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Volume 32, Issue 1

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Continuity planners received a wake up call when a massive power outage struck parts of the United States and Canada on Aug. 14, 2003. Thousands of manufacturing plants, offices and retail shops were forced to close. Restaurants shuttered their doors and airlines cancelled flights in record numbers. In the midst of it all were contingency planners who were called into action to implement crisis plans to protect their companies and inform their employees of proper procedures.

The blackout affected eight states in the United States, including most states in the northeastern region and several in the Midwest. Areas in and around Ontario, Canada also lost power.

Beginning shortly after 4 p.m. EDT., the blackout was triggered when a series of errors caused a major transmission corridor to shut down. Cities experiencing the blackout included New York City, Albany, Syracuse, Toronto, Detroit, Newark, Cleveland, Akron and Philadelphia. In total, nearly 50 million people were affected.

Though a final engineering audit will determine the exact cause of the blackout, the most touted theory is one involving instability on the Midwest power grid. As the instability spread through transmission lines, generators were dumped off the grid and power plants were automatically shut down in order to protect the equipment. Power began returning slowly the next day, but the immediate effects of the blackout lingered for days. And the long-term effects are still being tallied.


The Blackout of 2003 created major and costly inconveniences for an estimated 50 million people from Michigan, across Ohio and into New York and north into Ontario. Referred to by some media writers as the “Lake Erie Loop,” the interconnected power grid fell subject to a combination of problems and failures that with few exceptions interrupted the supply of electric power on Aug. 14, 2003, starting at about 4:10 p.m.

In the ensuing hours, reporters wrote about the system of generating plants, high-voltage lines, substations, and distribution lines connecting generating plants with “Main Street.” What most writers missed until much later was the system of computer controls used to monitor and adjust the delicate balance of generating capacity and demand (load) that must be maintained to keep the system up and running. What happened in most places was the automatic triggering of the safety controls on the system (grid) caused it to shut down before damaging equipment. Had the equipment been damaged, response, recovery and restoration would have been similar to a destructive wind or ice storm, possibly taking days if not weeks for full restoration of service.


The recent power outage in the Northeast and Canada brought it home once again; disaster recovery and business continuity planning are basic realities that businesses, large and small, need to address in order to maintain operations before, during, and after a catastrophic event. Since 9/11, companies have improved their efforts to develop and implement workable plans that will enable them to rebound from catastrophic events – either natural or man-made – and re-establish themselves as productive, revenue-generating entities as quickly as possible. Development and implementation of these plans can spell the difference between life and death for a business of any size.

Effective disaster contingencies should be all-encompassing plans that address all of the factors and issues to ensure an enterprise is prepared to deal with any eventuality. Whether before, during, or after an event, these documents prepare company management and staffers with a logical series of precautionary and pro-active steps. When implemented, these guidelines should enable a business to bounce back to an acceptable level of productivity, as quickly as possible, so it can continue to thrive.

When a disaster occurs that has wide-spread affect on a large number of businesses such as the recent blackout, one way to judge the impact is to view the number of declarations industry service providers received. In the following articles, three service providers (in alphabetical order) give an inside look at the impact the blackout had on their clients. The articles are not intended to promote a particular service or provider; instead it is an opportunity for our readers to look behind the scenes at the impact a major disaster can have on businesses large and small.


The pictures were all over the cable news networks. Gridlocked traffic, people walking home or sleeping in train stations, hundreds of airline passengers delayed and inconvenienced … all because of a major power outage that crippled many activities in the U.S. Northeast and much of Ontario, Canada.

We say “many activities” because one thing we didn’t see on the newscasts were major enterprises discussing the losses they were experiencing because of the blackout. Some estimates place the total loss on businesses at $6 billion. In fact, it seems that this major outage had only a minor impact. For example, Wall Street’s top financial firms reported business as usual on Friday, thanks to back-up generators and quickly implemented continuity plans.

Some years back, while in the defense industry, I met a fellow who mentioned that he once worked with a Hughes reliability engineer named Murphy, the very man responsible for “Murphy’s Law.” Reliability engineers are principally involved in analyzing why systems fail tests so they can determine changes to the materials, components and/or processes that will prevent a recurrence of the failure. This work tends to engender a lot of sarcastic commentary among its practitioners, so one can easily understand coming to conclusion that, “Anything that can go wrong, will go wrong.”

A few years later, I came across a corollary to Murphy’s Law that I have seen proven out many times: Marshall’s Generalized Iceberg Theorem: “Seven-eighths of everything can’t be seen.”

Man the Lookout Towers

Of course, those familiar with icebergs understand that the specific gravity (a measure of relative density) of ice is such that, in salt water, only about one-eighth is visible. This was, for example, why the HMS Titanic’s lookouts underestimated the possible shape and girth of the berg that tore into the hull.

In recent articles I’ve read, and in conversations with business continuity planners, I have begun to detect a similar phenomenon in the market for planning consultants: Companies are scrambling to address compliance with Sarbanes-Oxley and other new regulations in the aftermath of financial reporting scandals. But none of these measures contains clear mandates for assuring continuity of firms’ critical operations. They look at the language of the regulations and address it point by point, inevitably with a stern eye on minimizing their costs to comply. While that is understandable, even commendable, from a stockholder’s view, it reinforces a tendency to see only the one-eighth that’s clearly in view, missing the lurking threats beneath.