Disaster Preparations Remain Inadequate, Unreviewed

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Last week’s terrorist attacks brought home a terrible reminder to local businesses: disaster can strike without warning, taking lives and reducing years of sweat and toil to rubble in a matter of minutes.

L.A.-area businesses should need no such prompting, of course. After all, this is earthquake country, as last week’s 4.0 shaker centered two miles beneath the Beverly Center affirmed. And man-made disasters, whether arson fires, civil unrest or rampaging gunmen, also have struck frequently, shattering local workplaces.

So just how prepared are local businesses for such disasters and the monumental devastation like what happened in New York?

Not very, according to local disaster-preparedness experts. Sure, most area companies have emergency plans on paper, but more often than not those plans are only rudimentary and end up gathering dust on shelves or in cabinets.

“The vast majority of businesses are not prepared for any kind of crisis, let alone this one,” said Ian Mitroff, professor at the Marshall School of Business at USC.

Mitroff, who has written or co-written over two dozen books on crisis management, said there are three types of events businesses need to prepare for: natural disasters, core crises within the industry (i.e. a refinery explosion) and terrorism (the highest level).

With their earthquake experience, L.A.-area businesses may have a leg up on their East Coast counterparts on the natural disaster front, but certainly not the other two types.

“I think you’ll find that most businesses are not as prepared as they should be,” said Matthew Bartosiak, help-line manager for the Employers Group, an L.A.-based non-profit human relations consulting organization. “We know they have policies on paper, but often they are not implemented, they are not updated and they are not rehearsed.”

As a result, disaster experts say, companies often get caught flat-footed when calamity strikes, wasting precious moments working with outdated employee lists or realizing they don’t have adequate back-up for their computers and records.

“If you don’t plan for disasters adequately, you have a good chance of going out of business altogether within a year or two afterwards,” said Steve England, a consultant on business operations and real estate issues for Ernst & Young LLP. “You may open up for business again, but you may find your clients or customers have deserted you. It’s like quicksand: Start out with one wrong move during a disaster and then every future move you make, you just sink deeper.”

Last week, businesses seemed to be heeding part of the message to beef up their disaster planning: many companies and building owners had posted additional security guards at building entrances.

“We put increased security on all of our buildings,” said Tom McCarthy, co-president of McCarthy Cook & Co., which owns commercial properties in L.A.’s Miracle Mile district, the John Wayne Airport area of Orange County and downtown San Francisco.

But there’s a lot more to disaster planning than putting a few more guards at your doors. Here’s a breakdown of the major areas of emergency preparedness that businesses should be addressing:


Employees/Evacuation

Last week’s tragedy should have an immediate short-term effect on businesses’ evacuation and contingency plans, especially for those in high-rise buildings.

“Disaster recovery plans are not academic exercises,” said Mike Whalen, Pacific Northwest managing partner for Ernst & Young’s real estate advisory services, based in San Francisco. “Evacuation drills that everyone hates need to be taken very seriously.”

Geoffrey Ely, president of Building Owners and Managers Association of Greater Los Angeles (BOMA/GLA), believes that previous earthquakes and other events have forced local high rise operations to already take evacuation plans seriously. He noted that “we had our own mini-version (of the New York tragedy) when we had the First Interstate fire 13 years ago.” But Ely, whose organization has 400 building memberships throughout Los Angeles County, also stresses the need to constantly improve contingency plans. “This process cannot ever end,” said Ely.

Disaster consultants stress the need for “floor wardens,” people whose job it is to track down a group of employees and make sure they are accounted for.

“If the disaster occurs during the work day, these floor wardens must go through the building,” said Bob Westmore, owner of Q:SIS, a security and emergency consulting firm in Chatsworth. “Then they communicate this immediately to their superiors, so they know if they have to go back in and rescue anyone.”

Likewise, businesses need to start using “phone trees,” where each department manager in a company calls a certain number of supervisors to let them know when they’ll be returning to work. Then each of those supervisors calls employees under their charge (or fellow employees) and so forth, until every employee is contacted.

“Phone trees are the quickest way to reach employees in a crisis, provided you have all their updated home phone numbers, cell phone numbers, etc ” said Matthew Bartosiak, manager of helpline consulting for the Employers Group, a non-profit human resources consulting group. “You don’t want one person stuck with all this; that person may be incapacitated or simply overwhelmed.”


Security

Changes in security measures at local high-profile properties were immediate last week. Frequent I.D. checks and key card access requirements to elevators were already in place at Century City’s Fox Plaza by last Wednesday.

“We’re used to pretty high security,” said Credit Suisse First Boston managing director and Fox Tower tenant Gary Weiss, whose fellow tenants have included attorney Marvin Davis and the Ronald Reagan Foundation. “But nothing like we’ve seen today.”

MaguirePartners vice president Peggy Moretti said that all four high profile downtown properties owned and managed by the company, including the 73-story Library Tower, were on “heightened security alert.” Parking garage users were required to provide drivers licenses (for photocopying by the parking attendant) while all elevators were put in permanent “access control mode.”

Maureen Ehrenberg, president of Grubb & Ellis Management Services Inc. in Northbrook, Ill. said the days of giving building keys to technicians and service vendors are over. Ehrenberg, whose company manages 150 million feet of office space throughout the U.S., also noted that vendors would now be accompanied by security to the spot of service for the duration of the call.

Also, security consultants said the days of having people casually walking in and out of an office should end. “We all tend to be too casual about these things,” said Steve England, business operations consultant for Ernst & Young. “No one should walk in or out of your office without an access card.”

But guaranteeing safety for retail establishments in a building like the Wells Fargo Tower, whose bottom floor includes Nick & Stef’s Steakhouse and California Pizza Kitchen, would be unrealistic, according to Moretti. “We have visible security representatives on site (who) have been trained to look for behavior that looks suspicious,” Moretti said. But as far as totally regulating entrance into the bottom floor? “That would be more challenging.”


Computer Back-Up

The utter destruction of the World Trade Center will force local businesses to re-examine their information and data backup systems.

“I can guarantee that the level of their preparedness in New York was nowhere near enough,” said Carl Muhlstein, a broker with Cushman & Wakefield Inc. “The amount of contracts, documents, files and other information lost is going to turn out to be mind-boggling.”

Businesses across the nation were warned repeatedly about the need for document backup in the run-up to the Y2K “crisis” two years ago. In addition, the constant threat of an earthquake has forced larger West Coast firms to adopt complete backup systems for computer data. “It’s much more baked into their business processes because of the earthquake issues,” Whalen said. “It’s built into the cost of doing business.”

The key to document backup, disaster consultants say, is to make sure you keep both hard copy and back-up computer tapes. Those tapes must be updated daily and kept off-site, preferably not in the same geographic region as the business itself.

“If your entire business site is destroyed or you don’t have access to it, then you must be able to take those computer tapes stored off-site, put them in a computer and get your business up and running again,” said Westmore. “If you don’t have a separate off-site facility, then at least send the backup tapes home with one of your managers.”

Jack Srebnik, owner of 17th Street Caf & #233; in Santa Monica, said he plans to take that lesson to heart. Until last week’s terrorist attacks, he said he had kept his backup files in a drawer at the back of the restaurant. “I will now start taking the disks home with me. If I just leave them in the restaurant and a fire occurs, they could be lost.”

Companies may also consider using off-site online data storage facilities. “With all our fiber-optic capabilities these days, you may not need to physically bring computer tapes from one place to another. You may be able to press a button and off it goes to some online site in some other state,” said Ernst & Young’s England.


Business Records

The same holds true for key business records, such as incorporation documents, building leases, payroll data and insurance documents.

“You’ve got to have duplicate copies of all these records off-site,” said Bartosiak, the Employers Group consultant.

But for some businesses, key records may go beyond these standard documents. Bartosiak said each department head in a company should go through department files and figure out what key standing documents they need to save.

These days, of course, a lot of these key documents are in computers, so the same rules apply here as with general computer back-up procedures.

As with computer back-up systems, larger-scale businesses are generally more likely to have an off-site source of record keeping, according to Ehrenberg. “Most people have gone away from binders,” said Ehrenberg. “Many companies have an (off-site) e-net to access forms (they’ve) been using.”


Insurance

This is perhaps the most complex and costliest component of disaster preparation. There are so many types of insurance policies out there: conventional fire and theft coverage, earthquake insurance, life insurance, liability insurance and even ransom coverage.

“Determining what type of insurance coverage you need is the first step,” said Susan Del Bangio-Arman, a broker with the independent firm of Eichberg and Associates in Encino. “The next step is determining how much you can afford to pay.”

For some small businesses it may not make sense to pay for complete earthquake insurance, which could cost thousands of dollars per month and have a very high deductible.

It’s also important for businesses when they are shopping for insurance to have up-to-date emergency plans and to implement those plans.

“That’s one of the first things an insurance company will ask you, just how prepared are you for a disaster,” Westmore said. “The more prepared you are, the more you may be able to lower your premium.”

But some of the most important decisions, especially for a small business, come long before implementing a disaster plan. “Before you sign your lease on a facility, you’ve got to look carefully around you and ask questions,” said Ernst & Young’s England. “If you’re in an older building that needs rehabilitation, that will raise your (insurance) rates. The same holds true if you’re building lacks adequate security.”


Counseling

Whether the psychological effects of last week’s attack will be short- or long-term remains to be seen. “As a Californian you learn to rock and roll with earthquakes,” said Moretti, adding that the fear of conducting business in a high profile property “was not a fear that applied today.”

Others were more affected. “I find myself every five minutes looking out the window,” said Weiss, who can see LAX from his 16th floor office at Fox Plaza. “I’m looking a little more carefully.”

Dr. Scott Stacy, clinical psychologist for Professional Renewal Center in Lawrence, Kan., said businesses as a whole are better equipped to deal with the after-effects of last week’s tragedy than they used to be.

“Businesses are more savvy to the idea of paying attention to their (employees’) emotions as important pieces of data as it relates to productivity,” said Stacy, whose clients include a number of Fortune 200 executives. “In the past, business tended to take a John Wayne approach to emotions.”

This increased sensitivity is going to be necessary, especially given the scope of last week’s tragedy and the questions that remain about it. Stacy encourages companies to set aside time to address employees’ feelings of disbelief, anxiety, fear and resulting difficulty of concentration. “It’s basically structuring nonproductivity,” said Stacy.

Larry Ahlquist, general manager of the City Club on the 54th Floor of Wells Fargo Tower in downtown, is already doing this. A number of employees at the club at World Trade Center’s South Tower, all of whom survived, used to work for City Club. Ahlquist, whose daily pre-shift line-ups are usually used to announce service issues and other news of the day, had received a prayer from a fellow manager at the New York club last Wednesday morning. “Today, we’re going to read the prayer,” Ahlquist said.

Many companies already have employee assistance programs designed to help in just such situations, Bartosiak said. Those who do not have such plans should draw them up or, at the very least, call around to find out more about local grief and trauma counseling services are. The Red Cross or United Way are good places to start, he said.

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