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Berkonomics

Disaster Recovery and other happy subjects.

Have you ever lost all of your data on your smartphone, laptop, or desktop PC?  If not, it is probably only a matter of time until you do.  Those of us who have experienced this heart-stopping event now regularly back up our data and many of us create images of our entire hard drives often, ready this time to address an effective recovery.

But what about the shock of a fire, a major natural disaster, or even the loss of an important company top executive?  Are you or your board prepared to immediately jump into a pre-planned recovery?  From experience on more than forty boards over the years, I can state that few have even considered the possibilities.  All of us have a phone listing of our employees and associates. But very few have a phone tree for simultaneous contact of larger numbers of people to marshal a recovery from any type of disaster.

Buiilding_BoardsBoards of directors for companies of all sizes should have a person or better yet a committee dedicated to considering the preparations for disaster recovery.  Often, we consolidate this task into the audit committee of a board; and often we expand the subject to ‘risk management’ which includes examination of all forms of risk, from insurance coverage to OSHA compliance and more.

[Email readers, continue here…]  When a company is very small and the company’s assets reasonably replaceable with existing or easily borrowed funds, the event is less likely to threaten the existence of the organization.  As a company grows in size and complexity, more stakeholders depend upon the wisdom of the CEO and the board to think in advance of these unpleasant things, and to attempt to insulate the company’s dependents from a disaster.

How about yourself?  Have you been open in sharing your knowledge and talent with a backup, or even a potential successor?  It is prudent and certainly a sign that you take this responsibility personally as a leader among your peers and subordinates.

I have three unfortunate examples in my past of founder-CEOs dying suddenly at their prime.  The shock to each organization was a threat to the very core in all three instances.  Yet as we will discuss in detail in a future insight, in one, the board stepped in immediately to reassure the stakeholders, elect a new CEO from within the board, and reach out to the community with a plan for succession that allowed the business to continue with minimal interruption.  In another, the creditors threatened to close the company, and the board was completely unprepared to respond.  The contrast was quite a lesson to me – one that I would never want to repeat as a board member or senior manager.

What if?  How about dedicating at least a half hour of your next executive or board meeting to the subject, and creating a checklist and assignments for covering at least the greatest three risks identified?  It is yet another sign of your growth and growing wisdom as a leader.

  • Focusing your disaster recovery on IT will maintain your information, but as you poined out it won’t keep your company rinning. Some IT firms offer more comprehensive disaster recovery, including private office space that you can use while your building can’t be accessed.

  • Agreed, Investing in the continuity of your company to sustain a disaster is such a struggle. During my days at HP, I spent a lot of time with customers who had shelved disaster recovery under Information Technology. While a resilient Information Technology platform is definitely needed, it is only a piece of the pie.

    While I was in charge of operations for an insurance company, we did some planning at the upper management levels, implemented some relatively simple procedures, training and infrastructure. About a year later we were in the middle of the Northridge Earthquake. Our corporate office (also the operational hub of our $50 million company) was red-tagged. A lot of people had major family issues, but we did pretty well through it. The planning we did was not vast, but was enough to provide basic services and give us some options.

  • Dave is always insightful. This issue is one of the first Risk Mgmt discussions I always have with a new client. CRITICAL if you want the business to continue after such a loss.

  • Andrew Gelardi

    Shockingly many organizations have no disaster recovery plans but even more organizations have given little if any thought to a business continuity plan. Many confuse the two but while they are related they should be separate plans. The Continuity plan allows the organization to operate at some capacity while the recovery is being executed.

  • Michael O'Daniel

    A reminder that you need to do this sort of planning not only within your company, but your family as well. If you are a principal in a company, one or more family members should have the relevant information regarding your business, and your role in it, so they are not blindsided or in the dark if anything happens to you. For example, is there a buy-sell agreement in place? An attorney, accountant, or other trusted personal confidant should have this information as well.

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