It’s 2:30 in the morning. The fire department just left. What was your business now lies in smoking, wet rubble on the ground. That sense of security you have always had because you made sure your insurance program was properly structured and current is now replaced by a growing sense of unease, verging on panic. How do you do business? Where do you do business? How do you keep your customers from going elsewhere? How do you reconstruct who you owe, and more importantly, who owes you? How do you keep your best employees? While a well constructed insurance program is critical to the survival of a business following a catastrophic fire or weather event, equally as important is a comprehensive contingency plan designed both to mitigate the disruption to your business and accelerate your return to full operations. The absolute best “seat of the pants” response to such an event will never come close to matching the effectiveness and impact of the execution of a comprehensive plan constructed methodically well in advance of the event. The construction of a catastrophic fire or weather event contingency plan is, for all intents and purposes, a process of developing plausible answers to a broad range of questions, all of which are structured as: What do we do about __________ if we suffer a catastrophic fire or weather event? While every company’s circumstances and exposures are to some degree unique, the following are core areas of inquiry that every contingency plan should address. Public and Customer Relations Control the event or it will control you. How do you quickly and effectively communicate to the general public, your customers and suppliers that you are still open for business, where you will be operating, any short-term limitations in your operations, and how they can contact you? Who will be responsible for construction and dissemination of this information? How can you maintain an accurate list of customer and vendor telephone/fax/e-mail numbers and addresses in an alternative location so that it can be quickly accessed after a catastrophic event? Structure Until you can rebuild, what kind of structure do you need to house the operations you will be able to sustain? Can you utilize tents, temporary office dry storage containers, air-supported structures? If so, where would you obtain these and how do you ensure the vendor or vendors would have them available when you need them? Are there vacant commercial, industrial and/or office spaces in the area that could be utilized as short-term solutions? How will you keep your plan current as to the availability and identification of those potential spaces? Whose responsibility will it be to periodically assess appropriate space availability? Equipment/Production Capacity Do you have production equipment that is critical to ongoing operations? If so, how quickly can this equipment be replaced and from whom would it be obtained? Have you reality-tested turn-around time frames with vendors? Are there other similar facilities that have excess production capacity that could be utilized, and have you had discussions with those proprietors to frame the parameters of such use? Stock/Product During the initial and intermediate recovery periods, what raw materials, stock and/or products are critical to your efforts to maintain the viability of your business? What are the best and worst case scenarios as to how quickly your vendors could supply you with the necessary materials? Telephone/Fax/E-mail With the extent to which the operation of today’s businesses is now dependent on telephone, fax, and e-mail, restoration of this capability becomes paramount. What does your local phone provider project as an estimated elapsed time for emergency restoration of service, and what specific steps would you be required to take to initiate this process? Computer Equipment How vulnerable is your company left if computer equipment is destroyed or rendered inoperable? What hardware would have to be replaced immediately and where would it be obtained? Are copies of unique programs maintained at off-site locations? Is vital data backed up regularly and copies maintained at off-site locations? Payroll/Benefits To what degree could a catastrophic fire or weather event impair the ability to generate payroll and effectively administer benefit programs? Accounts Receivable/Accounts Payable To what degree are accounts receivable and accounts payable systems vulnerable to destruction by a weather or fire event? Are updated back-up copies of these records kept at an offsite location? Vehicles and/or Mobile Equipment If vehicles or pieces of mobile equipment are destroyed or rendered unusable due to a fire or weather catastrophe, what standing arrangements are established with servicing vehicle dealerships to provide replacements on short notice either as purchase, rental or lease? Insurance and Inventory Records Are copies of insurance and/or inventory records kept at an alternative location to aid in expediting settlement of related claims and advance payments to facilitate business resumption efforts? The keys to effective contingency planning are: 1. The commitment to devote sufficient time and effort to methodically and completely identify exposures. 2. The development of realistic and practical alternatives or solutions. 3. Reality-testing the alternatives or solutions on a regular basis to ensure that the plan is, and remains, viable. 4. The assignment to staff members of specific and appropriate responsibilities for execution of the plan before the catastrophic event occurs. (Editor’s Note: Donald R. Rung is vice president for technical field services for Lumber Insurance Companies in Framingham, Mass. He may be reached at (508) 872-8111.)