Thursday, November 1, 2012

Hurricane Sandy's Lesson about Operational Risk Management

So, I don’t know if I ever mentioned that I live in New Jersey. What a week this has been! Hurricane Sandy gave us quite a whooping! Power out all over the place, hour long lines for gas, the beaches and boardwalks destroyed, flooded roads, down wires and trees… I was one of the lucky ones who got power back already. Many others are still without. 

If you’ll recall this isn't the first time a hurricane caused so much trouble. As a matter of fact, Katrina caused far worse devastation.  

Now, this is a business blog, right? So, how will I relate this to business? Well, duh.. Obviously I am going to talk about risk management :).
Years ago, when Katrina hit millions of medical records were lost in the destruction by flood, fire, and wide-spread power outages. Patients couldn't get medication, treatments were delayed, etc. Both people and businesses were adversely affected. Now, here in NJ we are seeing a fraction of that disaster and many businesses are halted for lack of a well-communicated risk management and disaster recovery plan. Surely, there is no way to plan for everything but businesses need to be proactive as much as possible.

Over the last few years I have repeatedly seen businesses that take the reactive approach to everything. One company I worked with actually told me that they organize staff efforts based on “who’s [customers] screaming the loudest”. Another company I deal with is currently scrambling to restore something in terms of operations following Hurricane Sandy. Why? Because all their information is stored in-house and in-house is not a happy place right now. Business must be proactive in all things or they will suffer huge losses!

Every business – big or small – should have some type of risk management plan in place that includes operations not just data recovery. Operations are the money makers!!! The plan should assess weaknesses and seek ways to proactively close those gaps.  For example, is your business paper-based? What if there is a flood or fire? Is your business wholly reliant on in-house servers? What if your server crashes or your area experiences a power outage? In case of an emergency can employees work remotely with ease? The list of possibilities goes on. Has your business planned for such events? These events are not as remote as one might think!

So what can a business do? Again, you must consider all possibilities and make sure operations can resume as soon as possible. Have backups of everything in both a paper and electronic form. Do not depend on flash drives, local computers and in-house servers– the cloud is safer. One company I worked for was great at this. Their entire business, all documents, project stuff, customer information, email, everything was on the cloud. When anything prevented anyone from going to the office, everyone could work remotely without missing a beat. If power was out in the office, those with power at home knew what to do and had access to do it. 

How did we do that? (Here is a shameless plug. Note: I have no affiliation with this company except that I have used their services and loved it.) We used an online business platform called Zoho. It has everything in one place, fully integrated from CRM, email, project management software, document storage, etc. all in one place accessible online. My home could be as much an office as the office was an office if I needed it (wow, that was a lot of words). 

Next, don’t forget about server redundancy. Ultimately, the cloud is not some magical place where everything is always sunshine and rainbows. They are really just fancy data centers, if you think about it. In 2011, the release of a Lady Gaga single brought Amazon to their knees. That should have been quite a significant lesson to us little guys on the value of redundancy. 

Most importantly, business must be sure that all employees know the plans. Remember fire drills in school? We all knew what to do in case of a fire, right? There was a good reason we had those drills. The same should hold true for all business operations. Have a ‘plan B’ for everything operational and make sure that everyone is knowledgeable enough to carry out that plan when/if the time comes. 


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