The impact of a blackout can go far beyond a temporary loss of power.

The Blackout of 2003 created widespread disruption across eight U.S. states and parts of Canada, impacting hundreds of thousands of businesses and 50 million people. Power failures don’t have to be widespread and newsworthy to have a significant adverse impact on your business. A localized disruption affecting only one or two city blocks can be just as damaging, if that is where your company is located.

So much of the economy is dependent upon electricity that even a temporary loss of power can have a significant and lasting impact on a wide spectrum of business operations. In addition, in the increasingly interdependent, global economy, even if your company is not directly affected by a power failure, your suppliers, customers, vendors, and employees very well may be.

Power failures cause a “domino effect,” disrupting a variety of other services and utilities. For example, several essential services, such as water/sewer, transportation, IT services, communications (both cellular and land lines), banking/financial services, etc., were impacted by the Blackout of 2003. Power failures also can severely impede an organization’s ability to respond to emergencies such as a fire or employee injury. Finally, after a business’s operations are all back online, it may need to face the task of filing insurance claims for losses resulting from a the blackout.

What Will You Say When They Ask What Happened?
The Blackout of 2003 should make corporate executives begin to question how well they are currently able to manage their portfolio of risks, not just individual ones. They should be thinking beyond individual business operations and asking questions that are fundamental to their overall businesses, such as:

  • Do I understand the company’s potential risk exposures and their interdependencies so that I can deal with them proactively?
  • Have we identified potential threats and assessed their impact on our people, assets, operations and the environment?
  • How do I know if I lost data? If I have, how do I recover it?
  • How quickly can we restore critical business functions?
  • Do I have manual procedures in place to continue critical operations in the absence of information technology?
  • How well integrated are my emergency response plans with public authorities?
  • Is my staff properly trained to implement our contingency plans?
  • Do all employees know their roles and responsibilities during an emergency?
  • Do I have adequate procedures in place to communicate with employees, suppliers, customers, the media, and public officials?
  • Have I addressed the interdependencies with my suppliers, vendors, customers, and even competitors to help my company survive and quickly recover from an unexpected disruption in service?
  • Do my utility outage plans address loss of electricity, potable water, sewer, and other critical resources?
  • Do my property policies adequately cover me if I have a claim?
  • Do I have a property or liability claim that must be filed (or that will be assessed against my company)? If so, how will I properly manage these operations?
  • How do I determine, measure, and document my economic losses to maximize my insurance recovery?
  • How can I adequately recover damages incurred outside of the insurance contract?
Who's Looking Out for You?
To help address these and related issues, there are a number of solutions that executives can use to help better plan for, survive, and quickly recover from, the unexpected disruption of normal business operations. These include:
  • Business risk consulting: Identify, prioritize, and assess the critical business risks across the enterprise to ensure an effective, corporate-wide plan to proactively manage the potential consequences of power failures.
  • Business continuity planning: A process that systematically identifies critical business and IT processes and strategies that can help a company stay in business in the event of a severe disruption to operations.
  • Emergency response planning: Helps companies develop effective decision-making and execution of protective strategies for potential threats including fires and explosions, terrorism, natural hazards, hazardous material spills, utility outages, and related rescue challenges.
  • Supply chain risk consulting: Helps companies identify and prioritize critical dependencies within the organization’s operation as well as external to the organization that pose potential disruptions within the supply network.
  • Claims consulting: Provides a review of a company’s property insurance policies and assists with measuring, documenting and recovery of major direct or indirect losses through investigation and forensic accounting and claims services. Develops plans for handling self-insured disability and third-party claims. Provides dispute resolution services and insurance claims accounting and preparation services.
  • Property claims: Helps companies navigate through a property loss, from reporting the claim, collecting loss data, quantifying damages, policy/coverage interpretation, through settlement.

If you have any questions or would like additional information, please contact us.

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