Who’ll Stop the Rain?

Mother Nature is business's biggest saboteur.

This vulnerability, in turn, creates all sorts of problems downstream. To steer clear of weather-related supply-chain problems, Croy says some larger companies (especially demand-driven manufacturers) insist on reviewing the business-continuity plans of their key vendors, with a few drawing up contingency-service-level agreements. Case in point: Corning Inc., a diversified technology company that makes glass for LCD screens and fiber-optic cables. James Flaws, CFO at the $3.9 billion (in revenues) company, says risk managers at Corning try to review the disaster-recovery plans of key vendors, including utilities that provide electricity to their manufacturing plants.

You can’t blame Corning for wanting to see those plans. The company operates one plant in Wilmington, North Carolina, an area that gets its fair share of hurricanes. Last spring, a tornado tore through the western Virginia town of Danville, downing power lines and damaging a nearby Corning warehouse. And in 2002, a large ice storm, accompanied by gale-force winds, knocked out electricity in parts of northern New York, including the company’s home town of Corning, New York, where it operates a big plant. “That storm really harmed us,” recalls Flaws.

Determined not to repeat the experience, Flaws says Corning contacted the local utility soon after the weather cleared. “We worked with the utility on a separate way to get power,” he notes. “We now have power available from two grids.”

Key-man Policies

Corning applies that same caution to executive travel. Although the corporation operates its own fleet of six planes, company rules limit the number of senior managers who can fly on any one flight. “We would never put six members of our finance team on one plane, for example,” offers Flaws. “It wouldn’t be prudent.”

Not all companies are as risk-conscious, however, a fact that leaves them wide open to disaster. In recent months, a number of corporate jets have gone down in bad weather, including the fatal accident at Hendrick Motorsports, the November crash of a private jet carrying NBC Sports chairman Dick Ebersol, and that of a Circuit City jet in February in which eight employees were killed.

While the National Transportation Safety Board has not issued a final determination on the cause of those crashes, the recent rash of accidents raises doubts about the ability of some corporate planes to navigate through bad weather.

Phil Livingston, who sits on the board of several companies, including Vienna, Virginia-based software maker Approva Corp., says he is amazed by the number of companies that don’t implement key-man policies for air travel. Livingston serves as a director for one business that has fractional ownership in a jet. “We haven’t discussed policies yet, but I guarantee we’ll talk about it,” he says. “This is a hot topic.”

Of course, when Livingston served as CFO of World Wrestling Entertainment, he says management at the privately held sports entertainment company talked about the same topic. Nothing ever came of the discussions. Instead, the WWE, which produces several TV wrestling shows each week, would load some of its biggest stars, along with senior executives, into the company jet on a regular basis. So much for hedging. “A company invests a great deal in top management,” says Livingston. “It’s a huge asset. And it’s the hardest one to replace.”

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