Risk Management

Pre-Katrina Survey: Companies Complacent

Asked earlier this year about business continuity planning, more than 40 percent of managers said it wasn't a priority.
Stephen TaubSeptember 12, 2005

Nearly one-third of U.S. companies do not have a business continuity planning in place, according to a survey by AT&T Corp. and the International Association of Emergency Managers conducted between January and August.

Even more stunning — in the wake of the September 11 attacks, a widespread blackout across the Northeast in 2003, and three major hurricanes in 2004 — is the finding that nearly 40 percent of respondents said that business continuity planning was not a priority.

Interviews, concluded on August 19, were conducted with 1,286 businesspeople who have responsibility for continuity planning; most are directly involved with information technology or information systems.

“With today’s heavy reliance on constant access to information, even a few hours of downtime can have catastrophic consequences, including huge financial losses, a tarnished reputation, and lost customer goodwill,” said Kathleen Flaherty, chief marketing officer at AT&T, in a statement. “The results of this survey demonstrate that too many businesses still do not take business continuity planning seriously.”

Floridians seem to have gotten the message in recent years, albeit at great cost. According to the survey, businesses in that state are the most likely to have a plan (74 percent); those in the Southwest are the least likely (57 percent). Most organizations that have plan have updated it within the last six months (41 percent) or the last six to twelve months (33 percent).

Of those companies that have suffered some sort of disaster, 65 percent reported that they lost business as a result. While 45 percent lost an average of less than $100,000 per day, 3 percent said it cost their business $1 million a day or more. Fully 26 percent of businesses that suffered a disaster acknowledge that they don’t know the cost to their company.

“Companies are taking an unnecessary gamble with their futures,” said Elizabeth B. Armstrong, executive director of the International Association of Emergency Managers. “The cost of developing a business continuity plan and implementing a technology infrastructure to support the plan is minimal when compared to the daily financial impact once disaster strikes.”

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