Business Disasters (21)
On Wednesday, April 22, 1992, the 461-year old city of Guadalajara, Mexico, experienced a series of ten massive explosions occurring in the heart of the downtown Reforma district.
The explosions began at 10:30 a.m. (12:30 p.m. EDT) and continued for two hours. Five hours after the initial explosion, a second large explosion occurred about three miles from the Reforma site. The blasts measured 7.1 and 7.0 on the Richter scale at the University of Mexico in Mexico City some 200 miles away.
Crisis Management is to often narrowly viewed as involving only the backup of computer and communications systems. However, in its broadest sense, crisis management involves business survival planning. Crisis Management can be said to consist of an umbrella of communications intensive business planning applications which are not mutually exclusive even though they impact diverse areas of a business organization. The common focus of the crisis management function is best defined in a 'non business as usual environment'. The development of an effective crisis management plan affords an organization the ability to respond effectively to an adverse business scenario and actually capitalize on what would normally be considered a negative event.
The discipline of crisis management is gradually being incorporated as a strategic planning tool in many organizations. Current business philosophy indicates that such a planning activity can result in the creation of early warning systems which allow an organization to anticipate a potential crisis and thus preclude the development of a major crisis. Even when the organization fails to avert a crisis scenario, effective crisis management planning can minimize legal liabilities, the loss of public confidence, and the loss of market share. In even the worst case view, a well defined crisis management plan will expedite the recovery of critical business operations.
The key ingredient to effective crisis management is the flow of timely and accurate information to all parties involved in or affected by the crisis. Information and information delivery systems have become the most valuable components of an organization's infrastructure. In that role, the effective utilization of information serves as the first line of defense against a crisis and is also the most effective vehicle in the process of restoring both business systems and public confidence.
As earlier mentioned, crisis management can be described as an umbrella of communications intensive business planning applications. These applications include: Business Crisis Intervention: The provisioning of a communications plan to address audience specific concerns. Recent product tamperings and recalls have brought this element of the application to the forefront, however, the application also includes a broad range of organizational crises such as: boycotts, labor strife, corporate fraud, management succession, mergers and acquisitions, and negative public relations stories. The fundamental focus of this component of the application is to develop predetermined communications channels through which an organization can deliver a specific message to multiple and diverse stockholders. An example of such channels include the utilization of AT&T 800 Service or DIAL-IT 900 Service for consumers to call for up-to- date information regarding a recalled product. A company may also utilize an electronic mail medium to quickly reach its distributors with critical information. Perhaps most important is the fact that the message heard by the stockholder is that of the company spokesperson, not that of a media observer.
Telemarketing Center Backup: Telemarketing today represents an enormous and growing marketing channel for most companies. If fact, it is estimated that during 1987 more than $150 billion worth of goods and services were sold via Telemarketing. It has thus become critical that an organization take the necessary steps to ensure that this marketing channel is never disrupted. The crisis management application addresses this need in two distinct scenarios: first the loss of the primary center due to a business crisis event such as work stoppages, weather conditions, or a physical disaster; and second, in the event that an existing center is unable to handle seasonal or peak sales periods or special event promotions. In either case it is critical that an auxiliary plan be available for immediate execution to keep the organization's doors open for business. Such a contingency plan could utilize intelligent network services to route calls to a backup telemarketing site such as American Transtech.
Computer Security and Disaster Recovery: This element of the application focuses on maintaining the security and availability of an organization's most valuable asset - its information bases. The utilization of automated information bases has created the potential for an entire scenario of corporate crises. The growing dependence of information systems has become so critical that the average business can only survive 4.5 days without access to its information bases. In information intensive industries, such as financial services, the unavailability of the information infrastructure can result in business failure within 48 hours. The protection on this corporate asset has also become mandated in certain industry environments and compliance is not a matter of choice. The development of an effective crisis management plan must focus on both providing for the security of existing information bases as well as a recovery plan to be implemented immediately upon the loss of the infrastructure. A most important aspect of the crisis planning activity is to establish meaningful risk analysis profiles for all critical business functions. The contingency plan should not be determined by the cost of providing redundancies and backup, but rather by the financial impact resulting from the loss of the supported functions. It is often feasible to utilize an outside consultant to evaluate existing security and contingency plans as the consultant is less likely to be biased by internal constraints or predeterminations of what is needed. In all cases, the final product of the planning process should be a living document and a policy which becomes a component of an organization's business as usual plan.
Crisis Management planning makes good business sense. The impact of a catastrophic event is potentially so severe that prudent management should not risk it. Business functions continue to become more critical and time sensitive. As such, Crisis Management and its contingency planning and preparation must be viewed as both a strategic and operational necessity. An effective Crisis Management planning function can enable an organization to anticipate and manage change. Simply stated, Crisis Management planning is "a smarter way of doing business."
Written by Gerard F. Ventolo, AT&T Crisis Management Services
This article adapted from Vol. 1 No. 3, p. 19.
Many companies possess thoroughly documented and tested data processing contingency plans to follow in the event of a disaster, but how many of them are prepared to face the media when tragedy strikes? Who will face the press and what will they say? Or, perhaps more importantly, how will they say it?
A disaster that affects your company may seriously disrupt operations, but it does not have to be a total picture of gloom and doom to the public. Media planning can provide an opportunity to show how organized, effective, and responsible your company can be in the face of disaster.
First Interstate Bank in Los Angeles immediately projected a responsible, positive image by dispatching high level executives to answer questions at the scene of its disastrous 12th floor fire in May 1988.
This article discusses suggestions and planning for effective media relations. Some basic dos and don'ts are also listed. These guidelines are not only applicable in a data processing disaster, but also for others of a completely different nature.
The manner in which a company conveys information is critical to the public's understanding and perception of the business. A company issuing only prepared statements to the press as its sole method of media relations does not only risk appearing standoffish, but can also open itself to speculation and rumors if no other information is available.
Different events will require different ways of dealing with the media, but it is essential to understand why the media is at your doorstep. Realizing and accepting that they also have a job to do will go a long way in developing an effective public relations 'disaster plan.'
THE PRESS ALSO HAS A JOB TO DO
Understanding this is half of the job in developing an effective plan. You may want to bring in a reporter as a consultant to provide detailed insight on media-business relations.
Establishing favorable relations with the press can go a long way towards how they react in a situation involving your company. If reporters sense that you are responding to them respectfully and honestly, they will remember this the next time you have to meet with them. Most likely they will give you a fair chance to tell your side of the story as well as to react to questions and statements from other sources. Corporate raider T. Boone Pickens was often treated favorably by the press due to his constant communication and rapport with them.
Remember that reporters have deadlines to meet and that stonewalling them or refusing to answer questions may result in undesired perceptions of your company's actions. Even if it is not justified, silence can also imply guilt. It is acceptable and probably better to say you cannot answer a particular question and why.
You must realize that you are sometimes faced with people inquiring into a business they may know little about. Most reporters will appreciate the effort made to explain a complicated technological process or business strategy.
Often they rephrase questions to obtain additional information or better understand what you are trying to say, not to harass or pester. Remember, the more the press knows about the issues or facts you are attempting to communicate, the less chance you will be misunderstood.
Credibility is perhaps the most important issue when dealing with the press. Events that raise questions about a company's credibility can arouse greater suspicion and have a lasting effect on public opinion. It is important to offer a realistic appraisal of your situation and how it might be covered by the press.
A prime example is the Exxon oil spill in Alaska. The company's failure to respond quickly and effectively to the situation, followed by its attempt to blame the government for the delays, caused it immeasurable public relations harm. The fact that the CEO sent lower-level executives to examine the disaster scene initially gave the impression that the situation was not important enough for him to consider.
IS YOUR COMPANY 'MEDIA PREPARED'?
There are several steps which you can take to prepare selected employees to work with the press in providing information in the event of a disaster.
Media-train those employees expected to meet with the press. Public relations personnel can counsel your employees and advise them on how the media and public might perceive the event or crisis.
Give the representatives a little 'experience' by simulating a particular disaster and conducting a mock press conference, complete with reporters asking questions. Politicians use this technique when preparing for what may be an especially difficult press conference.
Who will talk? It is important to decide exactly who will speak to the press. You may want to appoint specific people in particular situations, depending on such factors as background or experience.
Companies may have an employee read from a prepared statement. It is important to realize that they do not have to read it verbatim. A mechnical report can make the representative seem like nothing more than a 'puppet' of management, just repeating what he or she has been instructed to say. Adding personal comments and providing anecdotes often helps to personalize and increase the spokesperson's and, consequently, the company's credibility.
Establish a single, consistent focal point for the gathering and distributing of information; few things could be worse (or more embarrassing) than the press receiving conflicting information from the same company.
Evaluate the location from where you will disseminate information. Is it convenient for the news media? Perhaps the disaster scene itself can effectively portray the activities you are undertaking. First Interstate's action of sending management to the fire scene showed the public directly that the company was well aware of what was happening.
Don't forget the customers. Customers and stockholders will also be anxiously awaiting information. Set up and publicize telephone 'hot lines' with informed personnel to answer any questions. Again, First Interstate sent out letters and made phone calls to individuals as well as corporate customers to inform them that business resumed immediately after the fire was put under control.
Publicize the 'reconstruction' activities. Inform the press how your longer-term clean-up and recovery plans are proceeding. The Los Angeles Fire Department distributed a video detailing actual scenes of the fire and emergency services teams' assessments of the fire's damage. It also contained commentary by First Interstate management and the Los Angeles Fire Department Fire Chief on how all parties working together were able to face the disaster effectively.
First Interstate employees also participated in subsequent Disaster Recovery conferences to share their experiences and knowledge resulting from the fire.
Examine all facets of your plan and its actions. After the major crisis has passed, evaluate the disaster, your dealing with the media, and its effect on the image of the company. What was good or bad? Where can you improve? As a result of evaluating an actual disaster, Dow Chemical Company of Canada is now prepared to face the media with a public relations team which will travel with the emergency response team to the event site.
Just as disaster recovery provides for resumption of your business operations, appropriate media planning can provide an effective and positive image of your company's efforts to do so.
James Folkerts is a Systems Analyst for IBM.
This article adapted from Vol. 3 No. 2, p. 6.
Chemical companies and others that have chemicals on premises must face up every year to the ramifications of a new, but unwanted presence: SARA (Superfund Amendments and Reauthorization Act) Title III! The news media and the environmental groups have now discovered how to use your Title III reports. Now, the chemicals are out of the bag, so to speak. Nightly network newscasts, most major newspapers, weekly news magazines, and the local media have discovered who is doing what to the environment. They all have instant computer access to the Federal SARA records.
I am in the business of training business people how to deal with the news media, especially in times of crisis. In the past year, 60% of our Crisis Media Workshops have been for chemical companies, and 95% of those companies said the training was prompted by concern about public and media reaction to SARA Title III. They have wisely discovered that when you are in a volatile business, the best communications advice is clearly evident in the Boy Scout motto: “Be prepared!”
FIRE...this word strikes fear into the minds of Disaster Recovery/Contingency Planners--why?
Most risk reduction/management planners perceive fire as a major threat the ongoing transmittal of electrons through microchips and integrated Binary-code circuits, the basis for all operating systems. A fire could also melt tape and/or disk media where all critical information is stored.
The perception of fire as a major threat is real to many. The cause of most fires, however, may be more of a surprise--particulate and gaseous contamination, in addition to being the major cause of equipment failure in data centers around the world, is also the leading cause of fires in the computer room. According to the N.F.P.A. (National Fire Protection Agency), the majority of computer room fires start internally inside of equipment. From this statement, one could draw several hypotheses:
1. Hardware manufacturers make inferior quality electrical components that frequently fail and catch fire.
2. The power supply to the hardware is of such poor quality spikes, surges, etc. that the equipment ignites.
3. The equipment is starved for air-flow (dirty filters restricting proper cooling) or actual arching (short-circuiting) of circuitry (IC and PC boards).
A top executive at one of America’s largest insurance companies has jokingly given me worldwide bragging rights to the title of “Mr. Catastrophe.” True, after 10 years in the catastrophe management business, I’ve helped reconstruct everything from hurricane-wrecked industrial plants on the East Coast to last year’s earthquake devastation in San Francisco--and hundreds of less well-known business disasters in between.
But catastrophes are no joking matter. Forty-three percent of companies struck by a serious catastrophe never resume operations, and 28% of companies that do manage to reopen are so weakened that they close permanently within three years. While these statistics may be skewed toward small and medium-sized businesses, a major disaster can also seriously depress the earnings of a giant corporation.
Shortly after 12:00 noon on February 26, 1993, over 900 businesses in the World Trade Center were victims of a Terrorist bombing.
The explosion shook all 110 floors of the building, killed six people, injured over 1,000 others and forced the immediate evacuation of the entire office complex.
More than 40,000 people within the World Trade Center were thrown into utter chaos.
Lights flickered, elevators stuck between floors, and thick, black smoke filtered upwards filling the complex with a dense fog. People within the complex waited for instructions on evacuation, but none followed.
There was no emergency sound system, or emergency lighting system to light the stairwells as the 40,000 people descended the stairs to safety.
As employees were descending, the New York Port Authority's police and fire officials were climbing up the stairs to make sure the evacuation was safe and complete.
By 7:15 p.m. EST the 220 floors and 199 elevators of the World Trade Center were completely evacuated.
Not only the World Trade Center was affected by the explosion. It knocked local radio and television stations off the air and welded the streets of lower Manhattan into a gridlock of traffic snarls. Drivers sitting bumper to bumper leaned on their horns, waiting over an hour to enter the Holland Tunnel. All major arteries and most side streets in lower Manhattan were closed to all but emergency vehicles.
The explosion shook all 110 floors of the building, killed six people, injured over 1,000 others and forced the immediate evacuation of the entire office complex.
The Port Authority’s emergency operations center (EOC) was originally located on the first floor of the Vista Hotel.
Even though initial inspection by authorities ruled the structural integrity of the towers to be safe, the Vista Hotel’s structural shoring needed re-enforcing. Consequently, the Port Authority’s EOC needed to find a new home.
Through the assistance of NYC Telephone Company and the NYC Real Estate Board, office space was made available for the Port Authority’s EOC in a building adjacent to the World Trade Center.
At this location the Port Authority set up a Tenants Assistance Center. Within 24 hours, the EOC was moved a second time to a vacant restaurant on the concourse of the World Trade Center.
Lynn Tierney, spokesperson for The Port Authority of New York & New Jersey, reported that “In addition to taking care of the tenants and moving the EOC a second time, they also had to initiate search and rescue teams for casualties, conduct a search of the crater area for clues to the origin of the explosion, arrange for clean up of the facility, and assist the FBI conduct a criminal investigation.”
Tierney said, “This was all being conducted while the Blizzard of ’93 dumped record snowfalls on the city.”
As of this writing, the facility has re-opened for its tenants and currently has 85% occupancy.
A few of the tenants plan to stay at their alternate site until after April 15 tax deadlines. The first office to re-occupy the facility was Governor Mario Cuomo.
With exception to the Vista Hotel, which is under serious renovation and hopes to re-open mid summer ’93, it appears to be “business as usual.”
The other articles in this special report come from members of the disaster recovery community who were involved in the recovery from the bombing.
This article adapted from Vol. 6 #2.