Disaster Due Diligence April 23, 2010

Crisis Just Hit Your Business: How will You Respond?

We would like to invite you to join us for an important event, hosted by Firestorm and The Rogers Group, where a distinguished panel will focus your attention on the immediate risks posed to your business by natural and man-made crises and disasters. The event will be held on April 26, 2010, from 3:00-5:30pm, at the Disneyland Hotel, Anaheim, followed by cocktails in the lounge. Click here to register >>

HEADLINE: Ash cloud grounds U.S. produce, fish and parts

SUMMARY: The volcanic ash cloud that grounded European air traffic for days has taken a toll on U.S. businesses outside of airlines. While most imports and exports move by sea, the trade of perishable goods such as produce, seafood and pharmaceuticals -- flown between buyers and sellers – has been grounded by flight cancellations. Some manufacturers use air delivery when they encounter a glitch in their normal supply chain. BMW was flying transmissions from Germany to an assembly plant in South Carolina when the volcano erupted. "There has been disruption in our parts supply," a company spokeswoman said. "We expect that there may be shortages of some parts or delays in some instances."

STORY LINK: http://money.cnn.com/2010/04/20/news/economy/volcano_exports/index.htm?hpt=C2

ANALYSIS: Supply chain breakdown is one of the largest failures in a disaster or a crisis. Most of us do not have a volcano as a vulnerability or threat. Yet, daily reports continue to reveal more touch points and interdependencies.

It is hard to imagine that BMW, Mercedes, farmers, travel agents, and seafood importers/exporters have factored the threat of an eruption in Iceland into their business continuity plans. Air cargo is generally reserved for highly perishable or highly critical products -- the very products that you cannot afford to lose.

Lost revenue to airlines, delayed flights, missed business meetings, disrupted vacations, loss of perishable goods, and delays in production are creating millions in losses every day, totaling more than $2 billion already. The economic losses exceed most hurricanes. Outside of Iceland the property and health damages remain low. Unfortunately, most of the losses are not fully covered by insurance.

Do you know your vulnerabilities? Their impacts? Do you have monitoring plans for each? Are their predetermined triggers to activate your plans? How do you know? Are you ready?

HEADLINE: The $390 billion San Francisco earthquake

SUMMARY: Analysis of data from government agencies and insurance experts shows a repeat of the 1906 San Francisco earthquake would do $390 billion in damage today, according to the website 24/7 Wall St. The U.S Geological Survey estimates a 50 percent or higher chance of an earthquake measuring 7 or greater on the Richter scale hitting San Francisco in the next 75 years. The value of exposed property in the area prone to a major quake is nearly $2 trillion dollars. It is certain that an earthquake similar to the massive quake in ’06 would do substantial damage to the city’s four main bridges as well as endanger the fresh water supply and utility network, including the power grid and telephone lines. Computer models show much of the coastal area would sink into the ground or collapse into the bay.

STORY LINK: http://247wallst.com/2010/04/19/the-390-billion-san-francisco-earthquake/

ANALYSIS: We have all seen stock offerings where the company disclaimer states past performance is no indication of future performance. However, with disasters past performance is always an indicator.

San Francisco sits on a major fault line. Earthquakes have and will occur there. Experts estimate losses from hundreds of billions to trillions. The human toll could be staggering. Unfortunately, no one can say when these events will occur.  

Are you concerned about the exposure in San Francisco? Most local residents are not. Does your company have locations there? Do your customers have locations there? Do your vendors have locations there? The disruption to the U.S. economy, insurance industry, and financial services will be staggering when the next San Francisco quake hits.

Have you done exercises to identify your response and recovery to this type of event? Are you ready?

--Jim Satterfield, Firestorm President/COO

Cyber security

HEADLINE: McAfee program goes berserk, reboots PCs

SUMMARY: Computers in organizations worldwide got stuck repeatedly rebooting themselves this week after a McAfee antivirus program identified a normal Windows file as a virus. McAfee could not say how many computers were affected, but judging by online postings, the number was at least in the thousands and possibly in the hundreds of thousands. As an example of the impact, a third of the hospitals in Rhode Island were forced to postpone elective surgeries and stop treating patients without traumas in emergency rooms, said Nancy Jean, a spokeswoman for the Lifespan system of hospitals.

STORY LINK: http://www.msnbc.msn.com/id/36694120/ns/technology_and_science-tech_and_gadgets/

ANALYSIS: According to several tech-related forums and sites, the most recent McAfee Corporate Virus Definition update caused thousands of Windows XP machines to shut down by deleting an important file in Windows, causing McAfee to register a false positive and through a chain reaction cause the system to shut down. 

The fix released by McAfee required a technical support person to spend time with each infected machine, and since this was an update to the corporate product and each machine is updated at the same time, this could run into the thousands of man hours. A quick tech with a quick machine may have spent 10 minutes each; a tech on a normal, old XP-running machine likely 20-30 minutes.  Now imagine you’re a large corporation with 100,000 XP machines to fix.

Most companies do not test DAT updates before they are automatically installed on client machines and servers, but this may change that and since virus definitions are updated sometimes daily, this will also cost millions of dollars in man hours.

--Kevin Struck, Firestorm Vice President for IT

Communicable illness

HEADLINE: Cruise ship virus can spread on planes

SUMMARY: Airline passengers are also susceptible to the spread of norovirus, best known for causing diarrhea and vomiting on board cruise ships, researchers have found. CDC investigators tracked an October 2008 outbreak of the acute gastrointestinal illness back to a flight returning tourists to California from a New England fall foliage bus tour. Sitting in an aisle seat or near a tour group member were strong risk factors for becoming ill, which suggests transmission of the virus occurred through person-to-person contact or indirectly via contamination of armrests, tray tables, or seat controls.

STORY LINK: http://www.msnbc.msn.com/id/36568257/ns/travel-news/

ANALYSIS: Anyone who has endured a bout with norovirus can attest it is neither pleasant nor do you have to be on a cruise ship to get infected.  Sometimes known by the misnomer “stomach flu” -- this virus is not related to influenza – this disease causes nausea, vomiting, diarrhea, and some stomach cramping and typically lasts for one to two days.  Highly contagious, norovirus is easily spread in places where people are in close, prolonged contact such as cruise ships.  Schools, nursing homes, and airplanes are also venues for transmission.

While it is impossible to totally prevent transmission, many of the tried and true admonishments can reduce the change of becoming ill:  wash your hands often, ensure frequent hand washing by food service workers and servers, and allow – insist even – that those who show symptoms of this disease stay home or away from others.  When incidents of norovirus illness are identified, cruise operators have implemented supplemental cleaning of common use areas (kitchens, bathrooms, elevators) and surfaces (telephones, doorbells and knobs). This is a prudent measure, at work and at home, for norovirus, influenza, and many other communicable diseases.  CDC recommends these steps for dealing with norovirus:

• Frequently wash your hands, especially after toilet visits and changing diapers and before eating or preparing food.

• Carefully wash fruits and vegetables, and steam oysters before eating them.

• Thoroughly clean and disinfect contaminated surfaces immediately after an episode of illness by using a bleach-based household cleaner.

• Immediately remove and wash clothing or linens that may be contaminated with virus after an episode of illness (use hot water and soap).

• Flush or discard any vomitus and/or stool in the toilet and make sure that the surrounding area is kept clean.

• Persons who are infected with norovirus should not prepare food while they have symptoms and for at least 2-3 days after they recover from their illness.

• Food that may have been contaminated by an ill person should be disposed of properly.

A heightened sense of awareness, sensitivity to reducing the risk of spread, and – perhaps most importantly – creating a culture where prevention and common response are routine are keys to keeping this -- and other most unpleasant illnesses – from spreading in your home or business.

--Don Donahue, Director, Firestorm Healthcare Response Team

Personal security

HEADLINE: Police search for pair accused of robbing Bloomingdale bank

SUMMARY: This bank robbery -- which occurred recently in the hometown of a Firestorm franchise principal -- and the ensuing response provide some food for thought for those who rely on alarm companies for security in their homes and businesses.

STORY LINK: http://www.northjersey.com/news/033010_Police_search_for_pair_accused_of_robbing_Bloomingdale_bank.html

ANALYSIS: Recently in my little Mayberry town (we have one traffic light and two banks), the Bank of America was robbed. Two individuals came in with long guns and proceeded with the holdup. They were, by all accounts, professionals (I say this having more than five years of dealing with bank robberies in a previous position). They were very mindful of the time they spent inside the bank, with good reason.

When the first teller hit the floor-mounted silent alarm it took just shy of 2 minutes to get the “bank robbery in progress’’ message to our police. Our police were on site within 30 seconds of getting the call (that is exceptional response time). The problem was, BoA’s alarm company calls a regional 911 center, who then calls a smaller regional call center (in the next town over) and then our police department. That phone chain took more than 90 seconds. The getaway car was parked just on the other side of the parking lot’s high fence, with tall landscaping along it.  No one was able to get a description of the car. They were in and out of the bank in less than 90 seconds.

The lesson: When seconds matter most, help is just a couple minutes away. The action needed: Make sure your alarm company makes the right call on the first dial. Ask them what number they will call when alerted and have them read it back to you. Big, national companies aren’t always the best ones to use. Many times smaller, regional companies offer better service and are more open to personalizing their response to your needs and not what is convenient for their data systems and operators.

--Scott Watkowski, Firestorm franchise principal

Preparedness groups

Join Firestorm’s LinkedIn groups and help build a Culture of Preparedness for your family and organization:

DISASTER READY PEOPLE: http://www.linkedin.com/groups?gid=1914314&trk=myg_ugrp_ovr

WORKPLACE VIOLENCE: http://www.linkedin.com/groups?gid=1898572&trk=myg_ugrp_ovr

COMMUNICABLE ILLNESS: http://www.linkedin.com/groups?gid=1899278&trk=myg_ugrp_ovr

SWINE FLU: http://www.linkedin.com/groups?gid=1921222&trk=myg_ugrp_ovr