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THE KOBE EARTHQUAKE:
The earthquake measuring 7 on the Japanese scale killed nearly 6,000 people, injured over 16,000 and destroyed over 55,000 buildings in the city. The damage from the earthquake disrupted major transportation routes and facilities, destroyed a majority of the port operations and stopped a majority of business operations for many weeks. The earthquake is now known as The Great Hanshin Earthquake. Many of the deaths and much of the business disruption could have been prevented or at least mitigated if the threat had been recognized and planned for. While Japan is recognized as one of the most seismically active countries in the world, the focus of attention for earthquake preparedness has, until this incident, been predominantly in northern Japan and the prefectures surrounding Tokyo. The last major quake to hit Kobe occurred nearly 900 years prior to the 1995 quake. The most significant lesson this should teach all of us is that in geological terms, 900 years is a minute in time. In human history, it is ancient history and we tend to only focus on and plan for recent events. Unless the earthquake occurred many millions of years ago, it is naive to assume that the threat no longer exists. The same has proven true with many disasters in the past ten years. How many 100 and 300 year floods, hurricanes, and other unusual events have we had within that period? Insurance companies have had more losses within that time period than all prior history. While Kobe is the incident discussed in this article, there are potentially more serious incidents that could occur with even greater loss of life and financial impact. Recent studies completed by Risk Management Solutions Inc., Menlo Park, CA and Stanford University present new data based on the reoccurrence of three major earthquakes. The scenarios used are a 7.0 magnitude earthquake on the Newport-Inglewood fault, a reoccurrence of the 1906 San Francisco earthquake, and the reoccurrence of the 1923 Great Kanto earthquake near Tokyo, Japan. The studies present the physical and financial impact of such events on the three areas. While any study is hypothetical, the credibility of these scenarios is solid. All three are based on recent building and infrastructure performance data from the Northridge and Kobe earthquakes as well as current data related to the valuation of real property and business inventories. The results of the RMS studies are sobering. The occurrence of such events will have local and global impact. Los Angeles, San Francisco and Tokyo are major financial hubs and the disruption of communications and business interruptions caused by the earthquakes would have major short and long term impact on the world economy. For smaller businesses, the picture is even more grim. "The Great Hansin" Earthquake (Kobe) disaster produced large-scale business interruption. All steel mills, the area's leading industry, were temporarily shut down. Many businesses were shut down due to water and gas outages. Seven months after the earthquake, a Kobe Chamber of Commerce survey revealed that 40% of the small shops closed due to the earthquake remain closed because they cannot find loans needed to make repairs and reopen. Secondary business interruption was extensive following the Kobe quake. Businesses in the area which had no direct physical damage suffered because damage to the utilities, port, railroads, and roads made production impossible or shipments in or out difficult. Companies around the world experienced business interruption as Kobe-area producers caused a chain reaction. When Sumitomo's metal manufacturing plant in Kobe closed, most Toyota Motor plants (located in other parts of Japan) closed as well. Toyota relied almost exclusively on Sumitomo for brake shoes. The Just-In-Time inventory management system meant that Toyota (and others) held little inventory and relied on frequent shipments of parts. Secondary business interruption was also felt outside of Japan. In the U.S., for example, production was affected for IBM's Thinkpad laptop computers and Apple Computer's Powerbook computers which relied on displays manufactured in Kobe. (Risk Management Solutions, Inc., 149 Commonwealth Drive, Menlo Park, CA 94025) What have we learned from the Kobe event and others that have occurred in recent history and what lessons are applicable to all businesses regardless of their size? In disasters other than earthquakes what should companies prepare for? FACILITIES How safe is your facility? The Japanese government and Kobe business community were surprised by the Kobe earthquake. The following "IBM Safe Site Test" provides a high level assessment of your risk potential. While it is not all inclusive it does provide a general understanding of the threats and impact on your operations. How "safe" is your site? Take the test and find out. The weighting factors in the scoring are based upon the frequency of the types of disasters which have impacted data centers and business operations over the last ten years. The source statistics on disaster history were supplied by Contingency Planning Research, Jerico, Long Island. SAFETY Ensuring that employee safety is maintained prior to, during and after the event is the primary objective of all businesses. Prior to asking employees to evacuate the building, re-enter a damaged building, or respond to an affected location, the employer should make sure that they are not putting the employees in danger. Documented plans of how to respond to the most likely events should be developed and shared with all employees. COMMUNICATIONS Do you have a communication plan for your business? Can you and your employees communicate with family and other critical contacts following a disaster that interrupts telephone systems? Have you talked with your service provider to identify what services will be restored immediately after the event? In California pay telephones have a high priority for restoration by the telephone company. How will employees critical to the resumption of business operations communicate with family and relatives and be assured of their safety and well being? How will the business communicate to customers, vendors, and service providers the status of their operations or requests for assistance? TRANSPORTATION How will employees get home or to work following the event? Is there a potential for transportation routes and services being disrupted? What alternatives are the local city and county governments providing? What restrictions will be imposed that could prevent personnel from leaving for home or getting to the business location? Would a disruption of transportation options prevent critical service providers from assisting you following an event? HOME PREPAREDNESS Are employees prepared at home to deal with a major disaster? What preparation have they made to ensure their families know how to protect themselves, how to respond, where to go following the event, how to communicate with other family members? Do employees have emergency provisions and supplies at home, in the cars, at work? Without the employees being able and willing to respond following the disaster, few if any, businesses can recover. Home preparation is critical to heighten the probability that key employees will be available following the event. CRITICAL BUSINESS RECORDS Are critical business records protected to ensure they will be available following the event? Business records may be in magnetic, paper, or other form. Neither business management nor employees should assume they will be able to access their business facility or home following the event. Access may be prevented by public safety officials, damage to the facilities, or destruction of the original records. Provision for protection of critical records should be made by all potentially affected parties. APPLICABILITY--DOES THIS REALLY APPLY TO ME? While larger companies may have more financial resources to put in place sophisticated procedures and systems to accomplish the above tasks, all companies regardless of size have the capacity to establish basic procedures and plans addressing the above questions. Company employees should ask the same questions regarding their homes and families. Knowledge of the threats, risks, impacts, mitigation options and basic means to respond effectively is critical. About the author:
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