What If Planning Is Still Lacking?

Monday 10th October 2011 | Bangkok Post | Link

If predictions about global warming are correct, flooding, the most common of natural disasters in Thailand, could get worse every year. But although many individuals and government agencies know more about managing floods than they do about other potential problems, Thai companies are not well prepared for disasters, says a risk expert.

"There has been a growing trend over the last few years of both man-made and natural disasters, so there is now more awareness of these events, but to date, only a small percentage of Thai companies have put in place documented and tested plans," said Andrew Durieux, director of Coverage Ltd.

Other countries such as England, Australia and Singapore have laws and regulations in place requiring companies to have plans for all potential disasters updated at all times.

The seven-year-old Coverage Ltd, which provides business continuity planning services and crisis management, experienced some growth during and after the red-shirt crisis, as businesses suddenly realised they needed better "what if" plans. Similarly, it saw demand rise during the H5N1 and H1N1 pandemic concerns.

"It is frustrating for us that companies typically address these issues only after a major disaster strikes, rather than be prepared before," said Mr Durieux.

Other than cost and training issues, he said that probably the most difficult problem for Thailand today was cultural. Unlike other cultures that are more open in discussing these situations and can therefore more easily consider options and make appropriate plans, Thai culture tends to avoid talk of potential bad events, which makes it very difficult to plan for them in the business context, he said.

Mr Durieux advises companies against building a factory or office in a flood zone. "However in some cases an unusual amount of water is delivered by the weather which leads to a situation like this year where we have higher-than-normal water. In some cases this then breaks previous control features such as dams or dikes. This then results in areas that previously never expected a flood becoming inundated or cut off.

The question for a business operator is whether this is likely to happen again in the future. Has the flood zone changed (because of a changed river or canal flow for example) or do we now expect an increased volume of water every year?"

"There is another element to this question, which is that not only the companies that are directly affected by the water are affected by floods. Some factories have closed despite not having any floods — but because parts suppliers have been affected. So a company that relies on critical supplies should be considering the location of its supplier's factories."

Some companies also close or are slowed down because staff cannot get to work during floods as roads are closed. These situations also lead to loss of income for employees in some cases, and loss of revenue for business owners, resulting in a general slowdown in the economy, which can lead to reduced demand for something like a tourist resort or restaurant that may be on the other side of the country.

In an interconnected business world, a disaster in one place can affect the lives of many people in many locations, said Mr Durieux.

Generally the two most common preventive measures are insurance and physical security.

Physical security is often forgotten, said Mr Durieux, and is a prevention against a crisis caused by theft or accidents, and in some cases fire — all of which can be more damaging than a single flood. Simple locks on doors or pass-control systems can suffice, but guards and patrols are also effective.

Insurance can cover loss of income or replacement for damage suffered, but the cost of policies is increasing due to an increased number of disaster events and also the global financial crisis, and the terms and payout conditions need to be carefully considered.

In some cases, items or amounts cannot be insured.

"Reputation damage, which can have a major effect on a company's sales following a crisis is difficult to insure. Evidence of values and updating policies are common problems when making claims," Mr Durieux said.

One new product the company is looking to bring to Thailand is an online backup service for small and medium-sized enterprises and individual users, which can take away the headaches of implementing, testing and maintaining an in-house system and worrying about how to do a restoration, or finding secure off-site storage facilities.