Corporations can no longer run, hide or ignore the path of disasters. The Swiss Re Sigma report "Number of Events 1970–2005" indicate a steady increase in the number of both "Natural Catastrophes" and "Manmade Disasters" worldwide (see Exhibit 1) since 1970. This trend of rising catastrophes and disasters is indirectly confirmed by the number of Federal Emergency Management Agency (FEMA) declared disasters since 1967 (see Table 1).
Exhibit 1. Number of events from 1970 to 2005 (available in full paper).
Table 1. Disaster statistics declared by FEMA by decade (available in full paper).
The 2005 hurricane season was the busiest ever recorded with 23 named storms, 11 of which resulted in FEMA-declared disasters. Three of the storms: Katrina, Rita and Wilma were extremely destructive. Katrina insured losses are estimated to be $40 - 50 billion and rising, while Rita and Wilma combined for about $20 billion in insured losses.
In August 2003 there was a massive power outage from Ontario, Canada to the Midwest and Mid Atlantic states. Despite the breadth of this disaster, it could have been much worse. Without a quick thinking utility worker in New Jersey who was alert enough to trip a circuit breaker, this power outage would have reached Florida. Weeks would have been added for the country to recover fully from this disaster.
The 9/11 terrorist act had considerable business impact beyond the terrible damage inflicted upon New York City and Washington DC. Interstate commerce came to a halt for several days. All air traffic was suspended for a week. Many financial institutions lost their data centers thus affecting their ability to conduct business for their national and global clients.
These events illustrate that no entity can assume it is immune to a potential disaster. Continued political unrest, aging infrastructure, unpredictable weather patterns, and global warming all have negative trends. Corporate consolidations, centralized processing, overseas vendors and just-in-time management practices are just a few business trends that make companies even more vulnerable.
So if companies cannot run or hide from disasters, then they must prepare for them.
Everyone has their own definition of a Disaster Recovery Plan (DRP) that is neither correct nor wrong. DRP is an encompassing concept that is difficult to grasp. Breaking the DRP into smaller components makes it easier understand. The DRP is composed of four sub plans.
Avoidance and Preparedness Plan
Emergency Response Plan
Business Continuity Plan