Emergency Preparedness Plan for Your Business

A company does not have to perform high-risk activities to be confronted with crisis. Any type of emergency that happens suddenly, that disrupts the routine of a company, that hurts its competitive position, and that demands immediate attention can be called a crisis. Loss of electricity to an electronic data processing firm can be as damaging as is a fire to a factory.

Emergencies can take many forms: physical perils, such as fires, floods, or earthquakes; work accidents; loss of essential supplies and utilities, such as electricity; walk outs or other labor problems; or deliberate acts of terrorism or sabotage. Some emergency situations give advanced warnings of several days, while others come totally unexpected. Emergencies also vary in degree and level of impact. Traditionally, large-scale or catastrophic emergencies are called disasters.

Pre-emergency planning is essential for successfully minimizing any adverse effects on a business and its operations. Being unprepared can cause a business to experience significant loss of assets or human life, or to experience business interruptions; also, being prepared for "anticipated" emergencies will make a business better suited to deal with unexpected or unforeseeable ones.

There are many words used to describe emergency planning - contingency planning, disaster recovery planning, crisis management, etc. The Occupational Safety and Health Administration (OSHA) requires companies to develop "Emergency Action Plans” while the Environmental Protection Agency (EPA) requires "Emergency Response Plans". All these different terms essentially describe ways of protecting the life, property, and assets of a company. Because they sound similar, they are frequently used interchangeably. They are all subtly different in scope, however. Words like "contingency planning" and "crisis management" focus on preparing for, or responding to, an event. "Disaster recovery planning" focuses on restoring operations once a disaster has occurred.

The terms that are used throughout this report are emergency preparedness and emergency preparedness planning. Emergency preparedness is a risk management philosophy concerned with anticipating, preparing for, responding to, and recovering from any crisis or unfortuitous event. Emergency preparedness planning is the methodology used to develop a coherent system or program for becoming emergency-prepared. This report presents an overview of an emergency preparedness plan intended to help a business survive an emergency or disaster.

What Is Emergency Preparedness?

Emergency preparedness has one goal — to minimize the adverse effects of an emergency upon a business. This goal is accomplished by the creation of an in-house program to assess the risk of potential emergencies on a business and the development of strategies for controlling those risks. These strategies are implemented through the development of an emergency preparedness plan. This plan spells out specific actions that should be taken before, during, and after an emergency, and assigns who is responsible for taking the actions.

There is no single "off the shelf" emergency plan that can be adapted for all businesses. All businesses are different - they have different concerns and resources available. Use of a generic emergency plan can result in situations where the resources necessary to implement a required action are not available.

The general procedures for developing an emergency plan can be used by all. There are eight essential elements of emergency preparedness planning:

  • Identify hazards and assess risk.
  • Assess capabilities and resources.
  • Develop an emergency plan and procedures.
  • Integrate the plan with the community plan (i.e., emergency responders).
  • Conduct training.
  • Develop a public relations structure.
  • Conduct drills and exercises.
  • Develop plan audit procedures.

The plan is very important - it will state, in writing, the company policy and procedures for handling emergencies. It will define all necessary procedures and requirements, including training requirements. It should not deal with normal day-to-day operations, which are not truly emergency situations. To develop the plan, see Natural Hazards Reports NH-30-11, Emergency Preparedness – Developing the Plan, and NH-30-12, Emergency Preparedness Planning – Example Plan.

The steps taken before and after plan writing are equally as important. An emergency plan is only as good as the information it is based upon and the ability for a company to implement it. A plan that looks wonderful on paper, but which assumes certain response capabilities exist that do not, will be ineffective.

An effective audit procedure is essential for plan longevity. A common pitfall in emergency planning is to forget that companies are dynamic - that their needs and resources vary with time. The plan must be kept current so that it accurately addresses the company's needs. Otherwise, the plan will become out of date. An out-of-date emergency plan may be as useless as not having one at all.

Why Develop an Emergency Preparedness Plan?

The question can be asked, “Why should I spend the time and effort developing an emergency preparedness plan at all?” The simplest answer to this question is that crises will happen. If a business exists for any period of time, it will experience a crisis. A company can either chose to pro-actively prepare for it, or just react to it. Experience has shown that action in emergencies is seldom effective, unless planned in advance. The longer it takes to react effectively, the greater potential for loss. Companies unfamiliar with proper crisis management procedures may even worsen an already unfavorable situation. Prior planning can prevent poor performances once a crisis happens.

Several other external factors can influence a business’ decision:

  • There is the potential for damaging media attention and loss of public good will. The longer an event is in the public eye, the more likely the public will be influenced by it. In the final analysis, a business will be measured on how well it responds and on the preventative measures it has taken prior to the event.
  • There is potential legal liability. Employers have the duty to provide a safe work environment. A business may be liable for third party claims, for example, from damage to neighboring properties. Insurance companies may stipulate some type of preparedness system before providing insurance. Certain government regulations may require some type of emergency planning.
  • Can a business survive a large loss? While the financial cost of property damage and business interruption can be offset with adequate insurance coverage, what will offset non-economic business opportunity costs? Loss of market share to replacement goods because of excessive delays in returning a product to market can be the first step toward bankruptcy - no product or service is indispensable or irreplaceable; if one company can provide it, others can too.

Types of Emergency Preparedness Plans

There are four types of emergency preparedness plans commonly used in industry: action guides, response plans, emergency management plans, and mutual aid plans.

Action Guides

An action guide describes, usually in a checklist format, the procedures to be followed in the event of an emergency. It outlines which company personnel and outside agencies are to be called and what information is to be collected and conveyed, and provides other basic response functions. This type of plan serves more as a reminder of the procedures to be followed and is generally part of the more comprehensive emergency management plan, discussed below.

Response Plans

This type of plan, also referred to as a contingency plan, describes, in greater detail than an Action Guide, the organization, responsibilities, and procedures that will be initiated, and the equipment and facilities that will be required, should an emergency occur. Response-type plans provide information only on the actions that must be implemented to limit damage from an emergency; in general, they do not deal with pre-emergency or recovery planning. A specific response plan is usually developed for each hazard identified as high risk.

Emergency Management Plans

This type of plan is a comprehensive program that includes the four phases of emergency planning - prevention, preparedness, response, and recovery. It describes the methods utilized to prevent emergencies, the plans implemented to prepare for emergencies, the actions to initiate in the event of an emergency, and the activities necessary to keep the organization functioning and to bring it back to full operation should damage be sustained. An emergency management plan should include response plans for each identified hazard.

Mutual Aid Plans

A mutual aid plan is the plan developed by the participating firms in a mutual aid association in which they agree to share resources to assist one another in an emergency.

Getting Started on Your Emergency Preparedness Plan

The first step in developing an emergency preparedness program is to have management appoint a leader to assume responsibility for the plan and to act as coordinator. The leader is responsible for overseeing the team's efforts through the entire planning process. He/she is responsible for coordinating all activities within the project and providing general direction for the process.

The appointment should be made in writing. It should be issued from the highest authority in the company. It should outline the leader’s responsibilities and authority, establish program direction, and emphasize the complete support of top management. Top management must be committed to the idea of emergency planning – otherwise, resources necessary to complete the task may not be available.

The leader should be someone: who knows the company well; who has experience in dealing with problems and making decisions; who is capable of dealing effectively with management and employees at all levels (ideally, he/she should be a member of upper management since he/she will have to be able to delegate authority and speak for the company); and, who has a high level of technical expertise and writing ability since he/she will be the plan editor. Because the role of the leader is so significant, an alternate or co-leader should also be chosen.

A committee made up of representatives of key departments should be appointed to assist and advise the leader and help organize the plan. Representatives should be drawn from all areas of the company that would be affected by a crisis or would have a role in recovery activities. Typical departments that would be affected and might contribute are:

  • Personnel
  • Security/Safety
  • Law
  • Emergency Response
  • Public Relations
  • Data Processing
  • Risk Management
  • Facilities Management
  • Consumer Affairs
  • Finance
  • Marketing/Advertising
  • Productions/Operations/Maintenance

In smaller companies, one person may be responsible for more than one of the above areas. The number of people chosen for the group is not important as long as the people selected have experience in these areas. If in-house resources cannot provide this expertise, outside consultants should be hired to help.

There are two main pitfalls — they are:

1. When establishing the team, a new department should not be developed to handle emergencies. The purpose of developing a preparedness program is to highlight potential problems and to provide the organization with the ability to deal with emergencies.

2. One person should not be relied upon to develop the entire program. For effective planning, companies need to know who is responsible for what, and who can perform which activities. This knowledge is only gained through team participation. Single person plans will be incomplete or biased.

The planning team has the responsibility of developing the emergency preparedness plan for the company. They must anticipate the type of emergencies that might occur and then develop response mechanisms and procedures for them. They are responsible for making sure that the organizational structure and appropriate supplies and are in place for implementing their recommendations, and they must make sure that the procedures are up to date. These goals can all be accomplished by following the eight planning elements stated earlier.

Hazard Analysis and Evaluation

Once the committee is assembled, it must conduct a hazard analysis. A hazard analysis is done to identify and evaluate any hazards that may exist, determine the consequences of the hazards should they occur, and assess any potential risk. The purpose of these steps is twofold: to make sure that all crises are considered when preparing the response plan, and to make sure that planning resources are allocated properly. Hazard analyses are critical to effective emergency preparedness for two reasons - an event cannot be prepared for if it has never been considered; and, it is pointless to waste time and money preparing for an event that will not occur or is of little consequence.

Hazard evaluation has two steps: identification of any potential hazards and evaluating the likelihood of an occurrence. Committee members should participate in a "brainstorming" session to identify all events that could lead to undesirable consequences. Typical hazards to be considered are:

  • Fires or explosions.
  • Geological/meteorological occurrences - tornados, hurricanes, earthquakes, floods, weather extremes, lightning, etc.
  • Work accidents - severe injury, multiple severe injuries, rumors, panic, etc.
  • Utility outages - loss of electricity, heat, steam, refrigeration, gas, etc.
  • Hazardous material releases.
  • Bomb threats.
  • Civil disturbances - riot, strike, sabotage, terrorism, etc.

Identification should be done independent of whether or not they are likely to occur. The purpose of this step is strictly to discover any potential problems.

Probability Assessment

Once all potential hazards are determined, they should be evaluated in terms of their probability and frequency of occurrence. Numerous methods exist for determining this - they range from being very simple (e.g., qualitatively ranking events in terms of "frequent", "probable", "occasional", "unlikely", etc.), to the very complex (e.g., determining numerical probabilities for events occurring).

The method chosen will depend on the needs and sophistication of the company. Not everyone needs to perform complex probability assessments. The purpose of doing any of these assessments is to develop a realistic list of potential hazards that could affect a company, highlighting the most likely, and deemphasizing the improbable.

Consequence Analysis

Once hazards are evaluated in terms of likelihood of occurrence, they should be evaluated in terms of the consequences of occurrence. Committee members should ask themselves the question, "If this event occurs, how will it impact the company, our employees, the environment, and the surrounding community?"

As with probability assessments, there are numerous methods for making formal consequence assessments. A simple method is to look at the potential consequences of an event on personnel, property, the public, and the environment, and estimate the potential severity of the consequence in terms of "catastrophic", "critical", "marginal", "negligible", etc.

Risk Assessment

Once all potential hazards are identified and their consequences determined, they should be evaluated in terms of the risk they present to employees, the neighboring public, and the company. For the sake of this report, risk is defined as a measure of potential economic loss or human injury in terms of the probability of loss or injury occurring and the magnitude of the loss or injury if it occurs.

The purpose of performing this assessment is to rank potential hazards in terms of potential loss so that action and response priorities can be established. No company has unlimited resources — risk assessment allows companies to allocate the resources they do have most effectively. For example, if a company is located in Florida, it would be better to develop procedures to respond to a hurricane than to a blizzard.

Assessing Capabilities and Resources

Once the committee has completed a hazard evaluation and risk assessment, it has to assess its preparedness, prevention, and response capabilities. Questions to be asked include: If one of the hazards identified were to occur, do we have the proper equipment and materials for responding to the event? If the equipment is not on site, how do we notify the proper authorities? Do our personnel know how to use the equipment? Has a chain of command been established?

There are two types of resources that have to be inventoried, equipment and personnel. All equipment that can be used to prevent or respond to an emergency should be noted. This would include sprinkler systems, shovels, fire extinguishers, torches, spare parts, wheelbarrows, etc. A survey should be made of existing communications equipment, burglar alarms, fire detection equipment, and any other emergency equipment. An inventory should be taken of medical equipment, first aid supplies, respirators, and personal protective equipment. Equipment used to train personnel should be listed, as well.

If the survey is done on the basis of inventory logs, a physical inspection should be done to verify the equipment is available. When performing this review, it is important to also note the lack of required equipment. Once a complete review of equipment is accomplished, the team will have a better idea of what equipment they have and what equipment they might need. They can then make recommendations regarding purchasing of additional equipment if required.

The team should then assess the number of employees on site and their abilities. This information will be very important for deciding what courses of action should be taken before and during a crisis (e.g., the response to a fire will be different if there is an organized fire brigade on site). Knowledge of any special worker's skills should also be considered when setting up an emergency response structure. Based on this assessment, training programs may have to be established.

The next step in this process is the actual development of the emergency preparedness plan. Natural Hazard Report NH-30-11, Emergency Preparedness – Developing the Plan, will be useful here; and, an example plan is provided in Natural Hazard Report NH-30-12, Emergency Preparedness – An Example Plan.

Head to our loss control and risk management page to learn more ways to protect your business.

Additional Resources

The following are additional sources of information on emergency preparedness and planning:

  • American Red Cross. Business & Industry Guide. Redcross.org. September 15, 2008.
  • Department of Homeland Security. Ready America. Ready.gov. September 15, 2008.
  • Federal Emergency Management Agency. Get Disaster Information. FEMA.gov. September 15, 2008.

References

1. Emergency Management. National Oil and Hazardous Substances Pollution Contingency Plan Overview. Washington, DC: Environmental Protection Agency, September 15, 2008.

2. Federal Emergency Management Agency. Emergency Management Guide for Business and Industry. FEMA 141. Washington, DC: FEMA, 2004.

3. Are You Ready? An In-depth Guide to Citizen Preparedness. Washington, DC: FEMA, 2001.

4. Homeland Security. Every Business Should Have A Plan. Washington, DC: DHS.

5. Occupational Safety and Health Administration. How to Plan for Workplace Emergencies and Evacuations. OSHA 3088. Washington, DC: U.S. Department of Labor, 2001 (revised).

6. Centers for Disease Control and Prevention. Emergency Preparedness and Response. Atlanta, GA: September 15, 2008.

COPYRIGHT ©2008, ISO Services, Inc.

The information contained in this publication was obtained from sources believed to be reliable. ISO Services, Inc., its companies and employees make no guarantee of results and assume no liability in connection with either the information herein contained or the safety suggestions herein made. Moreover, it cannot be assumed that every acceptable safety procedure is contained herein or that abnormal or unusual circumstances may not warrant or require further or additional procedure.


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Related Topics: Employee Safety , Protecting Your Business , Safety Programs