For more from our May issue on natural disaster planning in 2021, check out:
Armed with lessons learned from the 2020 hurricane season and pandemic response, risk professionals are preparing differently for natural disasters in 2021. Risk and insurance professionals discuss unique considerations, disaster planning for remote workforces, and first-hand perspectives of natural catastrophe response amid the pandemic.
Q&A: How Texas Roadhouse Takes a People-First Approach to Disaster Planning
Patrick Sterling and Matt McMahan from Texas Roadhouse sat down with Risk Management to share some of the lessons they have learned from managing disasters across 600 locations over the past year, preparations for natural disasters in 2021, and insight into building a people-first playbook for times of crisis.
A year into the COVID-19 pandemic, many enterprises have settled into altered arrangements such as remote work. While many have focused on the decreased importance of a physical office, many may overlook that the move to remote operations has both reduced and increased natural catastrophe risks. Now, heading into the 2021 hurricane and natural disaster seasons, organizations must reassess their risk profile with regard to remote or hybrid workforces to ensure the safety of both operations and employees.
Remote work has offered some comfort for risk professionals with regard to business continuity. For example, shifting to remote working is now clearly a viable option to continue operations if a hurricane or other natural catastrophe temporarily makes on-site work too dangerous. According to Jim MacDonnell, director in BDO’s crisis management and business continuity practice, “COVID-19 forced many companies to move to a remote workforce, despite the fact that there have always been concerns about internet bandwidth to handle the traffic. Those questions have been answered now, so we feel that COVID-19 has increased overall preparedness should we need to go remote in the event of a natural disaster.”
Measuring Your Modified Footprint
With many workers now operating remotely, the risks that natural disasters pose have been somewhat reduced, as companies rely less on one physical location that must be protected and that employees must travel to and from. As a result, some risk professionals or their organization’s management team may even consider hurricanes, wildfires and other natural catastrophes to be a much lower risk this year.
The exposure has not necessarily decreased, however. Instead, risk professionals must recognize that the organization’s risk profile has changed as workers change location, requiring reassessment of where physical risk truly resides. Enterprises have a much different footprint this year, and distributed employees likely expand the threat surface that risk professionals must monitor and manage.
“A remote work force expands companies’ geographical susceptibility to natural disaster, yet can lessen the organizational disruption given less workforce concentration,” said Thomas Varney, regional manager of North America at Allianz Global Corporate and Specialty. “Based on the current remote locations of many employees, the impact of a natural catastrophe may be different and the need for ongoing communication will be critical across many types of natural catastrophe events. This involves a larger footprint of understanding by employers of events that may have previously only been local in nature.”
It is critical to know where employees are working and reevaluate continuity plans based on this new footprint, Varney said. Companies may need to consider weather risks beyond what they have considered relevant operational threats in the past. They may also need to expand the list of locations actively monitored for natural disasters. Heading into hurricane season, risk professionals should ensure they have a detailed and fully updated list of the physical locations of all employees operating remotely. Depending on the scale of the organization, they may need to consider new ways of tracking these locations and monitoring this broadened threat surface in real time.
They should also consider the distribution of workers across these locations to assess the risk of disruption from different risk scenarios—and to evaluate potential ways to reduce disruption. For example, it is essential to know if employees are largely clustered in a coastal city at high risk from hurricanes, if some have moved from hurricane risk zones to wildfire risk areas, or if a notable proportion have dispersed among different regions.
With the right assessment and mitigation mindset, companies could find strategic risk management opportunities in the distributed workforce. Using this approach, many enterprises may actually be able to get into a stronger baseline position to withstand potential business continuity threats as a result of diversifying the physical locations from which work is done.
“Having a remote workforce can actually improve a company’s ability to prepare for and respond to a natural disaster,” Varney said. “Natural disasters are, in most cases, local events or, in a few cases like large hurricanes, regional events that affect a limited geographical area. Having a remote workforce can limit the number of employees affected, while others are able to continue to work as normal.”
With some advanced planning, companies can take advantage of this geographic dispersal to better fortify against potential disruption and ensure business continuity. “When preparing for a natural disaster, a company with a remote workforce should understand how to shift important activities from affected employees to those who can still work,” Varney advised. “Additionally, it is very important to have written procedures and efficient communication channels set up prior to any event.”
Ensuring the active and open communication necessary for effective emergency response should always be top of mind. This year, companies may need to dedicate additional thought and attention to new employees who may not have ever met their colleagues. “As the pandemic has persisted, companies have onboarded significant numbers of associates that have never met their colleagues in person,” MacDonnell explained. “During a crisis, close working relationships are influential in determining your success or failure. To prepare for the upcoming hurricane season, it is critical that your response teams feel comfortable working together during stressful, high-stakes incidents.”
Enterprise Disaster Preparation Gets Personal
Remote work has required employees to take company operations into their homes, but protecting those operations with natural disaster planning and preparedness remains the enterprise’s responsibility, regardless of worksite. Now, enterprises must assess how to extend their continuity planning to ensure safety and functionality at home.
For some companies, there may be a bit less risk this hurricane season because offices are not the operational hubs they once were. Needing to close or losing power in a given property does not pose the same threat. However, that central base is also likely hardened against threats more than employees’ homes, and enterprises have far more control in keeping facilities secure and connected than private residences.
“Many companies that continue to accommodate a fully remote or hybrid workforce have ongoing concerns about their employees’ heavy reliance on home internet, electric and other utilities,” said Drew Olson, partner in BDO’s forensic insurance and recovery practice. “While offices may have backup generators or redundant internet service providers, most employees simply are not equipped to continue to work from home during a natural disaster.”
According to Olson, this posed considerable problems for organizations responding to many kinds of natural disasters over the past year. “As we have seen during crises this year, regional impacts from natural disasters or manmade events can have significant impacts on an employee’s ability to work remotely. For example, the recent cold weather event in Texas resulted in widespread internet and power outages that limited employees’ ability to do their jobs from home,” he said.
As workers continue to endure the COVID-19 pandemic and face the added crisis of natural catastrophes on top of this prolonged disaster, many companies are paying attention to the increased need to care for employees on a personal level. Some are rolling out enhanced measures, investing in mitigation provisions to help employees prepare at home, reducing personal stress and losses as well as professional disruption.
“Companies with hybrid or remote workforces should be stressing individual and family preparedness as hurricane season approaches,” MacDonnell advised. MacDonnell and Olsen report they have seen many companies think outside of the box and outside of the office, introducing new and enhanced measures to help employees during disasters. These range from issuing mobile hot sports to offering individual and family preparedness classes.
“Creativity during COVID-19 has known no bounds,” MacDonnell said. “The companies that responded most effectively made solid investments in caring for their people and their customers.”