David Alexander - The Impact on Business Continuity of Buncefield and Eyjafjallajökull
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Transcript of David Alexander - The Impact on Business Continuity of Buncefield and Eyjafjallajökull
The Impact on Business Continuity of Buncefield and Eyjafjallajökull
David Alexander Global Risk Forum - Davos (CH)
The ingredients of resilience
Redund
ancy
Attitude
Part
icipation
Adaptability
...and communication
CRISIS
OPERATIONS (ACHIEVEMENTS) REPUTATION
Perception
Communication
Concrete developments
• positive • negative
failed succeeded
positive negative
unknown, hidden known, publicised perceived not perceived
Crisis management as a combination of management of events and management of reputation
Inside influences Resilience of organisation Crisis management capability
Outside influences Resilience of system
External factors: "force majeure"
REPUTATION
ACHIEVEMENTS
Civil contingencies
Resilience
management
The risk environment
Business continuity
Civil protection
Civil defence
Buncefield
The fire burned for three and a half days
Explosion and fire at an oil storage depot, Buncefield, Hertfordshire, United Kingdom
Sunday 11 December 2005, 0602 hrs
Motorways
Oil storage depot (22 tanks) Business park
Residential area
Entrance to site
The effects of the explosion extended 3 km with damage to 1000 houses and 300 companies.
Interruption of traffic circulation, of commercial activities for 300 firms, and to the lives of 3,500 people.
Effects on the nearby commercial area.
According to a study by the London Chamber of Commerce, started in 2003 and updated ever since:-
• 80% of commercial companies that do not have a well-structured emergency plan risk bankruptcy within one year of suffering a major incident or disaster
• 90% or companies that suffer major losses go into liquidation within two years
• 43% of companies that suffer the effects of disaster never recover their market position
• In the United Kingdom, half of commercial companies have no contingency plan (data unchanged from 2003 to 2006)
• in the United Kingdom one company in 500 per year suffers a disaster.
More than 85% of the largest companies depend totally or largely on
information technology. On average, a company will lose one quarter of its daily earnings by the sixth day in which it cannot access
its IT system. The figure rises to 40% for banks, financial service firms
and public service companies.
At Buncefield three multinational companies suffered serious effects, but 8000 jobs were saved by having business continuity plans
Northgate Ltd administered the payment of salaries for 209 clients ....and it was almost Christmas....
Northgate started work again the next day from other sites, including employees
working from home by Internet.
The local municipality, Dacorum, had a business continuity plan, which it used in
parallel with its emergency plan.
Recovery and reconstruction
planning
Strategic, tactical & operational planning
Aftermath
Disaster
Monitoring prediction & warning
Permanent emergency plan
Business continuity plan
Eyjafjallajökull
• from 1935 to 2003 102 aircraft encountered significant concentrations of volcanic ash
• ash is not detectable by weather radar as it is dry
• ash can reach cruise altitudes in five minutes
• stratospheric ash concentrations may remain at circa 20,000 metres.
Volcanic Ash Aviation Hazard
Eyjafjallajökull eruption of 1821-3: • started 19 Dec. 1821, ended Jan. 1823 • central vent, subglacial explosive eruption • volcanic explosivity index VEI=2 • 4 million m3 of tephra emitted
Eyjafjallajökull eruption of Apr-May 2010: • started 20 Mar 2010, ended 22 May • volcanic explosivity index VEI 2-3 • Vulcanian eruption style • maximum plume height 13 km • ash had 58% silica concentration.
• US$1.7 billion losses for civil aviation
• air delivery of perishables and medical supplies knocked out
• business travel down, meetings cancelled
• passengers left stranded everywhere
• imbalance created in tourism and business travel.
Impacts of Eyjafjallajökull on business
• potential civil aviation mass bankruptcy
• need for regulation and integrated planning for transportation in general
• liability issues for transportation (EU regulations)
• alternatives to travel, meeting and delivery need to be studied (create redundancy).
Implications of Eyjafjallajökull for business
• two big unanticipated (but not improbable) events
• longer or worse disaster of similar kind would equal threshold crossed to much more profound implications
• use scenarios to explore implications and identify needs
• in crisis radical changes needed in ways of doing business
• organisational learning.
Conclusions
Active context
(members'
tools)
After: Argote and Spektor (2011)
Environmental context
Latent organisational context
Practical experience
Knowledge
Active organisational
context
[email protected] www.emergency-planning.blogspot.com