ERM-BC-COOP: Organizations not prepared For natural disasters

Failure to plan puts businesses–and jobs–at risk: FM Global

An overwhelming majority of Americans do not feel their employers are well-prepared for, or might not recover quickly from, a natural disaster, according to research released today by FM Global (http://www.fmglobal.com/), one of the world’s largest business property insurers.

According to the insurer, “Business resilience is more than just about getting back on your feet, it’s also about doing the right things to make sure you don’t get knocked down in the first place”

FM Global’s new Business Risk Pulse Check (http://www.fmglobal.com/page.aspx?id=905312012) finds 75 percent of U.S.-based workers feel their employer is not well-prepared for a natural disaster, and 72 percent of those polled would not feel totally safe in their workplace during a natural disaster. Additionally, the study finds 71 percent of U.S. workers are not fully confident their employer can bounce back quickly from a natural disaster. The survey comes on the heels of a record year for natural disasters in 2011.

The survey focused solely on natural disasters. While common, risk management practitioners know that there are more risks than those falling under the "national disaster" heading.

"Findings of FM Global’s Business Risk Pulse Check adds further insight as to why U.S. Department of Labor statistics indicate more than 40 percent of businesses never reopen following a natural disaster." This scrivener hunted through the DOL Web site and failed to find any reference to this "statistic" or the basis of how the "statistic" was derived, i.e., what was the condition - financial, employee, customer base - of the organization before the event.

While I am pleased to see that FM Global's research turned up what at first appears to be a high employee awareness of their organization's risk management efforts, I have to wonder about

• The organization's transparency - does it share with personnel what it does and what it expects to do "in the event of"?
  

• Are published policies and procedures in place "in the event of"?
  

• Are ONLY "natural disasters" considered? What about
  
  customer
  financial
  human issues (work [in]actions, error, sabotage)
  neighbors
  politics and regulations
  transportation
  vendor
  
  issues to name just a few possibilities.

I confess that I am NOT left with a "warm fuzzy feeling" even for the organizations in which the workers are confident their employer will survive a "natural disaster."

The two-page PDF report, available at http://www.fmglobal.com/assets/pdf/P12105_BusRiskPulseNaturalDisaster.pdf, omits any mention of what type organizations were surveyed (e.g., commercial, industrial, non-profit, government) and what size - in market share, in ROI, in personnel head count, etc. Were Mom-n-Pop's included and how heavily was the survey weighted toward one industry or another, to one size organization vs. another.

For all the survey's weaknesses, it DOES tell us that risk management is finally being recognized, if not by management than by staff. That's encouraging.

But as with all statistics, unless all the information is available, if the statistic must be cited, it must be cited with the caveat that there are (too) many unknowns.

FM Global is an insurance company and its PR blurb tells us in the leed paragraph that it is "one of the world’s largest business property insurers."

I confess I like the statement made by Jon Hall, executive vice president of FM Global; it's worth quoting. He said, "Business resilience is more than just about getting back on your feet, it’s also about doing the right things to make sure you don’t get knocked down in the first place.

"The findings demonstrate how critical it is that business leaders better prepare for natural disasters and ensure those efforts are understood within the workplace. Not understanding how a business is prepared for disaster can adversely affect both employee performance and, ultimately, the health of a business.”

To my mind that means more than (just) insurance; it means measures to avoid or mitigate the risks before they occur. (It also means having insurance to help out when something does go "bump in the night.")

If I wrote it, you may quote it.

Longer articles at https://sites.google.com/site/johnglennmbci/