Risk Management for Precasters - MC Magazine January/February 2006 - Concrete Publications

	MC Magazine

Risk Management for Precasters

Protection for your physical location, employees, data and ideas.

By Bridget McCrea
Bridget McCrea is a freelance business writer who has covered manufacturing, industry and technology for MC and other magazines for more than 10 years.

On a Saturday night in August, Hedley Blundon got the news that no precast concrete executive wants to hear. Overnight, St. John’s, Newfoundland-based Capital Precast Ltd.’s 4,000-square-foot headquarters had burned to the ground. “It was completely leveled,” recalls Blundon, president of the 50-employee manufacturer of post-tensioned, pre-tensioned and architectural precast products. “Nothing was salvageable whatsoever.”

Because Capital Precast’s plant was in an adjacent building, it escaped unscathed. But employee records, accounts payable and receivables, computers and office equipment weren’t as lucky. Blundon says the firm’s insurance covered the rebuilding process – and that no employees were hurt during the fire – but adds that nothing could prepare him for the task at hand: piecing together the 20-year-old firm’s records, which included several irreplaceable mementos and souvenirs.

Making matters worse was the fact that Capital Precast’s data backup system failed completely in the face of adversity. For years, the company had been carefully transporting important company data off site using a tape system. As it turns out, those tapes dropped off during the month before the fire were corrupted. “The records indicated that information was stored on them,” says Blundon, “but when we went to retrieve the data, there wasn’t anything there.”

Even a data recovery specialist in California couldn’t help, says Blundon, who with his staff spent the next two months reconstructing personnel files, payroll information, tax records, accounting information and other pertinent data. “We had no record of anyone owing us money for work,” says Blundon. “We had to hire people to come in and help reconstruct that information from delivery slips – it was just chaotic.”

Capital Precast also faced challenges on the insurance side, where recent acquisitions of computers, for example, weren’t factored into the company’s coverage. So while the payout covered the new building, Blundon says it didn’t protect all of the firm’s office equipment, or the personal effects of its executives and employees.

“We were complacent, thinking that we’d just come into the office every day and the stuff would be there,” says Blundon. “Suddenly, disaster hits and you realize that you weren’t covered as well as you thought you were.”

Disaster Planning 101
The thought of a burning building puts fear in any business owner’s heart, but as Blundon found out, there are some pre-emptive measures that can be taken to mitigate the business impact of such events. According to Ron Cuccaro, president and CEO at Utica, N.Y.-based Adjusters International, it all starts with adequate insurance coverage. “Too often, business owners think everything will be taken care of in event of a catastrophe,” says Cuccaro, “but that isn’t always the case.”

To head off uncertainly in this area, Cuccaro advises precasters to be aware of potential dangers in their area. Located in California? Then earthquakes are likely your biggest threat. On the Gulf Coast of the United States, it’s likely hurricanes. Be sure that your insurance coverage includes not only property and casualty, but that it also comprises other elements like business interruption (see the sidebar “Business Interruption Insurance”) and additional expense (which covers some key expenses should you be out of business for a period of time).

Cuccaro also advises backing up pertinent company data to an off-site location (or two different locations, if possible) and on a regular basis. And while some problems can’t be anticipated, he says putting together a group of personnel to work through various disaster scenarios can help precasters be better prepared to persevere in the face of adversity.

“Consider the different exposures, and think about what would happen if you had a fire, if the power went out for an extended period of time, or if there was a widespread disaster in your area,” Cuccaro says. “Think about these issues, review them with your insurance agent and write a plan that addresses the issue of business continuity should the unthinkable occur.”

At Utility Concrete Products LLC in Chicago, disaster planning means building a 20-by-20-foot precast vault and situating it right next to the company’s 5,000-square-foot office building. Built to be both fireproof and tornado-proof, the 400-square-foot facility houses the 75-employee company’s important records and computer server. The company also has an on-site generator that can run its entire facility, says Philip Burkhart, general manager.

Burkhart says the company hasn’t suffered any substantial losses, but notes that it did “narrowly miss” being hit by a large tornado in 1990. “We tried to build something that would protect our data and our employees in case another one comes close or hits us,” says Burkhart, who views such risk management strategies as being extremely important for precasters like Utility Concrete Products. “That information and data is very critical to the day-to-day running of a company, and losing it could certainly bring devastating results.”

Backing up
As Capital Precast learned the hard way, even the best-laid data backup plans aren’t foolproof. As vice president of product marketing and management at Marlborough, Mass.-based online backup and recovery provider LiveVault, Scott Jarr hears the horror stories on a daily basis. Some companies don’t back up at all, others do it occasionally, and still others never test the system beforehand and come up empty when its time to “restore” the data.

To avoid such issues, Jarr says precasters might consider outsourcing the task to an outside information technology (IT) provider, or try using one of the myriad online backup services now available on the Internet. The latter, for example, precludes the company from having to physically transport the data off site on a daily or weekly basis. Companies like IBackup (www.ibackup.com) and @backup (www.atbackup.com) offer such services for a company with just a few computers, while firms like LiveVault (www.livevault.com) specialize in working with larger, server-based organizations.

After selecting a backup strategy, Jarr advises precasters to test the system to make sure it works. That means not only uploading and/or delivering the information to the storage source on a regular basis, but also ensuring that the data arrives in good condition and that it will indeed be “retrievable” in the event of an emergency.

That advice isn’t lost on Blundon, who cut the ribbon on Capital Precast’s new office building in early November. He says the firm has beefed up its loss prevention strategies since the catastrophic fire. For starters, he says the precaster is now using multiple backup systems not only for computer data, but also for storing copies of invoices and delivery slips.

Capital Precast is also using a wireless Internet connection to transfer data off site without having to physically transport it on a nightly or weekly basis, as it was doing before. “That way, if one place burns,” says Blundon, “we now know that we can at least go to another location to retrieve the information.”

To precasters who may one day find themselves in the same position he did in August, Blundon offers this advice: “Just imagine walking into your office and finding out that everything is gone. Think about where you would start and how you would go on, then develop a plan around it.”