By Nancy Doucette
"Once there was a cobbler whose children had no shoes..." So begins a children's story which conveys a meaningful message for agency principals: Don't be so busy attending to the property of your clients that you fail to take care of your own property. And while that advice can refer to a number of areas related to the operation of an independent agency, this article will focus on disaster planning--why your agency needs a disaster plan, how to develop one, and some of the technology factors and people issues to be considered.
But like so many projects of this nature, the paralysis is in the analysis. Many would-be planners get stalled almost before they get started because they don't know where to go for help. Well, take heart. There are "starter kits" available through your agent association, your companies, your user group, other agencies and off the Internet. Simply "borrow" ideas from the plans developed by others and adapt them to suit your unique circumstances.
What follows are the insights of two individuals who have developed disaster plans for the agencies they work for. If your agency doesn't have a disaster plan in place yet, their efforts will help you get started. If your agency does have a plan, you may find something to "borrow" to enhance your plan.
Braden Polansky is the director of information technology for the Dawson Companies, based in Cleveland, Ohio. The agency has some 150 employees and five remote locations within 150 miles of the Cleveland headquarters. We met Polansky at this year's ASCnet Conference (Applied Systems Client Network) where he was a member of a disaster planning panel discussion. His comments during the panel discussion were based on his experiences as chairman of the committee which developed the disaster plan used by the Dawson Companies. In a follow-up conversation, he shared these additional insights.
"The majority of disasters will be internal," he observes. "My server is going to crash or a water pipe is going to break. It's not going to be Hurricane Andrew. It's not going to be the Northridge earthquake. It's going to be something that happens within this building." In other words, you don't have to be on a coastline or a fault line to realize there's potential for disaster. Polansky speculates that customers would be more understanding of service delays following a regional disaster. Conversely, they'd be less likely to accept delays if your building were the only one affected. But, he recommends, "prepare for the worst and hope you get something simple."
When he joined the agency two years ago, Polansky says, developing a disaster plan was at the top of his "to do" list. So he established a committee that included the agency's senior vice president and general counsel, the vice president of claims and the senior vice president of commercial lines. The groundwork for the plan came from one of the agency's carriers that provided its step-by-step plan to the agency, as well as information from the PIA, ASCnet and off the Internet. Using a search engine and keying in "disaster planning" yielded innumerable hits, he says.
It's in the potential for the disaster where Polansky sees the biggest challenge because, he says, prevention is more important than minimizing the impact of a disaster after it's occurred. So he subscribes to a number of publications that focus on disaster preparedness. He says there are also organizations that specialize in disaster planning and disaster recovery.
He describes the process of developing a plan as long and arduous but essential. "As risk managers we're telling our customers to develop disaster plans, so we need to have one as well." But a well thought out disaster plan can serve as an E&O preventative also. Recalling the aftermath of the Northridge earthquake and Hurricane Andrew, Polansky says the majority of E&O claims that resulted weren't the result of the agent's failure to provide adequate coverage. He says the bulk of the E&O claims were the result of untimely reporting of claims. The courts reacted to the inconsistencies where some agencies were able to respond quickly, while others weren't. The agencies that were found guilty of untimely filing had failed to manage their own risks.
"Our goal is to respond to claims within 24 hours of the disaster," he notes.
But just because the plan is in place, that doesn't mean it's "in stone." Polansky explains the plan is "very fluid. It changes almost monthly depending on different vendors that are chosen and different technologies that are in place."
As part of its disaster plan, the Dawson Companies has certain key service providers on retainer. That establishes a contractual arrangement that gives the agency some leverage in the event of a regional disaster. (A localized disaster wouldn't put a strain on resources, Polansky reasons, but "you don't know what you're going to get hit with.")
Having the agency's general counsel on the disaster planning committee helps when it's time to spell out the particulars of the retainers. It's important to specify response time and technology requirements so the hardware and the technician are available within the agency's desired timeframe. "We have five claims people and that's where I want to concentrate the energy. Five people and a server need to be up within 24 hours," he stresses.
Almost as important as having certain suppliers and technicians on retainer is convincing management to allocate funds to keep spare parts on hand. That requires identifying the truly unique pieces of the system or the parts that would be difficult to get following a disaster. At the Dawson Companies one such "unique piece" turned out to be the tape backup drive. "The Novell file server is plentiful in the Cleveland area so a replacement wouldn't be a problem but finding one with the same tape backup drive that could restore our data...that turned out to be another matter," Polansky recalls.
Creating a disaster plan is a bit like building a boat. You don't know whether your boat will float until you put it in the water. Similarly, you don't know whether your disaster plan will work until you try it and getting that opportunity to try it can be good news and bad news. The good news/bad news arrived late last June when a tornado blew through one of the towns where one of the Dawson Companies' remote offices is located. Downed power and telephone lines surrounded the building. Using a cell phone, the office manager at the remote office conveyed this information to the main location. The "hot site" portion of the disaster plan was put into action. (With five remote locations, the Dawson Companies has the luxury of built-in hot sites--a location where they can conduct business operations when one of the other locations cannot function normally.) Phone lines and data were rerouted from the remote location to the main location. To customers and the rest of the outside world, the remote location was "off-line" for about 20 minutes. In fact, though, the workers were stranded for nearly 12 hours.
The technology elements of the disaster plan worked as expected. However, this experience gave the Dawson Companies an opportunity to reevaluate another important aspect of disaster planning: accommodating the employees. During those 12 hours, the employees had nothing to eat or drink, no "facilities," no air conditioning, no power. Cell phone communication was "rationed" to preserve the battery, as there was no way of recharging it.
Practice, practice, practice
George Chadwick Insurance is based in Wilmington, North Carolina, which has afforded this agency plenty of opportunities to test its disaster plan. In August 1998, they were visited by Hurricane Bonnie; in September 1996, they were in the path of Hurricane Fran; and in July 1996, they experienced Hurricane Bertha. For a while back in 1989, it looked as though Hurricane Hugo might land in Wilmington instead of further south in Charleston, South Carolina.
As operations manager for the 23-person agency, Aileen Batchelor began developing an agency disaster plan after Hugo pummeled Charleston. In our October 1997 issue we discussed some of the technology elements of that plan. (See "Surviving the Big Bad Wolf" at www.roughnotes.com). This year, Batchelor shares some tips on the importance of looking out for your employees before, during and after the disaster strikes.
"There are a lot of single women with children in the workforce," she observes. "If they don't have day care (and the day care centers probably won't be open immediately after a disaster) they won't be there for you. So it's important to think about what we need to do so that person is there 100%--not absent, not distracted, wondering if everything is OK at home."
Immediately after a disaster, employees fall into two categories: essential workers and non-essential workers, she explains. Service workers are the essential workers at that point in time. Sales people and accounting people, on the other hand, aren't doing their day-to-day activities just then so they fall into the non-essential category. "For those of us who aren't responsible for taking claims, we are responsible for making sure those who are have everything they need to do their job," she advises. "Think of your people in terms of what is going to be happening and how essential they are to that process, not in terms of what you're paying them."
The non-essential workers and spouses can be called upon for help with day care at the office or they can meet repair people and work crews at the homes of the essential workers so they can stay "focused" and at the office. However, the length of time the office is open should be modified, given the intense pace of the day, Batchelor recommends. Another option would be to have two five-hour shifts. This gives the essential workers time at home to do what they need to do after the disaster.
She urges agency principals not to underestimate the amount of stress that service workers experience following a disaster. It can take its toll. Batchelor talked to a number of managers of agencies in the Charleston area who said they lost half their staff within six months of Hurricane Hugo. The departed staff people blamed the stress. "It's emotionally so difficult for CSRs," Batchelor explains. "Right after the hurricane, they're being proactive, helping people and making a positive difference. Yet all they hear is bad news. This is hard on people who are used to being problem solvers."
When you know trouble is headed your way--such as when a hurricane is approaching--you can anticipate needs, based on those you've already identified in your disaster plan. Batchelor says George Chadwick Insurance divides several thousand dollars between a number of managers. "The ATMs won't have power or employees may have trouble getting to them. This cash needs to be available to the workers if they need it. Dividing the cash between a number of managers means if one of them can't make it in, the other managers will have cash should it be needed."
As employees are leaving for the last time before the hurricane hits, they must clear their desks and tape closed desk drawers and file cabinets. Prior to Hurricane Bonnie this year, all of the employees at George Chadwick Insurance collected their office supplies from their desks and took them home in a plastic bag. When they returned to work, they brought their bag of supplies with them. So if the office had been damaged, each person would have had the supplies he or she needed.
Those personal supplies are supplemented by a disaster kit that is stored at the agency principal's house. At the beginning of each hurricane season the contents are inventoried to be sure everything that needs to be there is there. The kit contains loss notices, paperclips, staplers, staples, pens, flashlights and batteries, candles and holders, matches, masking tape and maps of the area (street signs are frequently blown away). "You need to assume that Office Depot won't be open immediately following the storm," Batchelor notes. The disaster kit also includes a list of all employees' phone numbers, spouse's name, their cell phone number or the number where they can be reached if they have evacuated.
When there's a hurricane scare, Batchelor says she runs an expiration list. "Life goes on. We have a lot of policies with E&S markets that don't renew automatically. We want to be sure they renew when we're in the midst of this."
Batchelor notes that there are other elements to the agency's disaster plan beyond those that pertain to hurricane preparedness and response. "It's not something we look at very often," she says with a laugh. She suggests agencies that are just getting started with developing a plan first need to identify what constitutes a disaster in the context of their operation. Is it a hurricane, flood, earthquake, fire, hardware failure, loss of a key employee or principal, or sabotage of the system? "There are things here in Wilmington, North Carolina, that we don't prepare for as well as somebody who's located in New York City," she notes.
In a disaster planning workshop that she facilitates for the local Applied Systems user group, Batchelor notes the following as some of the areas that should be addressed in any disaster plan, irrespective of where your agency is located:
* Loss of a key employee (Prepare by having a documented procedures manual and a thorough cross-training program.)
* Sabotage of software/hardware (Prepare by implementing security, keeping your virus scan program up to date, maintaining system documentation for hardware and software, knowing your employees and managing your outside technicians as you would an internal employee.)
* Accounting functions (Prepare by having one individual handle check writing and another person balance the checking account.)
In closing, she notes, "Procedures aren't any good if they're out of date. Plans aren't any good if they're out of date. As you install new technology, review your disaster plan, always remembering the importance of documentation, training and the redundancy of data. With these elements addressed, the odds are less that everything is going to be destroyed." *
Share highlights of your plan with other Rough Notes readers. Send your disaster plan highlights to Nancy Doucette via e-mail: nancyd@in.net or via fax: (800) 321-1909. Please include contact information. With sufficient response, we will publish the replies in a future issue.