If the east coast earthquake, flooding and various hurricanes and tropical storms were not enough to show CFOs what can happen to a company in the wake of a natural or manmade disaster, the somber observance on September 11th provided another stark reminder.
While discussions about these events rightfully focused on the human toll, it is also important to consider whether your company is prepared to survive a widespread emergency. CFOs can help their organizations not only to survive a disaster but to rebound and recover as quickly as possible by taking steps now. Think through how your company would respond and develop procedures to take in an emergency before disaster hits.
According to a survey of 306 companies conducted by the Society for Human Resource Management in Alexandria, Va., 61% of companies have either implemented or revised their disaster preparedness plans since the 9/11 attacks. However, only one-third of the companies surveyed believe they are prepared to a great or very great extent and 42% feel prepared to a moderate extent.
Companies need to cover all bases when it comes to preparedness. The key to preparing for a disaster or emergency is to think through all possible repercussions and develop contingency plans for as many as possible. How will employees get paid and who will deal with benefits issues if headquarters is flooded? How will the company communicate with its employees about the state of operations following an emergency and when and how employees can help the company get back to work? What is the back-up plan for technology and communications? These are just a few questions to consider.
The SHRM survey found that the most common provisions of a disaster preparedness plan include offering/requiring more training about crisis and disaster management (48%), developing a business continuity plan (47%), and developing a communication plan for emergency situations (42%).
Whatever the specifics involved, the CFO is a natural leader for these types of preparations. However, these efforts should also include leaders or representatives from human resources, information technology, security, operations, risk management and all other key departments and functions. Moreover, everyone involved should be held accountable for their part in the development of a disaster preparedness plan and for activities to ensure that the plan can be implemented when needed.
Finally, the plan should not be static. Companies need to make sure the plan as written still reflects the reality and needs of the company. Regular meetings to update and revise the plan as needed ensures the plan stays workable and relevant.
There are plenty of disaster preparedness checklists and other resources available for download online. Here is a list of just a few:AICPA: Disaster Response: What to Do First—A Checklist for CFOs and Controllers