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Spring Journal

Volume 32, Issue 1

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Electricity is never more precious or more scarce than after a disaster. Lights are out, telephones disabled, businesses shut down. People may need food, water, heat and medical attention. There can be no real recovery without power, yet no one can predict when utility service will come back. The distance between continuity and chaos in managing a business is sometimes closer than many realize. Even the best laid plans can be wiped away by the devastating effects of a natural disaster. At other times, a power outage can result from something as routine as programming a couple of digits in a computer program.

Power failures are beyond your control' but they don't have to control you. Regardless of how interruptions happen, now is a good time to start planning for a backup power system. Providing for a safe, reliable supply of electricity will ensure that your business will save time and money during a power interruption. Within a business continuity plan, a few basic steps should be taken to evaluate installing permanent generator sets, or leasing or renting generator sets to carry you through any emergency.

Getting Started

Become familiar with some of the industry terminology associated with generator sets before talking with a power equipment supplier. Then, determine your power requirements. Make a list of critical loads and conduct a walk-around to examine your electrical system. Be sure to note connection capabilities and any special requirements that a backup system design should consider.

To keep an entire plant or facility operating with the same amount of power as supplied by a utility, make a determination of the power needs on the entire aggregate load. A simple and accurate way to do this is to take ammeter readings from the electrical distribution boxes when the facility is running at peak load. To confirm your calculations, a utility bill will list the amount of peak electrical usage.

Most media are swallowing whole the current Y2K happy talk coming from corporations and government agencies. Information Week, for example, reported earlier this year that "There seems to be a growing consensus that year 2000 computer problems at most major U.S. businesses will be nothing more than minor annoyances that can be easily managed."


We hope Information Week, and most other media outlets, are right. The Year 2000 problem could pose a monumental disaster for the global economy. And most U.S. companies have worked hard to clean up their systems. Still, the signs exist that all is not completely well.

For example, whenever my company is invited to demonstrate our Y2K testing/verification tool at customer sites, we ask the organization to supply us with certified code ' programs that have been analyzed, remediated, tested and given a Seal of Y2K Approval. Then we run it through our IV&V (independent validation and verification) tool, which checks the fixed code for any lingering Y2K bugs. We invariably find them ' anywhere from one to 50 bugs per 10,000 lines of code.

The biggest Y2K myth I hear, even today, is that by declaring a disaster on the dawn of a new millennium, a company can buy some time to fix any significant date related problem(s) they may have. That is simply wrong! If you or your management holds true to this belief, or erroneous hope, may I suggest that you read on, castoff and dispel this thought. If not, come January 1, 2000, all the contingency horses, and all the recovery men, won't be able to put the business back together again.

To understand the position I am coming from is to understand the role of the recovery planner, followed by corporate acceptance of your role and limitations. Quite simply put, it is to prevent a major unexpected interruption, and to ensure, through advanced planning and testing, that your business survives as a corporate entity should such an event occur. To that end, the recovery planner must:

1.take pre-emptive steps to mitigate potential risks, thereby averting a disaster;

2. prepare for, be ready to respond to, and rapidly recover from, unforeseen events such as: fires, earthquakes, power grid failure, chemical spills, floods and other outages.

An estimated $1.1 billion in damages occurred when massive tornadoes cut paths of destruction across Oklahoma and Kansas.

As many as 76 tornadoes hit the region on May 3, spawned from "supercell" thunderstorms that formed during the late afternoon.

The tornadoes' paths stretched more than 100 miles through 14 counties from southwest to northeast Oklahoma and as far north as Wichita, Kansas. At times, the twisters' paths of destruction were more than one-half mile wide.

In total, 742 people were injured and 41 people died from the storms, with five deaths occurring in Kansas. Damage estimates in Oklahoma show 2,314 homes were destroyed; 7,428 homes were damaged; 1,041 apartments were destroyed or damaged; 164 businesses destroyed; and 96 businesses were damaged. In Kansas, 420 homes, 27 businesses, and three churches were damaged or destroyed.

According to preliminary figures from Insurance Services Office, Inc's (ISO) Property Claim Services (PCS) Unit, Oklahoma received a record catastrophe loss of $955 million for insured property. Property losses in Kansas totaled $100 million.

It doesn't have to be a Level 5 Hurricane or measure 7.0 on the Richter scale to be considered a major disaster anymore. On June 14th, eBay executives, employees, traders, investors, the media, and the world watched as eBay stock value plummeted by $4 billion dollars. The devaluation occurred because of an all-day (22-hour) outage on its auction site. Executives at eBay estimate that the impact could include a drop of $3 to $5 million in sales. Every hour that eBay was down resulted in an estimated $200,000 in lost sales. That number doesn't include the potential loss of their customers to competitors like Amazon.com and Yahoo! that have online auction sites available. Those types of losses are typically felt in the more traditional disasters such as earthquakes or hurricanes.

As more and more online businesses emerge - the need for contingency planning will become apparent for the e-commerce industry. In today's highly competitive online market, the lack of a "physical" storefront is creating tremendous pressures for these companies to remain reliable in the eyes of their customers, investors, and the media. In the cases of companies like Telebank, eBay, E*TRADE, Yahoo, and Amazon.com, representing a wide variety of industries, when service is disrupted, there is no option for the customer to physically go to a store. For these companies the potential loss of customers and future sales in immeasurable, not to mention the immediate impact to their bottom-line revenue and stock value.

In 1996, America Online, Inc. stock took a plunge and dropped $4.50 because it was offline for 19 hours. E*TRADE had two consecutive failures in February of this year disrupting service for 75 minutes one day and between one and two hours the following day. The failure was due to software problems and ended up costing the company when its shares dropped $6.50. E*TRADE's disruptions occurred at a time when New York State's Attorney General had been inquiring about the operations of online brokerage firms. The inquiries were spurred by complaints of online trading service customers that their trades were not processed promptly due to delays.