Crisis disruptions come in many forms; blackouts, hurricanes, terrorist events, intentional acts of internal and external sabotage, the list is endless. In addition to the immediate toll such events take in terms of life and property, most initiate a chain of “cascading effects” that can extend the damage far from the place and time of origin.

In August 2003, a widespread power grid disruption left the NE United States and SE Canada without electricity for over 18 hours. Studies that analyzed the immediate and lasting impact of the event upon businesses in Ohio, New York, Pennsylvania, Michigan, Wisconsin and Southern Canada produced startling results:

• The Detroit Regional Chamber estimated the financial loss to the Detroit region as a result of the blackout will reach $220 million. The Chamber collaborated with the University of Michigan ’s Institute of Labor and Industrial Relations in the analysis.

• A quarter of the businesses surveyed lost more than $50,000 per hour of downtime (i.e., $400,000 for an 8-hour day). Four percent of the businesses lost more than $1 million for each hour of downtime. Several executives said, “lower bottom lines resulting from lost production reduced the value of those companies’ securities.”

• Almost 11% of firms say the blackout will affect their decision making with regards to either growth at the current location or relocation elsewhere. • An important indirect—and impossible to quantify—cost of the blackout was the “cascading” consequence on regions outside of the blackout footprint created by manufacturers’ just-in-time (JIT) production scheduling. Since delivery times for parts and materials to assembly plants are timed to meet scheduled production and thus minimize or eliminate the carrying cost of inventory, delays caused by the blackout affected production throughout North America .

• One manufacturer, Ford Motor Co., Dearborn , Mich. , had to close 23 plants during the blackout in Michigan , Ohio and Ontario . However, being prepared helped Ford stem the bleeding. “The quick response of numerous teams of employees prevented more lasting damage,” the company said. Ford immediately switched some critical operations to battery backups and generators to maintain data and continue serving retail customers and dealers. Other personnel were charged with restoring communications networks and preparing facilities for work.

Crisis Simulations International helps public and private sector senior leaders to address these complex issues and prepare for the unpredictable. Employing our national network of subject matter experts and our award-winning DXMA™ computer modeling and simulation technology, we identify and analyze domain infrastructure and procedural dependencies, conflicts and gaps. Our realistic and intensive crisis simulation exercises then stress-test senior leaders’ ability to adapt and respond together to an unanticipated event. Finally, we work closely with the leaders to improve systems, procedures and group decision-making dynamics.

The following questions may help you to assess how well prepared your community or organization is for a large-scale disruption:

• Has your company identified potential disruption threats and assessed their impact on other companies’ people, assets, operations and the environment?

• What are your organizations critical business functions and how quickly must you restore them, and in what order?

• Does your company understand the interdependencies with your suppliers, vendors, customers and even competitors to help your company survive and quickly recover from an unexpected disruption in service?

• How well integrated are crisis response plans with public authorities and infrastructure owners beyond first responders?

• Do you know how to effectively communicate issues with employees, suppliers, customers, the media, public officials and the general public?

• Are your senior executives properly trained to implement the crisis plans, and do they understand the cascading affect of their decisions and decisions made by others? • Have you validated the business continuity plan to ensure it will achieve the desired outcomes?