Hurricane Sandy and Crisis Management

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Hurricane Sandy is leaving a wake of destruction in major cities across the East Coast that can have a devastating effect on your business, management, employees, and customers. Interruption in power, communications, and transportation can create obstacles to the resumption of normal activity for your business. The following is a short checklist of issues you will need to face in the immediate hours and days following this event.

Implement Emergency Response Plan. Your emergency response plan was likely pulled off the shelf long before the disaster struck and the infrastructure and management of the impending disaster was in place before the crisis began. The long hours of preparation invested in your emergency plan will now pay dividends and keep your activities and actions on track to effectively triage the crisis you now face.

Assemble Crisis Management Teams. The division of labor and responsibility among your management is critical to navigating any crisis. Your management teams and department heads should clearly understand their roles in the coming days. Within each department, separate responsibilities should be assigned for not only disaster response to address immediate issues, but also for the continuation of your business operations (assigned to a separate group within each department). This may require pulling in employees and supervisors from other regions to assist the locations impacted by the disaster.

Implement Communication Plan. There are four key stakeholders that should be part of your communication plan:

    • Crisis Management Team. The coordination of activities between company management is critical to effectively navigate the crisis and formulate the company messaging. Your Crisis Management Team will comprise senior management, operations, security, human resources, finance, communications, and perhaps others. There should be scheduled times for this group to come together and discuss the status of their respective areas of responsibility and their plans going forward.
    • Employees. Your workforce needs to be updated on scheduling, resumption of operations, available employee assistance programs (EAPs), and the status of the company response.
    • Customers or clients. Your customers and clients should be assured that you are still operating (albeit in difficult circumstances) and that you appreciate their business and understanding. If there is to be an interruption, provide reasonable estimates of restored operations.
    • Public. The public at large, as well as the appropriate civil and regulatory authorities should know the status of your operations. Your website can be used to advise the public that a portion of your operations in the affected area may be disrupted for a short time but that company operations in unaffected regions are ongoing and taking on extra capacity to bridge the gap. Federal and state regulatory agencies may have an interest in your response if you are in an industry that is regulated by certain agencies. The public image you display of good judgment in your preparedness and effective response to the immediate crisis will create an image of industry leadership.

Electronic Information and Technology. Your information technology (IT) department should focus on ensuring that all electronic data is backed up, preserved, and accessible. In addition, your operations may need immediate access to back-up power sources and remote servers to continue operations uninterrupted. Access to electronic data is critical to the continuation of your operations. Your employees who have the capability of working remotely should have access to the support they need to continue their work.

Insurance. Provide your property insurer with prompt notice of the property damage and/or interruption of business that occurred as a result of the event. Many insurers have disaster response teams that can be deployed to assist you in resuming operations. Your finance department should be tracking all extra expenses your company incurs as a result of the event since these expenses may be recoverable under your policy. Talk to your insurer, agent, or broker to know and understand the coverage that may be available to your company as a result of the incident.

Legal Issues. A myriad of legal issues will arise both in the immediate aftermath of the disaster and also in the days, weeks, and months following the crisis. Some examples may be wage and hour issues as employees may be asked to work extended shifts, workplace safety issues as you work in and around damaged equipment and property, benefits issues for employees in need, and a whole host of matters that may have legal implications.

Don’t Forget the Human Impact. Events like these transcend the business cost and have their most acute impact on people, including your employees. They may have suffered injuries, deaths, and significant property damages that can have a lasting and profound impact in their personal lives. Never lose sight of the fact that those who work in your business may need support in many ways. For this reason, employers may need to adapt to the needs of some of their employees who are struggling. A prudent employer is supportive, reasonable, and understanding with its workforce during these critical times. Corporate responsibility and good citizenship will reflect well on your organization.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

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