Floods are the most common natural disaster in the United States. Historic floods in Louisiana in August 2016 caused over $8 billion in damage. The August floods marked that state’s second flood incident of the year that caused more than a billion in damage. In the wake of Louisiana’s significant losses, take time to check whether your business data would be able to survive after a flood.
The Impact of a Flood on Business Technology
Obviously, flood water and technology do not mix. If a flash flood causes water to back up into the first floor of your building, and you have a server stored there, your data is in trouble. While it seems obvious that technology staff members would want an emergency plan in place against water damage to tech assets, in reality many firms are not adequately prepared.
A UK survey from Zenium Technology Partners found that half of the UK’s companies operating data centers lacked disaster recovery plans for weather-related events (including floods). British telecom company Vodafone suffered over £55 billion (over $72 billion) in losses after their Leeds data center flooded. Vodafone customers suffered spotty data and voice connectivity.
Relocating data and sensitive infrastructure out of a danger zone is one option, but it’s not a great one. It costs time and money to do so, and there’s no guarantee that the new location will not suffer a flash flood or heavy rainfall.
Redundancy is a data recovery best practice, and can mitigate the risks that all copies of your business data will suffer the same natural disaster at the same time.
Developing a Flood Disaster Recovery Plan
To prepare your business for a flood, brainstorm all of the business processes and equipment that would be affected by water damage. It may be obvious that technology would need to be repaired or replaced, but would you think that inventory would be affected or that your staff would be unable to fulfill orders until things were fixed? If a flood would curtail your ability to fulfill orders for two days, what would the financial and reputation losses be for your business?
By taking the big picture view over which process would be affected by water damage, then connecting business processes to equipment needing protection, you can develop a comprehensive disaster plan.
As a next step, consider solutions that will help you recover all these processes. For example, if you can recover inventory from the cloud in minutes, you can fulfill orders without delay. Brainstorm solutions for all of the processes you need to recover, focusing on restoring business processes in a fast time frame. The longer it takes to get up and running, the greater your business losses.
For an inspiring story of flood disaster planning, consider the historic Chennai floods, which dropped more than 39 inches of rain on Southeast India. Chennai’s airport suffered floods, loss of power, and shut down. Chennai’s IT infrastructure not only supported that city’s airport, but nine more airports in Southeast India. Thus, ten airports were unable to move travelers to their destinations.
Fortunately, the Chennai IT team had done flood planning in advance. While flooding in Chennai meant that airport would not be able to serve passengers, the other airports were back in service in 15 minutes. How? The Chennai IT team transferred data center operation to the recovery center based in Kolkata. By planning ahead, taking advantage of a remote geolocation — Kolkata wasn’t flooded, even though it was raining in Chennai — and acting quickly, the IT team averted a national crisis.
Your IT team can employ the same approach by investing in real-time offsite backup so that you can mitigate data loss and avoid downtime that leads to financial losses.
Once you have your plans in place, you must test the system regularly to make sure all disaster recovery components are working as you hope they will. Too often, IT staff assume their data recovery processes are working properly, only to find out when it’s needed most that something has gone awry.
Start by recovering the mission-critical applications and business processes first. Recovery of your system and network are crucial for connectivity. Once your core processes are back online, resume data processing onsite or at an alternate location if your location is compromised by flood waters.
After the incident, inventory what assets may be lost or damaged as a result of flooding. Then, make plans for replacement of damaged equipment. Wrap up with a meeting among key stakeholders to discuss what worked, what didn’t work, and what you’d do differently the next time a flood occurs.
Lessons Learned from Louisiana
The recent floods in Louisiana affected some 6,000 businesses and caused real property losses over $2 billion.
These floods were caused by significant rainfall — over 6 months’ worth of rain in a period of days, to be specific. Heavier floods are occurring more frequently in flood plains across the U.S. However, as much as one-third of the flooding happened outside of the Louisiana flood plain. Business owners should plan for increased rainfall, regardless of flood plain location.
In urban areas, city storm drains and sewers may be ill-equipped to handle heavy rainfall. A flash flood or heavy rain incident could thus cause significant damage to a business that finds itself unprepared. In Illinois, 90 percent of flooding incidents occur when heavy rainfall causes basement-level flooding rather than in a traditional flood event, like a river overflowing its banks.
Illinois flood officials studied the state’s flood trends from 2007 to 2014 and found that nearly all incidents of urban flooding took place outside of the flood plain. Since flood maps are often drawn using decades’ old data, maps of flood plain areas are no longer accurate at telling whether you face risk of flood. One of the first lessons to learn from Louisiana is that you cannot assume your business is safe from a flood, just because your office or data center does not lie on the flood plain. Your disaster recovery plan must cover flooding.
Flood managers suspect that large-scale flood events, like Louisiana’s, will become more common due to rising temperatures and climate change. While the hard data needed to prove nationwide flood increases isn’t there yet — not enough time has passed — it pays to assume the worst and prepare your business for flooding.
A typical business insurance plan does cover damage caused by other types of storms, including wind and lightning. However, a basic business insurance policy, such as a Commercial Package Policy or Business Owners Policy, does not cover flood insurance, flood damage, or flood damage resulting from a hurricane.
Supplementary flood insurance protects damage to your business and business property caused by flooding, rivers overflowing their banks, storm surges, broken levees, flash floods, heavy rain, and other types of floods. As long as two properties or two acres of land are affected, the incident counts as a flood. You may claim any business assets that are damaged from flood waters.
Flood insurance does not cover water damage from above, as in melting snow or gutter leakage. These types of water damage incidents tend to be covered by a basic commercial property insurance plan. Flood insurance usually doesn’t cover the exterior of your business, including any landscaping or business cars. Flood insurance also does not cover business interruptions or financial losses. The cost of commercial flood insurance varies by what you need to be covered, what your risk of flooding is, and how much (in financial terms) coverage you seek.
In Louisiana, many home and business owners did not purchase flood insurance, because they were not legally required to. Given the uncertainty of weather events, flood insurance makes strong financial sense. Up to 25 percent of businesses that close after a disaster like a flood do not reopen.
The average commercial flood claim was more than $90,000 from 2011 to 2015. If it would impact your business to shell out $90,000 in emergency funding for repairs, hardware, and software, then flood insurance may benefit you.
Your business may be required to purchase flood insurance if you have a mortgage and your business sits in a high-risk flood area. Even if you are not required to buy the insurance, you may wish to do so for reasons outlined above. If you purchase flood insurance, you’ll probably face a 30-day waiting period from the date of purchase to the date your insurance goes into affect. During the waiting period, you will be unable to make claims related to flood damage.
The best practice for businesses is to educate all parties on the risks, prepare disaster recovery plans for the worst case scenario, build in redundancies, and cover business assets through flood insurance. While boosting awareness, buying flood insurance, and rethinking disaster recovery plans is a lot of work, the alternatives — shuttering your business due to devastating losses or losing all of your data — are unthinkable.