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Volume 31, Issue 2

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Special Report


by Richard L. Arnold, CDRP


At 7:00 P.M. October 18, 1989, I sat down to watch the World Series, as many others did, when suddenly the channel went off the air. Soon thereafter came a message stating that San Francisco just had an earthquake. As time went on, they announced that the quake measured 7.0 on the Richter Scale and the bay bridge had collapsed. They also mentioned an enormous amount of fires that occurred from gas explosions, and contended that this was a disaster of catastrophic proportions. This was “the big one” that everyone has been predicting for a long time. By this time I had a mental vision that San Francisco was about to break off into the ocean. I then decided then to fly to San Jose to see the extent of the destruction firsthand.

I left Wednesday, October 19 for San Jose. With the constant news updates relating the death and destruction that occurred in the afflicted areas, I was somewhat reluctant to go, not knowing to expect. I kept calling the airlines to confirm that the airport was open. One report said the San Jose airport was indeed open but the San Fransciso airport was closed due to cracks in the runway.

After I arrived in San Jose, I started inspecting the airport walls for cracks. I soon discovered that neither the airport nor the houses in that area sustained any significant amount of damage.

Later after touring downtown San Francisco, which sustained limited damage to its business district relative to its overall size, as well as other areas that were supposed to be destroyed beyond recognition, I found nothing to substantiate the magnitude of destruction portrayed by different media.

By the end of my first full day in San Francisco, I discovered that most of the news reports on television were either misleading or else partially inaccurate. For example, it was stated on Tuesday that the Bay Bridge would be fixed by Thursday; on Friday, the real word came out that it might be fixed within one to two months. The press focused primarily on the loss of life and the homeless.

What the press didn’t focus on was the impact that the quake had on businesses. In the following paragraphs I will try to focus on these important issues.

The areas hardest hit were:

Los Gatos
San Fransisco
Santa Cruz.

Watonsville lost their main business section due to the collapse of buildings and electricity; Los Gatos suffered approximately eight blocks of buildings with major stuctural damage in their business district; San Fransisco had power outages and window breakages; Oakland had approximately 10 blocks with structural damage: and Santa Cruz had approximately 12 square blocks of buildings with major structural damage, and over 50% of these will be on the demolition list.

The police had roped off the areas surrounding these business districts, and no one was allowed in. The contents of some businesses were functionally intact, but the owners or employees were not allowed to cross the police line. This meant immediate loss of revenue. Imagine walking out of your building at 5:00 one day and not being allowed to return for a week or more. I believe that most of the small to mid-size businesses affected by the quake may have to shut down for good because of the time it woul d take for them to rebuild. Not only will the business be lost, but hundreds of employees, many of whom have just endured private losses, will suddenly find themselves unemployed.

First 72 Hours

Cole Emerson, Senior Management Systems Consultant, SRI International, explained the effects that this disaster had on him and business in general:

“I was in my office with three other associates when the floor and walls began to shake violently. I was standing in the doorway and yelled at everyone to get under a desk. I then realized that I was not in the best of positions myself, so I quickly scrambled under a desk. The irony was that the desk was moving across the floor so rapidly that I had a hard time even staying under it. The walls were actually swaying back and forth and the windows were undulating. It seemed to go on for 15 minutes, but w e found out later it was only 15 seconds.”

The utilities were the first to be affected by the quake. Electricity and water were instantly cut off in most of the affected areas. The problem was exacerbated by gas ruptures that further delayed the return of electricity. Revenue losses occurred instantly due to electricity loss, police lines preventing entry into buildings, and absence of employees.

When push comes to shove, employees give precedence to their domestic situation over their business. This will almost inevitably include the person(s) in charge of the disaster recovery plan. If a disaster similar to the California earthquake strikes your company, you may not have your allotted personnel there to pick up the pieces. “The only person who would put his company over is his family is a psychotic one,” Emerson said. “I could not get my mind back on my job; I couldn’t even begin to get focuse d on my work until late Thursday night.”

What was learned from this disaster is that no matter how comprehensive your disaster recovery plan is and how well it is understood by your employees, your workers will virtually abandon the business until they are certain that their domestic situation is secure. Thus, you should appoint several alternates who can fill in if your critical employees are unavailable. If you have employees in another state or a region that is not affected by the disaster, plan ahead for them to replace your indisposed worke rs in the case of an emergency.

If you are using an alternate site for a backup to your business, include these out-of-town employees in your testing phase; make sure that they can restore the principal components of the company. Also, be prepared to assist your key personnel in the personal realm as much as possible--that is, confirm that their families are safe, help them with housing accomodations if necessary, and help to look after their family for the duration of the disaster. Once you take care of these considerations, the critic al employees can focus on the job as quickly as possible.

The plan itself

Make sure the person(s) who has developed your particular plan has substantial credentials in the disaster recovery field. Ideally, you want them to have experience with real disasters that have addressed broad issues of business operations, data processing, and telecommunications. If the expert has no firsthand experience, make sure he has a sound knowledge and understanding of several past disasters of other companies and their aftermaths. You, too, should be attuned to previous disasters and how they were handled (or mishandled) by other companies. Ultimately, a lack of competency in the plan will almost be as dangerous as none at all, for it will give a false sense of security and the financial life of the organization will be at risk.

Because disaster recovery planning is still a relatively new idea, most plans have yet to reach the stage where they are as good as they could be. “As the certification process continues to evolve and standards become stricter and more defined, you will have higher quality plan. But for now, be shrewd in your decision--when you go to select a consultant or an automated Disaster Recovery plan, remember that the automated plan is only as good as the expert who developed it,” said Emerson.

A Corporate Perspective

Tom vonNovak, President of the Northern California chapter of the Association of Contingency Planners (ACP), tells how he was on the 17th floor of his 20 story office building when the quake struck at 5:04. Although the building swayed 1 1/2-2 feet during those fateful 15 seconds, it escaped relatively unscathed. The adjoining building, however, “was immediately condemned...thefront of the building was maybe ten feet out into the street and all the bricks and mortar were completely down,” vonNovak says. “Within fifteen minutes, the building was cleared and there were thousands of people on the street not knowing what to do.”

Due to the immediacy and magnitude of this earthquake, several unanticipated adjustments had to be taken into account in response to the emergency. The sudden loss of communications is a prime example of what happened in California, and what could well happen elsewhere. Even if your company has its network backed up with T1 for its data circuits, it may be that, with the phone lines down, no one can make the essential call that will activate the recovery process.

Another unexpected element could be the extent of the long term losses, particularly for small to medium-size corporations. They may not have the resources to withstand a long outage; a San Francisco newspaper article estimated that in the stricken areas of Northern California, up to 25% of the smaller companies will be forced to close their doors.

Financial Impacts on Bay Area

As of Sunday October 22, 1989, the estimated damages had climbed to over $9 billion. This figure can be roughly broken down into two categories: immediate property damages, estimated at $4.1 billion, and business interruption damages, estimated at $5 billion.

Another important economic factor that cannot be overlooked is the relocation factor. VonNovak explained that this as “a reevaluation of where a company is doing business and how much they’re going to lose should that general area become temporarily inoperable.” Essentially, this refers to the loss of productivity resulting from the actual shutdown of the facility and the subsequent reduced productivity because employees do not report for work. This may be because employees cannot reach their workplace o r other economic factors. For example, the collapsed bridge was a vital artery linking the East Bay area with downtown San Francisco. Suddenly, approximately 200,000 daily commuters must find an alternate route to travel to work. For now, a ferry will take up the slack: however, this will cost each person $8.00 a day as opposed to a $2.00 toll for the bridge.

What We Can Learn From This Disaster

Both executives and their employees can gain valuable hindsight from the California earthquake. Before a disaster strikes, executives must allocate sufficient funds to ensure the safety not only of their individual employees, but also of the organization itself. Ideally, the disaster recovery planner should have direct contact with senior management, rather than filtering information through corporate channels.

Employees should know exactly where they stand in case of a disaster such as an earthquake. They should be aware of the compensations to which they are entitled in case of a disaster, and be certain that there is a clear understanding as to the exact nature of such compensation.

Company Planning

As you reevualate your plan, keep these questions in mind:

Is your plan up to date?
How often do you test it?
Does your plan have alternates to your key employees to the plan?
Have you considered all aspect of communications?
What would happen if an extended outage occurs?
What exactly do you expect from your test?

Statistics from 3 years ago said that only 5% of all corporations have plans. Today that figure has risen to 43%. That still leaves a considerable number of companies unprepared for the worst. Furthermore, of the 43% with plans, only an estimated 60% have tested them.

If you are without a plan, estimate how long it would take recover without one. The cost for recovery without a plan will increase exponentially versus the cost with one. In addition just having a plan is not enough; it is useless to discover that your plan is insufficient or somehow lacking when it is tested under fire.

Building Codes

It seems that the one common denominator in the damaged areas was that none of them had reinforced masonry. The pictures in this article were from Los Gatos, and Santa Cruz. San Francisco has had building codes in effect for over 10 years now and it seems that it has paid off. The loss of life was minimal due to these strict codes.

If an earthquake of that magnitude hit St. Louis, Missouri, the death toll would be much higher. A major portion of the city is unreinforced masonry. In fact my own chruch is only 9 years old and it is not reinforced at all. I dont think the building codes in St. Louis are as strict with regard to earthquakes, and the state and local governments are not as prepared for earthquakes, as Northern California. I am mentioning St. Louis, because I live here and are familar with the city. St. Louis, is not th e only one with this condition. Memphis, Tennessee is closer to the New Madrid Fault line than we are, and they are in the same shape we are. Many towns in Missouri and Tennessee would fall in the same catagory as St. Louis.

Now that I am back in St. Louis, I am going to use my experiencefrom the Bay area, and safegard the welfare of my family. I plan on purchasing earth quake insurance Monday.

Written by Richard Arnold, Editor-in-Chief, Disaster Recovery Journal