Supply Chain

Contingency Plans in Focus After Baltimore Unrest

Businesses have to consider worst-case scenarios and evaluate plans for protecting employees and closing facilities, as well as review insurance co...
Katie Kuehner-HebertMay 7, 2015
Contingency Plans in Focus After Baltimore Unrest

Retailers and other companies in urban areas across the United States are reassessing their contingency plans in the wake of riots that destroyed facilities in Ferguson, Missouri, and Baltimore, according to a Risk & Insurance story.

“Organizations that have robust plans and contingencies may actually have shelter in place to protect employees during civil unrest,” Sean Ahrens, security consulting services practice leader for Aon Global Risk Consulting, told Risk & Insurance.

“But if a company has no policies or procedures in place, then in the worst-case scenario, they should close the store and evacuate. Ultimately, a company’s duty of care is to protect [its] employees from all hazards.”

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Post-event, businesses should also provide counseling for employees who were caught up in a riot, though a lot of them might not want to come back, Ahrens said.

Crisis management teams deciding whether to close a facility should take into account whether that location serves a critical function in the community, and whether employees would lose needed income if the store closed prematurely during peaceful protests, said Tracy Knippenburg Gillis, global reputational risk and crisis management leader for Marsh Risk Consulting.

Businesses should also review whether their insurance policies cover “civil authority and unrest,” which would pay for either physical damage or losses for not being able to gain entry to the store, said Lance Becker, vice chairman, Northeast region, at Arthur J. Gallagher & Co.

“Now is also the time to review contingency plans to understand what other locations can be used during a times of unrest, as well as making sure companies that supply goods to them have alternative ways to make their goods available,” Becker told the magazine.

Meanwhile, in Baltimore, insurance carriers might seek to recoup their losses by suing the city, as several news outlets have reported that the police there were ordered to “stand down” and not prevent rioters from looting, burning, or destroying stores, including a CVS pharmacy and an Ace Cash Express store, according to Risk & Insurance.

The magazine cited Baltimore Mayor Stephanie Rawlings-Blake’s denial there was a stand down order, but she also reportedly told “Meet the Press” last Sunday that she regretted saying in an earlier press conference that space was given to protesters who “wished to destroy.”

It’s unclear whether insurance carriers would prevail in such cases, because any city that experiences civil unrest might have sovereign immunity for those sorts of actions dealing with the police force, said Terrence Graves, a shareholder at Sands Anderson PC, a law firm.

“If a city government — like any other governmental entity — takes action within what is considered its governmental sphere, such as making political decisions, as opposed to its proprietary sphere such as providing water services or maintaining city streets, then a city might have governmental immunity,” Graves said.

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