Lately, the natural disasters in the United States seem to be supercharged, with each storm more deadly, devastating and costly than the next. As a recent example, a two-mile-wide EF5 tornado decimated the southern suburbs of Oklahoma City on May 20, killing dozens of people and causing damages estimated at $2 billion.
Severe thunderstorms and tornados alone caused $15 billion in U.S. insured losses in 2012, following $25 billion in such losses in 2011, when the industry suffered two of the costliest tornado events in U.S. history: $7.5 billion in insured damages arising out of April 2011 twisters that struck multiple states, most notably Alabama; and $7 billion in insured damages that resulted from the May 2011 multiple-state tornado outbreak.
But tornadoes are not the only disaster preparedness target. In February, Winter Storm Nemo dumped 40 inches of snow on Connecticut, leaving 700,000 customers without electricity and causing 18 deaths. And, in October 2012, Super Storm Sandy devastated the Mid-Atlantic and New England regions, killing 285 people and causing more than $75 billion in damage. Once weather anomalies of this magnitude become common, can we still call them anomalies? Shouldn’t we be better prepared?
The examples of natural disasters are endless, and what is most concerning is that many of the most devastating U.S. disasters struck unsuspecting regions where such weather is uncommon. While Mother Nature may be unpredictable, we can look at her history and know for certain that all of us are at risk for at least one type of natural disaster or another. We cannot prevent natural disasters, but we can prepare.
For long-term care (LTC) facilities, the risk is even greater because so many lives are cared for under a single roof. A single-site facility may spend several hundred thousand dollars in extra expense, expediting expense and emergency evacuating expenses. This number increases with each additional site. In addition to the actual evacuation expenses (hotels, transportation, food), a facility could potentially incur hundreds of thousands of dollars in expenses for generators, additional linens, facility protection and myriad other items, all resulting in a substantial loss of revenue for each day that business is inoperative.
An LTC organization also needs to consider the value of the “soft costs” during and after a natural disaster, in terms of distress to the staff, distractions from strategic work plans and interruptions in the claims process. Finally, organizations need to strongly consider their General and Professional Liability exposures relative to the evacuation of residents. What happens if a resident is injured or killed during an evacuation? Are you protected?
The considerations seem endless, but the most important question is: “How do I maximize insurance coverage and limit my financial exposure? And, how do I plan for evacuations and ensure that my liability policies will protect my residents—even if we must evacuate the facility?” From preparedness to recovery, the following can serve as a primer for preparedness—from critical business considerations pre-disaster to best practices post-disaster.
Below is a “primer” for your disaster preparedness, before, during and after any devastating event.
BEFORE THE EVENT:
1. Form a recovery team
The first step in preparedness is establishing a cross-functional disaster recovery team onsite that will meet at least every trimester. This team should be responsible for evacuation planning and execution, as well as the organization’s speedy recovery thereafter. First, identify a strong leader for the team and provide explicit responsibilities for that leader, similar to a job description. Leading the team will be a time-intensive role that requires commitment throughout the year—not just in the aftermath of a disaster. It will be necessary that the team leader be given time and flexibility throughout the course of the year for opportunities to continue to examine, hone and refine the disaster recovery plan. Also, be sure to clearly define how the CEO or other executives will interact with the team leader, as this can be a source of contention if not properly defined before a disaster occurs.
The best leaders will have a solid team supporting them, so choose the team members carefully. They should come from a cross-section of all levels and functions within the organization. Rather than treating the disaster recovery team as an “added responsibility,” engage team members on the basis that the team is part of their professional development and the organization’s succession planning. These are just a few examples of the many considerations in preparing for a disaster:
2. Develop an evacuation plan
The elements of a well-defined plan will address the following elements and considerations: