General Business Community

  • Business preparedness for disaster and terrorism requires human continuity planning and behavioral risk management of the psychological and health consequences of disasters.
  • Rapid revival of local business is extremely important in re-establishing normalcy.
  • To gain a perspective on the long-term outlook, we first need to look at the economy of the region prior to the disaster.

According to the Regional Financial Associates and EQE International, only about 60% of the total loss caused by a disaster is physical damage.

Bullocks Department Store, Northridge CA/U.S. Geological Survey, J. Dewey
The remaining loss is an estimate of such indirect impacts as increased commuting time, higher future insurance premiums, out-migration of workers and the opportunity cost of capital spent rebuilding the physical damage. They estimate the lost output figure for the midwest floods included $5 billion of long-term crop losses, as well as increased transportation costs due to disruption of barge traffic on the Mississippi River. Inadequate insurance coverage affects the Midwest, California, lower East Coast and Gulf areas. (Intagliata & Payton)

There is a pattern to the economic wake of disasters.

An initial significant drop in employment is followed two to six months later by an employment mini-boom, particularly fed by the construction and physical damage repair.  How long this boom lasts depends on the level of damage and the overall strength of the economy, but typically is between two to three years.  (ibid.)

The economic regeneration of any community is affected by national economic trends.  The Charleston economy remained strong through 1991, but slowed thereafter, in part as a result of the hurricane, but in part by the reduction of military employment in the area.  The downsizing and ultimate closing of the Charleston Naval Base and Shipyard led to the loss of 22,000 jobs.  (Post and Courier, 9/21/1994)  At the same time, increased global trade led to expansion of the container port facilities on the Atlantic and Gulf coasts.

Getting financial assistance can take time.

SBA Loans are slow to process and may need lending partners; SBA was inundated with applications following Katrina and Rita.  As of May 2006, they had received 418,000 applications.  Far from meeting its goal of processing in 21 days, SBA was averaging a process time of 74 days.  SBA and GAO have both done studies on the difficulties faced and GAO has made several significant changes in the processing procedures.  Two, however, that were considered but have not yet been successfully implemented are the “Give a Lending Hand Initiative,” which involves requesting volunteers from the business lending community to help process business disaster loan applications, and “Disaster Loan Partners,” which involves soliciting proposals from local banks and other entities to process disaster loan applications.  (GAO-06-860 SBA Disaster Loans report, 30)

Assessing the loss can be quite complicated.

Downtown New Orleans after Katrina/Global Security
In Oklahoma City, there was difficulty in differentiating between damage that had been caused by the bomb and weaknesses that resulted from age and wear.  The goal of the City of Oklahoma City was to make the business owners whole again and to take the opportunity to bring all rehabbed buildings up to current codes.  In deciding how many federal dollars to request, Oklahoma City weighed, for the buildings, the cause of the damage and the codes the rehabbed building should meet, and, for the geographic area, the damage to the infrastructure.

In New Orleans, there was difficulty in identifying the damage that resulted from hurricane winds and that which had been caused by the flooding from the lake and canals.

An example of loss resulting from other than physical damage is Capital One.  In 2005, Capital One Corp. was in the process of merging with New Orleans-based Hibernia Corp. when Katrina hit.  Although Capital One renegotiated the price down by 9% based on physical damage, it was still concerned about commercial and consumer loans in the New Orleans area being uncollectible.  With 321 locations in the New Orleans area, the big question was whether or not the city would rebuild sufficiently to restore the pre-Katrina business that Hibernia had enjoyed.

Business communities are composed of large, global businesses, possibly with International Organization for Standardization (ISO) Certification; mid-sized companies/franchises that may or may not have multiple branches outside the damaged area and that may or may not have Business Continuity Plans; and small businesses that may have only minimal (if any) disaster plans.

The trend today is to encourage businesses to develop both Disaster Plans and Business Continuity Plans.

Early in the 20th century, as more companies began to function globally, the need for international standards of operations became apparent.  Today, companies from 157 countries are certified by the International Organization for Standardization, an organization that emerged in 1947 from various attempts to develop basic operating standards that would protect both consumers and other businesses.  ISO is the world’s largest developer of standards and its members are mandated to meet very high standards that include such valuable planning as disaster response, business continuity plans, and inter-operability and networking plans with other companies that insure rapid recovery in the wake of disasters.

Today, these large corporations are even developing their own Emergency Operation Centers (EOC) that are in some cases even more sophisticated than those developed by the state governments.  These EOCs have the capability of tracking and/or identifying potential disaster locations and moving supplies into locations to ready a rapid response.  In an interview, Bryan Koon, Wal-Mart Operations Manager, Emergency Management Department, said that in addition to moving supplies into disaster areas, Wal-Mart has pre-planned to be able to move communication and power supplies into the area, should those be needed. 

Lobby of the Oriental Hotel, Kobe, Japan/National Geophysical Data Center, Dr. Roger Hutchison

ISO Certified companies prioritize their response and recovery plans to take care of employees, get operational as soon as possible, and get their community up and running again.  Their extensive capabilities make them very valuable assets in a recovery process. 

Franchise and nationwide businesses provide a staple for economic recovery as they play a major role in

  • Initial recovery

    In Oklahoma City, Wal-Mart stocked the lodging and command centers with supplies.  Local land and wireless telephone services provided communication means for rescue and recovery.  Medical suppliers were waiting at the EMSA supply center to restock the units.  Contractors and suppliers shipped to the site any supplies needed.

    In New Orleans, Wal-Mart provided extensive support to assist the citizens of New Orleans.

    Waveland, Mississippi/Wal-Mart
    In Waveland, Mississippi, the whole community took hope when Wal-Mart set up under a tent and began assisting people.  Wal-Mart has developed a disaster response office that monitors potential natural disasters and routes supplies into both man-made and natural disaster areas.

    In the Enterprise, AL, 2007, tornado, by day three Winn-Dixie had implemented its “Neighbors-Helping-Neighbors” program and Anheuser-Busch had begun shipping in water.
  • Launching outreach programs to their many locations that harness large sums of money for assistance to the suffering community.

    In the wake of Katrina, the Gulf Coast received $3m from Curves, CKE Restaurants, Inc. sent $275,000, Kroger’s sent over $6m, with additional funds coming from Sonic Corp, Hardee’s, Wendy’s, Tony Roma’s, and Popeye’s, among others.  In Oklahoma City, franchise businesses used their outreach across the U.S. to bring hundreds of thousands of dollars of aid to those impacted.
  • Launching long term recovery because they have the means to rebuild quickly

    In New Orleans, by December 2005, Applebee’s had reopened seven of its 15 restaurants, Ruth’s Chris Steak House, Inc., had announced it would rebuild, McDonald’s locations were reopening, Smoothie King had announced plans to reopen five of its outlets, and Popeye’s was reopening, just to name a few.

Small business is primary to the local economy.

Small businesses may not benefit from tax-based incentives, but may need low interest, even high-risk loans and grants to rebuild.  This is a major concern in the rebuilding of New Orleans and was a primary concern after the Oklahoma City bombing.  Ninety-two percent of all businesses in the pre-Katrina economy of greater New Orleans employed fewer than 50 employees.  (Brookings, Amy Liu)

Walker Stomp & Seal in Oklahoma City/FBI
Ron Norick, Oklahoma City’s mayor at the time of the bombing, also expressed concern about the smaller businesses, and the Greater Oklahoma City Chamber of Commerce established a special division to assist the local businesses.  The Chamber took 122 applications for business assistance.  The Urban Land Institute assisted the businesses in returning to their damaged facilities to assess the status.  The City of Oklahoma City oversaw the damage assessment of the structure and the Chamber assisted with claim applications and funding sources.  Mayor Norick said that in the case of small businesses, the city must move promptly or it would be looking at “an excess of parking lots.” (Collective Reflection)

In New Orleans a special economic development commission was created to develop enhanced marketing campaigns for the core industries of tourism, port, oil and gas and health care. The City would

    New Orleans after Hurricane Katrina/Global Security
  • Commission a study of the impact of Katrina on existing large businesses and assist in market, outreach, and employment-matching services
  • Establish a seed and early-stage equity capital fund to help fuel a culture of entrepreneurship throughout the City with a lifespan of five-ten years
  • Develop a program to improve attractiveness of commercial corridors and districts throughout the City
  • Assist businesses in relocating to follow their customer base if the residential plan involves clustering
  • Create a program to develop transient worker housing immediately.  This may be essential for reconstruction in a situation where the damage is massive, with major residential housing destroyed.
    (UNOP, January 20, 2007, draft)

The Brookings Institute, in their Metropolitan Policy Program: Urban Markets Initiative is looking at methods to identify and mitigate financial vulnerability of businesses and individuals in the wake of natural or man-made disasters.  They are working in conjunction with Experian Business Information Solutions, Information Policy Institute, TransUnion, Standard & Poor’s, and World Bank to gather and analyze data that, hopefully, will determine key drivers of financial vulnerability and recommend safety net actions or programs.  (Brookings, “The Credit & Insurance Consequences of Natural & Man-Made Catastrophes”)

The Chamber of Commerce may be able to assist in determining what funding is available to assist businesses and help them apply.

The Chamber should also assist in locating mental health assistance for the business owners and employees in the membership. The Greater Oklahoma City Chamber of Commerce

  • Established an Emergency Business Assistance Center
  • Established a News Media Center that operated from 5 a.m. to 10 p.m. daily
  • Provided Hotel Room Locator Service for the influx of media and government agency personnel
  • Provided Evaluation Assistance for Planned Conventions and helped several groups in changing their conference dates
  • Managed a Business Relief Fund started by the State Chamber and enhanced by The Salvation Army, since 45% of applicants DID NOT have insurance
  • Helped manage Government Relief Funds from local, state and federal sources. (Van Rysselberge)

Following the bombing, the Greater Oklahoma City Chamber received a grant to hire a full-time manager for a Chamber Emergency Business Center to help businesses locate available assistance, to serve as advocate for damaged businesses, and to facilitate the application process for city funds and SBA, CDBG and HUD funds.  (ibid.)

Market Hall, Charleston, SC, after Hurricane Hugo/Historic Charleston Foundation
In Charleston, the Mayor’s Recovery Task Force, on which the Metro Charleston Chamber had representatives, conducted a phone survey of more than 10,000 area businesses in the weeks immediately following Hurricane Hugo.  They found that 12% of their businesses were in need of assistance, either financially or with debris removal.

In a study on economic recovery in the wake of disasters such as Hurricane Frederic in Mobile, AL (1982), Dr. Semoon Chang found that there was a temporary increase in the flow of recovery dollars for several months following a major disaster but roughly only 29% of the recovery money received from insurance and government sources remained in the local community.  Dr. Chang found that the temporary economic boom following Frederic had dissipated within nine months.

Charleston learned from this study that it needed to work toward increasing the turnover of the recovery dollars within the local economy in order to ensure continued recovery following Hugo.  “By capturing these dollars the negative impact of the storm may be lessened and the possibility of a windfall may be increased.”  (Hugo Economic Impact Report)

Recovering documents and data from computers

To some businesses, particularly smaller businesses that don’t have archivists or IT personnel on staff, a disaster that appears to have destroyed the documents and/or computers may seem to be catastrophic.  However, there are companies that are miracle workers at recovering data from hard drives and preservation professionals who can freeze dry documents so that clean copies can be produced.  Should assistance be needed in these areas, local computer experts can recommend hard drive recovery experts and the local museums will have on staff persons who can recommend the best document preservationists for each particular circumstance.

For businesses with first-person items such as signature cards, law enforcement agencies that have support documents which must be maintained for a designated number of years and businesses in need of maintaining tax or other financial records, again, this is not an insurmountable obstacle.  After duplicates have been made for on-going use, moldy records can be maintained, even after being freeze dried.  They need to be isolated for employee health reasons and for the protection of succeeding documentation, until their assigned destruction date or until new signature cards can be obtained.  Storage can be done in freezers, in sealed canisters, or any container that will provide the necessary isolation.  Sealed moldy documents need to be stored in a temperature below 70 degrees to prevent further growth of mold spores.  When accessing the documents, use protective breathing apparatus.  Almost any library or museum can provide assistance in this area.

Expediting Economic Development

Identify leading industrial segments and initially focus on retention and expansion of these key sectors.  For New Orleans, these key sectors were the port, tourism, energy and health care.  To assist small business the UNOP anticipates gap financing, downtown revitalization assistance, a small commercial building repair program and small business loan programs in addition to SBA programs.  (UNOP, January 20, 2007, draft)

Individual Business 

  • In the wake of the Oklahoma City bombing, the business community emphasized three themes:  Take care of your people, Manage the chaos to regain control, Re-establish operations.  Taxpayers, stockholders and clients understand the nature of disaster and empathize with its victims, but they also want a return to the bottom line as soon as possible.

Take care of your people

Studies have shown this may be extremely challenging.  Human responses in the face of traumatic events are not instinctive and often counter-intuitive.  They require planning, education, practice and leadership.  Studies of World Trade Center employees who survived the September 11 terrorist attacks showed that nearly one in four believed the roof could be used for evacuation and only one in ten had ever entered a stairwell as part of a fire drill. (CSTS, Gershon, 2005)  Studies conducted after the 1993 World Trade Center explosion found that 32 percent of employees had not begun to evacuate the building an hour after the bomb detonated and 30 percent decided not to evacuate at all.  (CSTS, Aguirre et al. 1998)

Establish points of contact to get information to and from families of employees in the wake of an incident.  Business leaders and managers need to understand what post-traumatic stress means.  The post-event depression, when the adrenaline stops, is real.  Some people may not return to their jobs.  Others may need varying levels of counseling.  Don’t wait to talk about mental health either within the organization or in the community.  Broken hearts matter as much as broken bones.  (Collective Reflection)  “When we think about workplace concerns, PTSD is only one part of the story.  The range of problems is much broader.  Depression, unexplained somatic symptoms and complaints, sleep disturbances, increased use of alcohol and cigarettes, traumatic grief, increased family violence and conflict, and over-dedication to the group – all can be substantial problems in organizations.”  (CSTS, Ursano, 2002)  In discussions with federal employees following the Oklahoma City bombing, Dr. Anthony Baron listed 4 common effects of trauma. 

  • Defenses are put up for protection, so people become more defensive.
  • Personalities are magnified, so, for example, those who were dependent become more so.
  • Anxiety is heightened.
  • Behavior becomes disorganized.

Dr. Baron specifically listed the following reactions to trauma in a workplace setting:

  • Employees easily come to feel like they are tools.
  • Employees become oversensitive to management doing what they said they would do – walking the talk.
  • Employees are looking for direction, and the rules for success need to be clearer.
  • There is misplaced anger; that is, since expressing anger directly to the bombers is not possible, survivors find themselves generally angry at other people.
  • Repetition is needed in all communications.
  • Workload concerns are increased.
  • Labor-management relations can go to a blame orientation.
  • Security concerns are heightened.

Counselors in Oklahoma City advised the following:

  • In the case of terrorism, there is a general violation of one’s sense of fairness and order in the world – breaking one’s normal illusions of predictability and control.
  • Aside from the purely emotional recovery needed, there are also cognitive deficits which are slow to be regained.  These deficits include short attention span, illogical thinking, memory problems and concentration lapses.
  • Recovery from trauma is not a matter of desire or will.  While there are conscious decisions, like getting counseling, exercising, etc., employees can make that will facilitate or shorten the recovery time, one cannot just decide to “get over it” or to function as well as before.

(Reports based on discussion with Oklahoma City federal employees post 4/19/1995)

Rebuilt PATH station and Tower 7 at The World Trade Center, New York City/Jo Wolf

Psychological First Aid (PFA) in an important evidence-informed post-disaster intervention to mitigate the psychological consequences of traumatic exposure, found to be helpful in restoring function and resilience. (CSTS, Stith et al., 2003)  PFA is a behavioral risk management tool whose principles include safety, calming, efficacy, connectedness and hope.  PFA is the recommended post-disaster early intervention. (CSTS, 2006)

Lehman Brothers (occupants of WTC pre 9/11) is now working with the American Red Cross to develop teams to work when disasters occur.  “Had we done this post 9/11, we would have had that many more employees back doing useful, productive work that was contributory.” Kyle Maldiner of Lehman Brothers, CSTS, 2006

Manage the chaos to regain control.

This is not a time to micro-manage.  Empower others in the chain of command to make decisions to increase the speed of response.  Establish a point of contact for the media, either individually or in conjunction with local business organizations such as the Chamber of Commerce.

Re-establish operations

It is helpful if employees have been cross-trained so they can easily step into different jobs. If buddy systems are in place, personnel and equipment can be brought in from other agencies and locations to resume operations.  In Oklahoma City, personnel and equipment were brought from other locations to re-establish operations for the Credit Union, Social Security, Housing and Urban Development, etc.

Cultural implications of workplace response to disaster

Disasters and terrorism may open fault lines of our society, which include racial and ethnic divisiveness, economic difference and religious differences. (CSTS, Ursano, 2002)  After 9/11, workplaces had to address employee sensitivity to individuals of Middle Eastern background.  During the anthrax attacks, postal workers questioned the difference in their medical treatment from that administered to Congress. (CSTS, 2006)  People in Oklahoma City resented the funds paid to those impacted in 9/11.

Resources for Help 

AXA Group
25 Avenue Matignon
Paris, France 75008
Phone     +33 1 4075 5700

AXA Group is one of the world's largest financial protection and wealth management companies.  AXA Group in UK has developed extensive guidelines regarding business continuity of small and middle sized businesses from their years of experience with man-made disasters in Ireland and the UK. 

Bank of America
Bank of America has a website with links to multiple planning guides related to disaster planning and recovery for small businesses.

Baron Center, Inc.
10299 Scripps Trail, Ste. 122
San Diego, CA  92131
Phone     800.391.4267x14

Dr. Anthony Baron worked with federal employees after the Oklahoma City bombing to help them stabilize the employee base.  He had previously worked with the US Postal System in the wake of the shooting in the Edmond Post Office.  His organization is comprised of a unique company of nationally recognized experts with highly specialized skills.  Working as a team, they minister to a broad spectrum of human behaviors in the workplace.

The Brookings Institution
1775 Massachusetts Avenue, NW
Washington, D. C. 20036
Phone     202.797.6000

The Metropolitan Policy Program:

The Metropolitan Policy Programs aims to redefine the challenges facing metropolitan America and promote innovative solutions to help communities grow in more inclusive, competitive, and sustainable ways.

The Urban Markets Initiative:

The Urban Markets Initiative aims to improve the quality of the information available on urban communities to unleash the full power of those markets to connect them to the economic mainstream.

Center for the Study of Traumatic Stress (CSTS)
Uniformed Services University of the Health Sciences
4301 Jones Bridge Road
Bethesda, MD  20814
Phone     301.295.3013

CSTS is part of the Department of Psychiatry of the Uniformed Services University Medical School.  In June 2006, the CSTS held a national conference in Bethesda, MD, that included workplace professionals in the public and private sector and academicians and policy-makers in disaster mental health and disaster planning and response who presented findings from disaster research, and firsthand accounts of corporations and federal agencies involved in 9/11, the anthrax attacks and Hurricanes Katrina and Rita.  The end product was “A Leadership Document to Inform Planning, Response and Policy for Workplace Preparedness and Behavioral risk Management of Disaster and Terrorism,” Conference Report, June 29-30, 2006, Bethesda, MD 

Department of Homeland Security
Under the Department of Homeland Security Citizen Corps program, sites providing guidance on business response and continuity were developed and can be accessed at

Dorset County Council, Emergency Planning Service
Salisbury Road
Blandford Forum
Dorset  DT11 7LL
Phone     01258 454111
Fax         01258 480179

The UK has extensive experience with man-made disasters and thus appears to be more advanced in developing business continuity plans for small and middle sized businesses.

ISO Central Secretariat
1, ch. de la Voie-Creuse
Case postale 56
CH-1211 Geneva 20
Phone     +41 22 749 01 11
Fax         +41 22 733 34 30

Wal-Mart Emergency Management Department
702 SW 8th Street
Bentonville, AR  72716-0770
Phone     479.277.1001
Wal-Mart has one of the most sophisticated Emergency Operations Centers in the U.S.

Wiltshire County Emergency Planning Unit
Environmental Services Department
Bythesea Road
Wiltshire  BA14 8JN

Wiltshire County, England, has developed a business continuity guide for small businesses that was newly updated in 2006.

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