Property Owners Fail to Plan for Disasters
May 8, 2013
A large wildfire is swiftly moving through the hills of Ventura County, California, threatening businesses and communities. The Los Angeles Times reports that 10,000 acres are already ablaze and high winds could strengthen the fire over the next few days.
Despite high-profile events like the fire north of Los Angeles, many commercial real estate companies fail to adequately plan for disasters. A recent survey by Travelers Insurance found that 43 percent of organizations did not consider natural disasters to be an important business issue.
“The lack of preparation could be detrimental for real estate managers and owners,” said Deb Denker, real estate industry manager at Travelers. “To survive the increasing number and severity of disasters, real estate owners and managers need a strategic business continuity plan to help minimize downtime, organize a response and deploy the resources needed for a prompt recovery.”
Even a small, localized event could have large financial repercussions for property owners, causing damages that need immediate repair and creating additional expenses. Some events may not affect buildings, but tenants may be unable to conduct work due to road closures, personal losses or other disruptions.
Complete a risk assessment Conducting a risk assessment can help building managers avoid potentially costly disasters. Each threat should be evaluated based on its likelihood and estimated impact. There is no standard response to risks, as each situation will be influenced by a variety of factors. This variation is what makes risk management so essential. Analyzing and understanding the vulnerabilities of properties, as well as employees and tenants, allows steps to be taken to prevent losses. These measures may include ensuring buildings have sufficient insurance or establishing plans for getting tenants up and running after a disaster.
The Travelers survey found that 57 percent of real estate managers operate without a business continuity plan. Mitigation strategies are essential to the recovery process, and these plans can be developed to ensure quick action following disasters to minimize the impact and delays they create. Many building managers know it is important to produce prevention strategies to eliminate risks, but few extend these strategies to include efforts to rebound from incidents when they occur.
Having the plan to save a business or property is only valuable if it works effectively. Regularly testing response strategies will give operators confidence that their prevention efforts will work. Once these tests are completed, building owners need to evaluate the results and communicate them to tenants and employees.
Source: Industry News