski “does not infer any judgement regarding the cause of the accident or the involvement of these three individuals. It indicates simply...lost confidence in their ability to carry out their duties.” (06-12-96)



Ed Devlin is Senior Vice President with Strohl Systems.