Masters of disaster

Disasters can be good for business, according to two Oxford academics. In 1997, Dr Rory Knight and Deborah Pretty found that share values actually rose for some firms following a disaster. They concluded that it was not the disaster itself that affected long-term share value but the way in which the crisis was handled – often to the credit of facilities managers.

Knight and Pretty studied the financial consequences of Lockerbie, Bhopal, the Herald of Free Enterprise, the Baltic Exchange, Piper Alpha and ten other corporate catastrophes. Unsurprisingly, they noted an immediate negative impact on each firm's shareholder value immediately after their respective disasters, but many made a full recovery within 50 days. Knight and Pretty found the firms fell into two groups: recoverers and non-recoverers.

A year after the catastrophe, the share value of the non-recoverers was still, on average, 15 per cent lower than before the disaster. In contrast, the recoverers saw a shareholder value five per cent higher than before the disaster.

Peter Power, managing director of Visor Consultants and lead consultant to the DTI on such incidents, says: 'There is great value in seeing people deal successfully with a crisis. If these people can handle a crisis well, then this will attract inward investment.'

According to Power, disaster is in the eye of the beholder. For one company, going off-line could be classified as a disaster, for another the foot-and-mouth outbreak has had disastrous consequences. But whatever the cause of disaster, it is often down to the facilities manager to draw up and implement an action plan.

John Bartlett, senior consultant at Insight, also believes that facilities managers have a key role to play, but adds: 'It is paramount that business continuity is sponsored at a very senior level. This business continuity needs to transcend the entire organisation.'

Disaster management has captured the attention of company boards largely because of the Turnbull Report, published in the summer of 1998, which stems from the London Stock Exchange's Combined Code on Corporate Governance. The Turnbull Report requires a system of internal control among UK publicly listed companies, which will manage significant company risk and be overseen by the board of directors. A key principle of the report requires the board to 'maintain a sound system of internal control to safeguard shareholders investment and the company's assets'.

The growing importance given to disaster management is providing facilities managers with great opportunities, says Visor. 'The whole issue of crisis management can rest on the facilities management side. In their daily life, facilities managers often find themselves dealing with crises, so they work at a faster pace than others, making them experienced to deal with incidents. Also, this can provide a great opportunity for such managers to elevate their position within their organisation.'

Visor Consultants explains the typical disaster phases:
1 Crisis – occurs within the first few hours after the incident starts, caused by ongoing damage to premises or restricted access to buildings and so on
2 Emergency response – this may last for a few minutes or a few hours following the crisis phase, during which time the situation has to be assessed and decisions made quickly on issues such as rapid recovery
3 Recovery – this may last several months following the disaster, and ends when normal operations can resume. During this phase, essential or primary operations will restart and continue in recovery format
4 Restoration – conditions are restored to normal. Planning for this phase might start within a few days of the incident. If there was physical damage to the premises this phase will not occur.

Flood damage
On 12 October 2000 the River Ouze burst its banks and Owen Williams Consultants was forced to evacuate its offices in Lewes. The ground floor was completely submerged, causing £1.5 million of damage. Ironically, the company provides building, transport and property consultancy services and, with extensive flooding in the area, it had to service emergency calls from clients while handling its own crisis.

Business sector manager Simon Barrett recalls: 'We were contacted by police and told the building was likely to be subject to minor flooding – we were led to believe it would not be significant. Two hours later, the ground floor was 1ft under water and over the next 18 hours, the water rose to 12ft.'

Staff were evacuated after the first phone call and fleet vehicles were moved to higher ground. The building was secured and the two disaster teams were called together. One team was responsible for Owen Williams' premises and staff issues, the other was involved with servicing clients.

Colin Jordan, Owen Williams' contracts manager, facilities manager and head of the crisis management division, was impressed by the teamwork. 'At one time, we had 15 building surveyors and mechanical engineers working from mobile phones and laptops in the car park,' he says.

'As a large number of our clients were also flooded, we set up disaster teams within a few hours and we managed to update our client records on an hourly basis. We also had a team working at County Hall – it was like an operations room during World War II.

The flood made us consider our location. We honestly didn’t consider the siting of the building. When we took the lease, we just thought “What a great river setting”

Simon Barrett

'This incident also proved that our excellent lines of communication are an absolute godsend. We have a cascade system of phones, and each person has around 20 personal numbers. In the event of an incident, we are responsible for contacting these 20 people.'

While this team answered client calls, the other team communicated with staff and found new offices. 'All the staff were contacted over the weekend and informed of a company meeting the following Tuesday,' recalls Barrett. 'Meanwhile, we frantically sought alternative accommodation. The first floor escaped damage but we still had to rehouse 150 staff. We trawled for offices in the Crawley/Haywards Heath area and we managed to secure two sites. Mercifully, we have some excellent suppliers and by Tuesday our two replacement offices were up and running.'

For Barrett, the incident has been a learning curve. 'We have an action plan in place for IT and everything computerised was backed up, so we had very little downtime,' he says. 'However, when we designed the building, we hadn't considered that all paper files and records were stored on the ground floor. All these records were lost. We have learned our lesson now and all paper files are stored on the first floor.'

'The flood has also made us consider our location. We honestly didn't consider the siting of the building. When we took the lease, we just thought "What a great river setting". Now, rather than thinking it will never happen to us again, the National Rivers Authority has told us that it will happen again, and we have restructured the building accordingly.'

The flood has also prompted a broader rethink on disaster recovery. Now, the firm outsources its filing, to minimise losses in the event of, say, a fire. Only current filing is kept on site.

Even Jordan, with 15 years of disaster recovery experience, including the Bishopsgate and Docklands bombs, feels he has learned from the experience. 'We have learned not to put all our eggs in one basket,' he says. 'For example, our back-up tapes are taken home by members of staff. The main focus of any team is planning, as well as moving milestones – you should never say something will never happen.'

Fire at Heathrow
Ian Glover, a partner of Insight Consulting, was part of the British Airways crisis management team that oversaw the recovery effort following a fire at Heathrow Airport on 12 December 1997. This is his report:
6.00am The phone rings. It is one of my colleagues from Insight informing me that Terminal 1 at Heathrow is on fire and they are shutting the airport.

6.45am I arrive at British Airways' crisis control centre just outside the central Heathrow cordon. Within the centre, there is a comprehensive media monitoring area, which comprises a bank of television screens and video recorders and radios with tape recorders. My role is to act as an independent observer, recording and monitoring the handling of the incident. As an outsider, I have a certain emotional detachment from proceedings. This sense of detachment is curiously reinforced by the absence of windows in the centre, which makes the whole incident feel like a test.

The fire had started above the Burger King in Terminal 1 at 5.20am and quickly spread through the roof. Heathrow's own firefighters were on the scene almost immediately, backed up by the rapid arrival of the public fire brigade. As a precaution, Terminals 2 and 3 had also been closed.

I print off the first of my hourly update reports, which I make available to people as they arrive.

8.00am The flight scheduling team has managed to re-route five flights that were already in the air but we still have 14,000 transfer passengers to accommodate. Some 1,500 of them are taken to Terminal 4. BA requisitions 12 coaches and 15 buses, in case there is a need to bus people around the airport or to transfer them to other airports. The traffic chaos in the area means that some crews have not arrived. Terminal 4's car park is full, which adds to the problems.

We establish the property recovery team and discuss various recovery options based on the information available. The media team is busy. The incident is the lead story on most of the news channels and during the day; the media team issues three press releases and four staff releases.

It has not been specified that the British Airways helpline telephone number broadcast on television is intended for British Airways customers only, so the team has to take about 85,000 calls – many for other airlines and for general enquiries about the incident.

Despite reports of a blaze ‘mushrooming upwards and outwards through 600ft of ducting’, the terminal was recoverable within hours

Ian Glover

10.30am Good news. We receive confirmation that the damage in Terminal 1 is not as bad as at first thought. The team believes the terminal can be used today and the night-flight ban has been lifted, which will help with the backlog of flights. It is important to give out a positive message as early as possible. An announcement is made that a full service will operate today between 15:00 and 18:00.

However, TV coverage shows a baggage handler saying the baggage area is full of water and will take days to clear, which is untrue. And there are interviews with people at the airport who complain about lack of information. Some passengers become abusive and violent. The police intervene.

12.30pm Terminal 1 is ready to open. The Health & Safety Executive (HSE) initially refuses to admit passengers because the fire wardens are not equipped with whistles or loud hailers, but this issue is quickly resolved.

12.52pm Terminal 1 reopens. There is a huge sigh of relief.

12.54pm To the disbelief of the control centre, staff report that the fire alarms have started to sound and the terminal is being evacuated. A message is received that this was just a test that had not been announced to the staff – there's another sigh of relief.

12.59pm Terminal 1 reopens for good.

13.15pm There are queues the length of the terminal, with passengers understandably upset about the delays. Their sense of annoyance is exacerbated by the absence of any visible damage – a recently installed special membrane had kept the fire in the roof. British Airways makes plans for evening and next-day operations and discusses sleeping arrangements at the terminal.

14.30pm The situation is under control. We agree an incident debriefing for the following Thursday.

In some senses, we have been very lucky. There were only 150 people (mostly staff) in the terminal when the fire started. All procedures had been followed and no-one was hurt. And, despite press reports of a blaze 'mushrooming upwards and outwards through 600ft of ducting and exploding through', the terminal was recoverable within hours. It was also a Friday, which meant that BA had the relative slack of the weekend to aid the recovery process. The early-morning timing, before most of the incoming flights had taken off, also helped.

The key lessons learned from the incident are as follows:

• Understand the importance of communication with staff, the police, the Health & Safety Executive, customers, the press and, indeed, anyone else who might want to talk to you
• Practice your call-out regularly and have appropriate numbers of fully conversant deputies
• Invest in good crisis management facilities
• Ensure you have a business, not just an IT, recovery strategy. As this incident shows, a disaster can have little or nothing to do with IT
• Organise a 'wash-up' meeting soon after any incident– this is vital to ensure that lessons are learned and improvements implemented.