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Volume 27, Issue 3

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October 30, 2007

The Impact of Recent Disaster

Written by  Stuart Johnson
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In recent months, the world has witnessed a flurry of powerful disasters.

Articles in this issue examine these disasters, but together they are changing the disaster recovery industry. They have focused the general public and the business world on disaster recovery planning, and what organizations must do to survive in the long run.

Chicago Flood—Business’ Biggest Disaster Ever

Corporate executives, building managers and contingency planners will long remember the Great Chicago Flood. Fortunately, the flood caused no injuries, but the toll to businesses and the city was enormous. The Chicago flood is the biggest business disaster ever, and the corporate recovery effort has taken months. Restoring the city’s infrastructure to prevent future disasters is a formidable task.

The Chicago Board of Trade (CBOT) Building was one of the hardest hit by the flood. Because its air conditioning system was underwater, the computer systems that operated price reporting and wall board equipment were shut down, effectively closing the markets.

The CBOT installed a $2 million air conditioner on La Salle Street next to the building. The system included two giant chillers, diesel generators and a 24-barrel cooling tower. The tower was brought in from Oklahoma.

Although the basements were still filled with water, the CBOT resumed regular trading within a week using temporary power. However, other offices in the building were not open until full power was restored two weeks after the flood began. Lynco Futures, a commodity firm headquartered in the CBOT building, relocated to their hot site by 2 a.m. the day following the disaster, and they were ready for business the next day.

On the positive side, some companies that fared well extended support to affected businesses.

Continental Bank was fortunate—their building’s access to the flooded freight tunnel was sealed in the 1950’s. They helped other banks by processing checks at their technical center. According to William Murschel, a corporate relations representative, Continental processed cash letters from four other banks the day after the disaster, so that the letters could be properly dispatched without serious delay.

McCormick Place, the nation’s largest exposition center, offered 60,000 square feet of exhibit space for free, temporary office use by displaced firms. The space was wired for electrical and phone connections, and McCormick Place provided free phone set-up.

“This is a city that pulls together,” said Jim Reilly, CEO of the Metropolitan Pier and Exposition Authority, which runs McCormick Place. “We want to extend our help to those businesses which may be unable to return to their normal office locations for some time.”

Four businesses moved in, bringing a total of 125 employees for three to five weeks. All of these companies were based in the Carson Pirie Scott building, one of the hardest hit by flooding. Articles from people who had to deal with the flood appear on pages 10, 13, 16 and 21. These authors have described many aspects of the flood recovery: dehumidifynig flooded buildings, relocating to an alternative site, using backup power, and restoring damaged basements, materials and records.

Riots in Los Angeles Affect Thousands

The rioting in Los Angeles was one of this country's most destructive urban disturbances ever. Thousands of businesses and even more jobs were lost.

A report on page 29 details the impact of the riots to businesses. Consultant Joanne Piersall has written an article on page 34 which discusses disaster recovery planning for small businesses. Piersall emphasizes documenting business procedures. She says, “Once a business owner has a head start on setting up an organized and efficient office, it's a short leap to the realization that having a copy of a well constructed office manual off site will also help them recover from a disaster.”

Although small businesses generally don’t require data processing recovery plans, and rarely have resources to invest in disaster recovery, establishing and documenting essential procedures can help businesses of any size survive a disaster.

The immediate effects of the Los Angeles riots were similar to those of any disaster--property damage, loss of retail sales and temporary paralysis of the business community. But the long-term effects are more serious than those of most natural disasters. Tourist and convention business in Los Angeles are likely to be depressed for some time. Social service spending will increase, while property tax revenues are likely to decline along with property values.

The riots have brought the problems of the American city to the forefront of national discussion; hopefully this attention will yield positive results.

Gas Explosion in Guadalajara

On Wednesday, April 22, Guadalajara, Mexico was hit by a series of underground gas explosions that destroyed 26 downtown blocks. The devastation was enormous: over 200 people were killed, at least 2,000 injured, and over 20,000 left homeless. Property damages are estimated at $300 million. American Medical Search & Rescue Team leader Dr. James Dugal administered emergency medical care to the victims. He reports first-hand on the disaster on page 32.

The explosions came from sewer lines filled with gas that had leaked from a nearby pipeline. The national oil company Pemex has been incriminated in the gas leak. Apparently, gas had been leaking from the pipeline for days prior to the explosion.

The gas explosion raises serious issues of corporate accountability in a disaster. At least eleven people are facing federal prosecution. Four top Pemex officials and three officials from the municipal water company have been charged with negligent homicide. The mayor of Guadalajara and the Jalisco state Secretary of Urban Development are also being charged in the disaster.

Environmentalists, opposition politicians and academics blame lax environmental regulation as the long range cause of this and potential future disasters. The responsible government regulatory agency is understaffed, underpaid and prone to corruption.

Industrial growth has far exceeded infrastructure development and maintenance in Mexico. This horrible human disaster stands as a dramatic example of the problems associated with unrestrained economic growth.

The Earthquake Threat

Between Wednesday, April 22 and Sunday, April 26, California experienced four earthquakes registering at least 6.0 on the Richter Scale. The first of these occurred near Palm Springs in southeast California on April 22. Considering the strength of the quake, there was relatively little damage.

Three more destructive earthquakes hit northern California the following weekend. Centered near Petrolia, 30 miles southwest of Eureka in Humboldt County, a 7.0 earthquake struck on Saturday, followed by aftershocks on Sunday measuring 6.0 and 6.5.

Most commercial and public buildings in Petrolia were destroyed or rendered useless. Fires caused by ruptured gas lines ravaged the downtown area. Motion-sensitive shut-off valves, which could have prevented the fires, had not been installed.

California’s new earthquake insurance program will be able to cover homeowners’ claims. Approximately 20 claims were filed in Palm Springs and 100 claims in Humboldt County. The earthquakes in northern California were seismically unrelated to the Palm Springs earthquake.

One of the greatest concerns raised by these earthquakes is that attention is focused on the damage they caused, rather than on preparing for the potential earthquakes they foreshadow. These earthquakes had relatively little impact on business operations in California, but they had even less impact on earthquake preparedness planning.

after the disasters

According to Dr. Robert Kuntz, President of the California Engineering Foundation, “A predictable cycle of activity occurs after every major disaster. Emergency preparedness systems are tested and found wanting. The print and electronic media move in to cover the disaster for the news hungry public. Political leaders visit disaster sites to express concern for the victims and to capitalize on media opportunities. Universities and research organizations submit proposals for more studies on all aspects of the disaster. Then, media interest diminishes, and life returns to normal for those unaffected by the disaster until another disaster repeats the cycle.”

In a survey of cities published before the Chicago flood in Financial World, Chicago received a C+ on its infrastructure, due to neglected maintenance. Chicago was not the only city to fare poorly; numerous other cities are struggling to support a failing structure.

The tunnel failure in Chicago that led to the flood was not unlike the pipeline leak that led to the gas explosion in Guadalajara. Fortunately, Chicago’s toll was primarily economic.

A major earthquake, however, could be both a horrible human tragedy and a devastating business disaster. Hopefully, these recent examples will awaken more people and businesses to involve themselves in disaster recovery planning.


Stuart Johnson was co-editor of Disaster Recovery Journal.

This article adapted from Vol. 5 #3.

Read 2445 times Last modified on October 11, 2012