Who’ll Stop the Rain?

Mother Nature is business's biggest saboteur.

According to the Deloitte & Touche/CPM Global research, however, half of the surveyed companies have no enterprise business-continuity plan whatsoever. Experts say lots of corporate officers don’t have the resources to invest in disaster prevention and recovery. Others are simply short on time. That’s understandable. As International Rectifier’s McGee acknowledges, business continuity is an awfully big topic. “It could consume you forever,” he insists.

Planning for the Worst

If crisis planning is an onerous, unpleasant task, consider the alternative. About four months before last year’s Daytona 500, Nascar’s biggest race, Hendrick Motorsports’s controller and CFO, Scott Lampe, got a phone call at his Charlotte, North Carolina, home. The voice on the other end, that of Hendrick marketing director Pat Perkins, delivered devastating news. A company airplane, en route to a race and engulfed by thick fog, had hit the side of a hill in south-central Virginia. All 10 passengers had died, Perkins said, including eight Hendrick employees.

Usually, general manager Jeff Turner handled problems with the company’s 10-plane air fleet; company president John Hendrick oversaw the day-to-day operations of the company. But both Turner and Hendrick were passengers on the ill-fated plane. With a gaping hole now in senior management (and with CEO Rick Hendrick coping with the loss of a son and a brother), Lampe—barely versed in the tenets of crisis management—went to work managing the crisis. After reassuring employees, consoling loved ones, and attending funerals, he contacted team sponsors, aviation insurers, and later, the company’s bankers to make sure they understood that Hendrick was still in business. But Lampe was going on instinct. “We didn’t have any plan for this,” he says. “There was no script to follow.”

In time, the crisis at Hendrick eased. One of the company’s racing teams, led by Jeff Gordon, won the Daytona, getting employees thinking more about future victories than past losses. Now Lampe himself believes “we’ve sort of turned the corner.” But in light of the crisis, Lampe says he has no choice but to examine all liabilities, all possible disasters. He says he will eventually draft a road map for dealing with the unexpected. “We were caught unawares by the accident,” he grants. “Now, we’re trying to get our arms around all the risk at the company.”

Of course, most businesses are unlikely to face the type of disaster that struck Hendrick. But few can afford to lose manufacturing capacity, let alone top managers, for even a short period. And that goes double for small businesses. Business-continuity experts point out that supply-chain vendors in the heartland are especially vulnerable to bad weather—violent, unexpected storms that can flood plant floors and take sheet-metal roofs right off of prefab buildings.

What’s more, such companies often supply businesses located hundreds of miles away, with deliveries typically carried out by truck. “It doesn’t have to be a tornado or hurricane,” insists Mike Croy, director of business continuity and disaster recovery at Forsythe Technology Inc., an IT infrastructure consulting firm in Skokie, Illinois. “Small and midsize vendors can be hurt by a bad winter in the Midwest where I-80 goes through.”

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