Are You Prepared For The Next Business Interruption?

Jim Blasingame

This year marks an ignominious 20th anniversary. On August 13, 2003, a single outage in the electric grid cascaded across eight northeastern states, putting 55 million people in the dark for days, and thousands of businesses out of business. The Great Blackout of ’03 was a catastrophic reminder that we’re all one nosy squirrel in a transformer away from an instantaneous, put-you-out-of-business event. 

Two decades later, the evidence isn’t in favor of less exposure for the next 20 years. Consider this report from CNBC: “The FBI warned Russian computer hackers had compromised hundreds of thousands of home and office routers.” And this one from the Department of Homeland Security: “Russian government cyber actors have been targeting U.S. critical infrastructure sectors, including energy, nuclear and commercial facilities, since at least March 2016.” And more recently, experts allowed that the Chinese balloon that recently circumnavigated the U.S. could have been carrying an EMP, or electromagnetic-pulse device, that when detonated, essentially fries the electric grid below.

Prior to 2003, most businesses surveyed reported they were aware that a business disruption/interruption was possible, but incredibly, they also admitted they weren’t prepared for one. Thankfully, that response is different these days, as one of our recent online polls indicated.

Compared to similar polls we conducted five and ten years ago on the topic of business interruption preparedness, this year’s response shows some improvement. The number of respondents who believe they’ll be able to handle a disruption/interruption of up to a month increased. However, as you can see in the results below, that combined response is still only six of ten. That means about 40% are in the danger zone. 

Here are the two primary reasons (there are many) why business interruption preparedness is easier than ever. 

First, almost every aspect of business today is done electronically, especially with cloud-based resources. Consequently, it’s idiot-proof, fall-off-a-log easy to backup data. In the event of a disruption, most businesses can move to another location and plug in there with less-than-catastrophic interruption. Of course, as we discovered during the pandemic lockdown, the options for retailers are more limited. But that doesn’t mean that when customers eventually return, resuming regular business processes is possible.

Second, those small businesses that survived the Main Street economy’s lost decade (2007-2016), and the ones that endured the pandemic, did so by doing two things: deleveraging – getting out of debt – and learning how to operate more efficiently, both of which produced stronger balance sheets and cash positions. Financial strength is the foundation of a business outage preparation strategy, which would include risk management resources like business interruption insurance, and sophisticated tools like power generators. 

The primary advantage of wealth is the ability to afford options. When a business is financially strong, one advantage is they have the option of being better insulated from things that go bump in the night, like hurricanes, electric grid cascades, Russians, and viruses – and oppressive, unwarranted, and discriminatory government responses to viruses.

Remember, as the CEO of your business, being surprised and unprepared for the next disruption is unacceptable. That doesn’t mean you have to see the next pandemic coming. But it does mean you have to strengthen your business so it has the maximum opportunity to withstand whatever lands on your head.

Write this on a rock … Operate for success – prepare for interruption survival. 

Jim Blasingame is the author of The 3rd Ingredient, the Journey of Analog Ethics into the World of Digital Fear and Greed.

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