Risk Management: Are You at Risk in a Catastrophe?

The eventual recovery of the businesses devastated by the recent hurricane season comes down to the effectiveness of their disaster planning. A catastrophe on the scale of Katrina could be impossible to plan for fully, but companies can do more to understand their risks and develop strategies to mitigate them.

Roberta Witty, a research vice president with Gartner, says most companies aren’t prepared for a regional disaster. “Most companies are looking at the kind of events that would impact [only] themselves,” she observes. “They have a fire in the building, or there’s a power outage at their data center.”

Free software made available earlier this year by the National Institute of Standards and Technology is intended to help companies do a better job anticipating the damage to their facilities from extreme events that occur infrequently—a natural disaster or terrorist attack, for example, says Robert Chapman, a NIST economist.

NIST’s Cost-Effectiveness Tool for Capital Asset Protection provides companies with a process to help them develop risk mitigation plans. First, the software enables the assessment of a building’s vulnerability to a variety of extreme conditions, including high winds and flooding.

Once the risks are identified, the software can suggest strategies to reduce the chances of a disaster affecting a company or to decrease potential damage.

Lastly, the software guides users through an economic analysis that helps them evaluate the planning, maintenance and installation costs of various mitigation strategies.