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Disasters hit businesses hard, keeping many permanently closed

Published 6 July 2011

Business owners across the United States are being urged to create emergency plans, so that they can continue operating in the wake of a natural disaster; according to the Insurance Institute for Business and Home Safety, 25 percent of businesses hit by a natural disaster are unable to continue functioning

With the deluge of natural disasters across the United States ranging from massive wild fires to tornadoes and hurricanes, business owners across the United States are being urgedto create emergency plans, so that they can continue operating.

According to the Insurance Institute for Business and Home Safety, 25 percent of businesses hit by a natural disaster are unable to continue functioning. Other studies put that figure even higher with one estimating that number could be as high as 40 percent.

Having an emergency plan “improves your chances of staying in the game,” said Carol Chastang, a spokeswoman for the Small Business Administration (SBA). “Being able to reopen as quickly as possible, that’s the key. The longer you stay closed, the bigger the chance of not recovering at all.”

Deirdre Patillo, who leads crisis-response workshops in the University of Texas at San Antonio’s Sustainable Business Program, said, “We try to get people to focus on their key functions, on what their key needs are.”

“Often, it’s simply not having planned for the contingency that’s most likely to put them out of business,” she said.

Emergency plans vary widely depending on the type of business and threat business faces, but all share a few basic components.

All plans need a communications section so all employees, vendors, suppliers, and contractors are informed of the latest developments about the business during and after the emergency. Plans should also include a vulnerability analysis to help determine weaknesses and critical infrastructure that needs to be protected. Finally, plans should also include protecting data to ensure that crucial information like insurance policies, bank accounts, and property records are backed up.

Diane McClure, the Insurance Institute’s business-resiliency program manager, said the plan should be written down and made accessible to many people throughout the company.