Category: Tornado

Natural disasters and various emergency situations can affect any company’s performance and competitiveness. Therefore, disaster recovery planning is one of the central areas of modern organization management. The case of AlphaPet reveals some ways to address emergency situations regarding such organizational function as human resources management. The company had to face various issues when the area was affected or rather deteriorated by a series of tornadoes (Loepp, 2011). Yash Awasthi, Operations vice president, made wise decisions that ensured the safety of the employees. The plant was also able to restore its functions within quite a short period of time. This paper includes a brief analysis of the story and some other organizational functions that should be involved in disaster recovery planning.

Wise Decisions

It is clear that the company had an emergency plan in place as the employees knew about the spot designated for certain emergency situations. Such plans are crucial especially for regions where natural disasters are frequent or likely to happen (Wallace & Webber, 2017). Importantly, the executive was not afraid to make quick decisions, which is vital as unexpected situations and issues occur quite often. Awasthi did not wait for sirens but ordered people to go to the designated areas, and that proved to be beneficial for people’s safety. This case shows that plans can be effective and detailed, but the person in charge should be ready to respond to challenges that are not described in the disaster planning. The story told focuses on human resources management and ways to ensure people’s safety during an emergency. Clearly, this is an important organizational function to address during disaster recovery planning as it ensures the safety of people, which is any company’s priority.

Other Functions

At the same time, it is also essential to consider other functions including logistics, IT, finances, and sales. All these areas are equally important as they ensure proper functioning of an organization. IT can be the first function to consider as it is related to other operations. When considering this sphere, it is essential to make sure that the facility will have the necessary power to communicate with different departments and facilities, as well as the rest of the world (Roper & Payant, 2014). Loepp (2011) mentions that the company managed to locate generators and power the plant and restore some operations. It is also clear that the communication with other departments and facilities was also available since other departments assisted the plant. Proper functioning of the IT department is vital as it ensures effective communication and information sharing. The organization having issues with its information technologies can be unable to ask for help, identify areas of major concern, restore operations quickly.

Logistics and sales are important areas as they ensure business continuity. In the case in question, a plant was affected. When such facilities are unable to fulfill daily operations, the company may fail to meet deadlines, which can result in financial and reputational losses (Roper & Payant, 2014). One of the first issues to focus on is associated with power as the production process should be restored as soon as possible. Besides, it is crucial to communicate with partners both suppliers and buyers. It is important to make sure that all the necessary resources are available or the buyers will receive their products timely. The company should also be aware of the damage caused to the area’s infrastructure with the focus on roads availability. Thus, sales and logistics functions should be involved as the facility’s operations should be restored within the shortest time possible.

Finally, it is also important to include such function as finances since this area is associated with the availability of resources. An effective disaster recovery plan should include certain estimates of the funds needed to respond to and recover from various disasters (Wallace & Webber, 2017). It is important to make sure that the allocated funds can be accessible. It is noteworthy that the proper functioning of these operations is closely linked with the IT department. Communication channels should be available as the facility should be able to estimate the loss and inform about the needed materials and resources. Furthermore, an effective emergency plan should contain some estimates of potential financial losses and possible ways to reallocate resources. These figures can help the company recover faster.

Conclusion

To sum up, the disaster recovery planning process should involve such organizational functions as human resources management, sales, logistics, IT, and finance. All these areas are closely connected and equally important as the proper functions of the associated departments can ensure business continuity and rapid recovery. The case in question is illustrative in terms of the effective decision-making in the sphere of human resources. Nevertheless, it is also necessary to have a detailed plan related to the functions mentioned above. Clearly, communication is the major pillar of an effective response to and rapid recovery from disasters as the affected company should be able to foresee the upcoming emergency situation, estimate the damage, communicate its needs.

References

Loepp, D. (2011). How AlphaPet dealt with the Ala tornadoes. Web.

Roper, K. O., & Payant, R. P. (2014). The facility management handbook. New York, NY: AMACOM Division of American Management Association.

Wallace, M., & Webber, L. (2017). The disaster recovery handbook: A step-by-step plan to ensure business continuity and protect vital operations, facilities, and assets. New York, NY: AMACOM Division of American Management Association.

Introduction

The following is a management report based on analysis of a case study of a bank in Texas, Fort Worth where tornado hit in the year 2000. The analysis will also discuss the types of losses experienced by the bank both directly and indirectly. There is recommendation on various kinds of tools applied by the bank manager to manage future risks of tornado.

Direct Losses

The first loss experienced by the bank is business interruption, as the property from where the business operates had to close because of the tornado. This meant that the business operations had to stop before finding alternatives. Business interruptions affect the normal operations of the company such that the company cannot make the anticipated profits because they are not providing services to the customers.

The other direct loss experienced by the bank was the loss of documents left in the closed building. The loss of these confidential documents such as the customer accounts may lead to a bigger loss as there is no clear record to verify and ascertain clients’ information. The documents are important part of the business since replacing the information may not be easy. The other direct loss incurred by the company is the damage on the bank property. While the building does not belong to the bank, the furniture as well as computers belonged to the bank and they were some of the destroyed materials belonging to the bank.

Other than loosing the business support assets, the business lost its time. The bank had to close and seek alternatives to ensure that normal operations resume. This made the bank to inconvenience clients who needed their services at that time.

Indirect Losses

Apart from the direct losses, the bank also experienced indirect losses that did not come immediately but they are nonetheless losses accrued from the disaster. The first loss is that of the office space as the company had six hundred employees in the damaged location and the new offices in the remote place could only accommodate half of the employees.

The other indirect loss is inefficient operations because holding meetings was a challenge as the previous building had space and venues of holding meetings. This made transactions and communication a challenge leading to inefficient operations. The other challenge from the loss is that the company incurred expenses of leasing additional offices for the staff in different locations. These were unanticipated expenses, which made the company operations difficult.

Termination of the lease by the owner of the building is a double loss where the company has to lease another property and the costs are twice the previous expenses. Indirect loss would be in the cost of transferring goods from the previous location to the new location. The cost of shifting to another location is higher than the cost of repairing the damage.

The other indirect loss incurred is that of having to use shuttle services to transport the employees to the remote location. The loss involves paying workers who are in different locations additional transport allowance to enhance their work in the offices, which are in different locations. When employees reside near the offices transport cost is reduced which increases the profit margin.

Maximum Loss

In case of maximum probable loss that may have occurred additional losses would be loss of lives of the bank workers, forcing the company to incur compensation costs for the workers. In addition, the bank would have experienced total damage of the documents and the equipments. This would make the company liable for the losses incurred by its clients. The payments of liability would be a great loss to the bank and would affect the bank negatively.

Risk Management Tools

The following are ways in which the bank manager can use risk management tools to ensure that such disasters do not result into huge losses to the company. The first tool is that of risk retention, which refers to the situation of acknowledging risk but the long-term costs of insurance are higher than the loss incurred. Since tornadoes happen most of the times, the company can have its mechanism of retaining the risk by having a separate fund to cater for such emergencies when they occur.

The other risk management tool that the manager can use to contain the losses of such occurrence is risk prevention. This refers to a situation where the company identifies the loopholes, which may lead to loss and instituting measures to avoid that loss. Such measures include having an electronic filing systems and a different database away from the bank for storing information. In addition, buying damage proof equipment or insured equipment is a loss prevention mechanism.

The loss reduction method of risk management involves reducing the loss that is in form of liabilities or lawsuits from clients because of the damages they have incurred. Loss reduction ensures that the company has policies of risk sharing which makes it impossible to sue the bank for inefficiencies arising from a disaster.

The other risk management method regards insurance, which helps to put the company back to the initial financial position before the loss occurred. This is where the bank buys the appropriate insurance cover to ensure that the company can be compensated from the likely loss of property and profits. The bank’s risk manager needs to buy insurance policy to cover the company from the loss of property.

The other risk management tool is risk transfer. The bank can adopt risk transfer measure to ensure that loses are transferred to stakeholders other than the bank itself. This can only happen in an agreement between the bank and other institutions to compensate the bank when such losses occur. Risk transfer means that someone else is responsible for the loss and damages incurred from a particular loss.