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Economic Resilience for the Private Sector

North Central Texas Council of Governments

May 25, 2016

NCTCOG Economic Resilience Project

• Goal:Toassistlocalbusinesses,economicdevelopmentorganizations,andlocaljurisdictions toimprovetheirabilitytoquickly recoverfromdisasters.

EconomicResilienceGuide

PrivateSectorTraining

EmergencyManagersTraining

TrainingResources

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Workshop Organization

ModuleOne:ResilienceandCriticalBusinessFunctions

ModuleTwo:ManagingEconomicResilience

OpenDiscussionofIssues

Module 1: Small Businesses and Critical Business Functions

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Economic Resilience and the RegionOverviewofrisksandissues

What’s at Stake?

Approximately7millionresidents

4th largest MSA(bypopulation)

Keyfinancialcenter 6thlargestconcentrationofhightechjobs

3rdbusiestairportintheworld

Nationaldistributionhub

21Fortune500companies

If acountry,27thGDPintheworld

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North Central Texas Region at Risk for Natural Disasters

DatePresidential DisasterDeclarationsDeclaredCounties

Dec 2015 Dallas,Ellis,Kaufman,Navarro,Rockwall

Oct2015 Navarro

May2015 Dallas,Denton,Ellis,Erath,Hood,Johnson,Kaufman,Navarro,PaloPinto,Parker,Somervell, Tarrant,Wise

Aug2011 Hunt,Navarro,Wise

Apr 2011 Erath,PaloPinto,Somervell

Apr2007 Denton

Jan2006 Erath,Hood,PaloPinto,Tarrant,Wise,andallcountiesintheState

The Cost of Disasters in North Central Texas

• $1.2billionintheDallasmetropolitanareafromDecember2015tornadoes.• $2billionintheDallas/FortWorthareafromtornadoesandhailstormsin2012.• $400milliondollarsfrom2009“extraordinarywindstorm”intheDallas/FortWortharea.• $1.1billioninTarrantCounty in1995duetohail,flashflooding,andhighwinds.• Over$347millionbetween1955and2012fromhailstormsandtornadoes inCollinandDentoncounties.• Hailstormdamageintheregionresultedin4ofthetop10costliestdisastersinTexas§ May1995costNorth Texas$1.7billion§ April1992caused$1.2billion indamagestoFt.Worth/Waco§ April2003caused$1.2billion indamagestoNorth Texas§ June2012caused$917million toDallas/FortWorth

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What is Resilience?

Theabilitytoadapttochangingconditions, andwithstandandrapidlyrecoverfromdisruptionduetoemergencies.

What is Economic Recovery and Why Do We Care?• Business losses translateintotheloss ofresourcesforlocalresidentsastheytrytorecover,andtheloss oftaxesandservicestolocalgovernmentsastheytrytomanagetherecovery.• Businesses employworkers,provideforcommunityneeds andservices andgeneraterevenueonceagain,allowingthecommunity toprovideforitself.• 85%ofournationscriticalinfrastructure(ag,food,telecommunications, energy,banking)isconcentratedintheprivatesector.

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How Prepared are Businesses for Disasters

• Only26%ofsmalltomid-sizedbusinesses haveaplan• 40%to60%ofsmallbusinesses neverreopenafteradisaster

§ Ofthosethatdo,25%willclosewithin2years• Lessthan25%ofFortune500companies couldbeconsidered capableofsuccessfully managingacorporatecrisis• Surveyof100financialexecutives($1billion inannualrevenue)- fewerthat21%wereconcernedaboutnegativeimpactofafinancialdisaster JohnSealyHospital– UTMB

• Economicdevelopment andeconomic recoveryshareacommonoutcome:increasingtheresiliency oflocaleconomies.

• Investingintoresiliencereapsprofitsregardlessofadisaster.

EconomicRecovery

EconomicDevelopment

Resilience

Economic Development = Economic Resilience

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ü Check-In

•Haveanyofyourbusinessesbeenaffectedbyadisaster?

•Whatareyouconcernedaboutintermsofdisastersoreconomicshocks?

Critical Business FunctionsOverviewofrisksand

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Critical Business Functions

• Mostsensitivetodowntime• Fulfill legalorfinancialobligationstomaintaincashflow• Playakeyroleinmaintainingthebusiness’ marketshareandreputation• Safeguardanirreplaceableasset

Categories of Critical Functions

Structures andEquipment

Utilities andInformationTechnology

Transportation andSupplyChain

Employees/ Workforce

Customers,Markets,&Procurement

Finance &Financial Systems

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Business Continuity Plan

• EssentialFunctions• DelegationofAuthority• OrderofSuccession• AlternateOperatingFacilities• InteroperableCommunications• VitalRecordsandDatabases• HumanCapitalPlanningandPreparedness• Test,Training,andExerciseProgram• DevolutionofControlandDirection• Reconstruction

Business Impact Assessment

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BreakDrinksomecoffee!!

Mitigating Losses of Critical Business FunctionsToolsandIdeas

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Mitigation: Structures/Operations/Utilities

• Developanevacuationorshelter-in-placeplan• Haveaplaninplacetomoveorprotectcriticalequipmentandinventory thatarelikelytobecompromised• Developabusinesscontinuityplan• Haveappropriateinsuranceandlevelsofcoverageforthefullrangeoflossesassociatedwithlikelydisasters• Identifyalternatespacesorpotentialcolocationpartnersbeforeadisasterstrikessotherearefallbackopportunities forsitingbusinessactivity• Identifyback-uputilitysources• Protectelectronicdatathroughappropriatebackupsandredundantaccess

BIA Tool - Mitigation

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Mitigation: Transportation and Workforce

• Planforback-upmodes androutesoftransportation• Diversifynumberandlocationofsuppliers• Prepareforsurgeorsofteningofdemand• Encourageemployeestocreatetheirowncontinuity plans• Establishgoodcommunicationprotocolsforemployees

2015Flooding:NavarroCounty(CentralTexasConference)

Mitigation: Markets and Finance

• Whenpossible, diversifyconsumers geographically• Prepareforgovernmentcontracting• Keepcashreserves• Protectandback-up allimportantbusiness documents• Keepgoodaccountingrecordsofpost-disasterlosses• Donotrushintodebt MineralWellsdamagefromMay2015tornado

(MineralWellsIndex)

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BIA Tool - Planning

Post-Disaster Activities for Businesses

• Short–Term§ Implementthebusinesscontinuity plan§ Contact utilities /set-upbackuppower§ Gatherpaperwork

• Mid-Term§ Accesssiteanddetermine physicaldamage§ Communicate withemployees§ Contact insurancecarriers andbank§ Communicate withcustomers

• Long-Term§ Seektechnicalassistance§ Collaborate withother businesses§ Provideservicesforemployees§ Seizeopportunities afteradisaster

PreliminarydamageassessmentatWestHighSchool(FEMA)

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Case Study: Munro Workforce Support

• PriortoHurricaneRita,MunroInc.hadarudimentaryemergencyplaninplace. Itdidnot,however,accountforpoweroutagesorfoodshortages.• Whenemployeeswereallowedtoreturntothearea,schoolsremainedclosed,causinganissuewithdaycare.Thecompanysolvedthisproblembyallowingemployeestobringtheirchildrentoworkwiththem.• Basedonlessonslearnedfromthedisaster,thecompanyexpandeditsbusinesscontinuityplan.§ Stepsforsecuringfacilitiespriortoanevacuation§ Implementingstrategiesforimprovingpost-disasteremployeecommunication.§ Stockpilingmaterialsandsuppliestosupportuptofifteenkeyemployeesforthreedays

§ Workingcloselywithlocalauthoritiestoobtainclearanceforkeyemployeestoreturntoimpactedareasearly.

Open Discussion of Issues

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Investing in Resilience is an Investment in the Health of the Community• Goodeconomic resiliencedepends ongoodeconomic development• Resilienteconomic developmentcanbeaprofitableinvestment,notjustanexpense.• Notallkinds ofeconomic resiliencearethesame.• Noteverybusiness will,orshould, survive adisaster• Thecostsofeconomicresilience should beasharedendeavor

Questions and Closing Remarks