When disaster strikes: How to remain in business
MANILA, Philippines - Act before, not after, disaster strikes.
Dr. German Velasquez, regional coordinator for Asia-Pacific UN International Strategy for Disaster Reduction, had this advice for some 40 businessmen who attended a roundtable discussion on business continuity plan (BCP) at the Ateneo Professional Schools on Thursday, May 2.
His advice comes in handy especially since the Philippines is one of the most disaster-prone countries in the world.
Situated inside the Pacific Ring of Fire, the country is battered by at least 25 storms each year. Earthquakes are also frequent due to its many fault lines.
Velasquez warned the onslaught of climate change will increase the intensity of natural disasters in the Philippines.
He cited, for example, the destruction wrought by back-to-back tropical storms Ondoy and Pepeng in 2009.
He also cited a 2004 study by the Japan International Cooperation Agency predicting Metro Manila will be hit by a 7.2-magnitude earthquake that can destroy 40% of its residential buildings, damage 35% of its public buildings and kill as many as 34,000 people.
"Are you going to wait for [that earthquake] to hit Manila before you change the way you do business?" he asked.
Velasquez said tragedies like these should push businesses to devise a BCP, which identifies the bottlenecks in operations that natural disasters could bring. By assessing the impact of the disasters on their businesses, managers and entrepreneurs could prepare how to ensure the continuity of critical operations and establish a management system.
Dr. Takahiro Ono of the Asia Disaster Reduction Center in Kyoto University specified the role of the private sector when disaster strikes:
a. provide labor, services, and products essential for the quick resumption of social functions;
b. extend assistance such as relief goods and evacuation shelters;
c. secure employment for the early recovery of victims of disaster;
"Even if the loss is incurred by an unexpected event, top executives need to manage the organization properly to continue with social role and responsibility," he said.
Ono said this was true in the case of Japan.
Japan immensely suffered from an 8.9-magnitude earthquake and tsunami in March 2011. The Tohoku expressway (seen above) was ruined, but it was repaired and became passable again only after 11 days.
"This quick recovery has been accomplished from the quick resumption of private sector's labor and services," Ono said.
Increasing the rate of BCP adoption is part of Japan's disaster risk reduction strategy from 2005-2015. The 2011 tsunami and earthquake taught Japan, however, that companies should also integrate BCP in the supply chain.
The disasters caused 337 companies to go bankrupt, but out of these, only 46 were located in the area hit by the tsunami. The other 291 went bankrupt because of the indirect damage from the disruption in the supply chain.
Nissan, a Japanese car manufacturer, was one of the companies that made sure its suppliers had their own BCP after the earthquake and tsunami. Nissan saw the value of this move as it also had suppliers in Thailand, which was devastated by floods in 2011.
Ono said Nissan's plants did not suffer from the floods directly, but its suppliers' facilities did, which made it difficult for Nissan to acquire 3,500 kinds of parts and materials.
Ono said that in other countries such as South Korea, there is a law promoting BCP, while Singapore and Japan have provided national guidelines for BCP.
Velasquez said however that some companies may not be open to legislating the adoption of BCP. In this case, he said the best way to go is to self-regulate.
Ramon Isberto, public affairs head at Smart Communications Inc., said that learning the dynamics of BCP may do the trick, adding a network of corporations will provide training on BCP this month.
The development of BCP was a key subject in the APEC (Asia-Pacific Economic Cooperation) High-Level Policy Dialogue on Resiliency in November 2011. The Japanese government conducted a survey among the 21 participant-countries in the said meeting. Among 40 Filipino companies that answered the survey, only 9 had BCP, while three others still had theirs in the pipeline.
Accenture, a management consulting, technology services and outsourcing company, has BCP. "We have 2 senior managers for BCP," Manuelito Tayag, country managing director said. He added they have a disaster recovery site in the southern part of Manila, which they tested during the time of Ondoy. Having another site helped them put 80 percent of their operations back on track, 3 days after the tropical storm ravaged Manila.
Gov't needs it too
BCP, however, is not for the private sector only.
Margareta Wahlstrom, special representative of the secretary general for the UN International Strategy for Disaster Reduction, said the government should also develop its own BCP.
"If the government is going to collapse under the scenarios [of extreme disasters], who are going to run the systems?" she said.
She said this is what happened in Haiti, when an earthquake hit it in 2010. The earthquake not only killed 300,000 people, it also destroyed government properties, disrupting the public operations.
Wahlstrom said the government should update its information on the risks that different areas of the country face and share this to the private sector, so that businesses may be guided on their own risk assessment. "There should be better information flow from the government, not newspaper information," she said. - Rappler.com