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

d.alexander@alice.it www.emergency-planning.blogspot.com