Disaster Class : First Interstate wearied of telling firms one by one how it coped with its fire. So it went into the seminar business.
First Interstate Bank opened a seminar Monday on how to respond to a major disaster with an unscheduled mini-disaster.
The start of the bank’s two-day conference at the Newporter Resort was delayed 30 minutes by a pre-dawn power failure that left the Newport Beach hotel and much of the surrounding area without electricity.
Many business executives who had arrived at the hotel Sunday overslept when the alarms in their rooms did not go off. Once awakened, they faced cold showers because the hotel’s water heaters are electric.
The inconveniences and delay were minor, of course, particularly compared to the disaster--and subsequent Herculean efforts to resume business at the bank months ago--that motivated the seminar.
Last May 4, a fire severely damaged several floors of First Interstate’s 62-story headquarters building in downtown Los Angeles. A worker was killed and vital functions at the state’s fourth-largest bank were disrupted.
Less than three weeks before the fire, First Interstate had conducted a trial run of its emergency plan for resuming critical bank business in the event of a disaster. The rehearsal scenario had envisioned an earthquake, but the fire put the system to the test.
By accounts from within the bank and outside experts, the system worked with remarkable smoothness. In fact, the plan has become something of a hallmark in the growing field of disaster preparedness for major businesses.
Particularly in Southern California, where the danger of earthquakes is omnipresent, businesses are spending increasing amounts of money and time creating plans to keep vital functions operating in the event of a disaster.
One problem is, however, that few businesses have had the unfortunate opportunity to examine the effectiveness of their systems under the stress of a real-life catastrophe.
“Most of us are making our plans for disasters that haven’t happened and we hope won’t happen,” said William B. Hand, a data-processing expert with the city of Los Angeles. “But here’s someone who did undergo a disaster and came out of it fairly well. We’re here to learn from them.”
Experts were so eager to learn from the First Interstate experience that the bank was inundated with calls for advice in the weeks after the fire. Demand became so heavy--and the explanations so complex--that the bank decided to offer an intensive seminar to share its experience, said John Y. Popovich, director of public affairs for the bank.
The bank expected mild interest and was surprised by the overwhelming response. More than 280 people paid $735 a person to attend the seminar. The attendance list read like a Who’s Who among major U.S. corporations of all types--Atlantic Richfield, B. F. Goodrich, Boeing, Chevron, Hewlett Packard, Kaiser Permanente, Lockheed, Merrill Lynch, Paramount Pictures, TRW, Wells Fargo Bank, and the purveyors of Monday’s interrupted electricity, Southern California Edison.
“Take a look at what happened in that fire--that speaks to why we’re all here,” said Lawrence M. Kalmis, vice president in charge of contingency planning for Chemical Bank of New York. “We’re here to see what we’re doing well and what we might be doing better.”
Hoping for Answers
Most of those attending are executives with direct responsibility for creating and implementing emergency plans and heads of some of the units most directly affected by a disaster, such as data processing.
“This is the first time something like this has happened, and we’re just hoping we’ll find out something here,” said Michael N. Smith, disaster recovery coordinator for Hughes Aircraft, which began planning for back-up systems for its data-processing operations a few years ago.
Colen H. Emerson, the First Interstate executive in charge of the business recovery plan, opened the seminar by cautioning the audience not to underestimate the complexity of managing a crisis of the dimensions of the fire.
To drive home the point, he outlined a few of the seemingly mundane tasks accomplished in the hours after the fire: 1,000 critical employees were relocated in a matter of hours; 3,000 telephone numbers were redirected from the devastated headquarters to the emergency site seven blocks away; a system was set up to distribute 128,000 pieces of mail a day; more than 800 new telephones were installed in two days; an entire new securities trading floor, with 160 computers and work stations, was created in four days.
Insights Into Coping
In an interview before the session opened, Emerson said there was no easy checklist for the complex problem of coping with a disaster. But his overview at the start of the seminar offered a few insights:
A business should know the potential financial loss associated with stopping each of its business units and should create a system to get the most critical operations back in service first.
Business resumption plans should be simple and automated for fast and easy access; bulky written documents will be unwieldy and too complex for the split-second decisions required.
When the disaster occurs, senior management should focus on policy issues and leave operational decisions to operations personnel.
Data processing, the area in which many businesses concentrate their planning, is only one part of any plan to resume total business operations.
