Disaster Preparedness: The Math Behind How & Why You Should Invest

As we enter the beginning of disaster season, it can’t help but feel like we have already been in disaster season all year long. There is no denying that we have seen destruction in 2020, whether natural or man-made, but all of which have taken a toll on our businesses. And while no one can predict when or where a disaster will occur, data continues to back being prepared over-responding after the fact.

It is estimated that the United States has spent over $200 billion in relief and recovery between 2012 to 2019 and still 25% of businesses affected by natural or human disaster never re-open. When surveyed by the Ad Council about emergency preparedness, 62% of businesses said they have no plan in place and are not considering adding one, even though World Bank’s Independent Evaluation Group has revealed that disasters cost 15 times more than they did in the ‘50s.

The decision to move your disaster-allocated resources from relief and recovery to preparation and planning is never an easy one and will require moving in phases, tough decisions, and of course, planning. But once transitioned, your corporate emergency response plan- whether local or international- will benefit your employees, customers, and business throughout the entire recovery process.

Inform Yourself on Your Business’ Needs

Getting educated in disaster preparedness doesn’t mean you have to sign up for a library card, but it does mean you will need to spend sometime identifying company needs and resources, asking critical questions, and assessing all risk. Level and ranges of risk can be affected by many factors, including specific industry, size, and scope of your corporation. Other things you may not have considered to assess are which disasters are most common in the areas that your corporation operates and what are some common community risks in the area.

There are great resources out there for the taking to prepare you and your corporations long before disaster. FEMA’s Business Risk Assessment Tool helps assess assets by risk level and disaster type to provide an understanding of where funding should be allocated.

Next, you’ll use that risk assessment and conduct a business impact analysis. This will help predict the consequences of business disruption from a disaster so you can create a strategy to prevent and prepare. Of course, it is not always accurate, but it is better than nothing! Some things you can analyze are lost sales and income, delayed sales and income, contractual penalties, increased expenses, customer loss, regulatory fines, and delay of business.

Educate Your People on Disaster Preparedness

Your company’s emergency response plan will be constantly changing. Take this year for example- there probably weren’t that many preparedness plans including pandemic procedure. However, the world is constantly changing, and we must adapt. The first written plan will be basic if you are just starting out and have not invested much into preparedness, most likely including crisis communication, emergency response, employee assistance, and resource management. As you continue to grow your plan, areas like business continuity, information technology, incident management, and training can hold a larger focus.

Encourage employees to assist in the implementation and maintenance of the company’s preparedness plan through leading courses, filling resource requirements, and serving as program coordinators. Communicating updates often will help co-workers develop preparedness skills, give feedback on the plan, and to ensure they are confident when an emergency occurs. Along with educating your employees on preparedness at work, make sure they are educated on what to do at home. Encourage them to at least have a disaster kit on hand and know basic medical procedures.

Invest in Your Preparedness Plan

How much you invest in emergency preparedness depends on how many different factors and risks, along with the potential severity of these risks, you assessed earlier and how much you are willing to pay to reduce those risks. You also don’t have to do everything all at once. Building a preparedness plan is a long-term investment that reaps many rewards.

The easiest way to begin is to know what is already handled, so start by reviewing all of your company’s insurance policies to see what would really be covered in the case of a disaster. Remember to include all payments and deductibles in your preparedness plan’s yearly budget. Compare your risk assessment and the insurance tool to see what areas of your company are at greatest risk.

A few inexpensive ways to prepare for anything include elevating valuable inventory and machinery in case of flooding, using computer anti-virus software, or maintaining your HVAC system. Another simple way is keeping batteries updated in smoke detectors and fire extinguishers current.

While there is no way to predict what will be impacted, your business is most likely dependent upon utilities like gas, electricity, internet, and sewer. The best, but most pricey, option to protect your employees, customers, and products are maintaining working and up-to-code building standards. The Natural Studies of Building Sciences found that by simply adopting legal building standards, United States communities save $1.1 billion a year in prevented flood damage. It has also found that for every $1 spent on preventative building updates, $11 is saved in future disaster relief aid.

Share it with Your Vendor

Whatever analysis, plan, or investment you and your team ultimately go with, make sure to loop in your CSR vendor. They are there to help, and chances are, they have seen something similar before. The dedicated account managers can provide you with some help on planning for the current year and what to expect in years ahead, while also giving you some perspective on where preparedness is headed and sharing best practices from other organizations like yours that have dealt with the same things before.

There’s a lot to think about when it comes to disaster- relief, and preparedness. Investing time, money, and people into something that isn’t a guaranteed fix is a hard sell, and even more difficult to ask of people when it is tied to such a painful topic like disaster. However, if implemented in all viable buildings, it would cost $520 billion in disaster preparedness, but would ultimately save society $2.2 trillion in relief aid. Fortunately, we are making some progress. In 2005, for every $1 spent towards disaster preparedness, $4 was saved in future disaster relief. By 2019, every $1 saved $6 in future disaster relief.