Learning from History: Time to Plan Ahead?

It has been a decade since the joint?SEC, CFTC and FINRA?report on Business Continuity?in the light of Hurricane Sandy(1).

Right from the very start of the report, there were two specific considerations requested of firms (verbatim):

• “Firms should consider the possibility of widespread lack of telecommunications, transportation, electricity, office space, fuel and water in their BCPs. Consideration should be given to multiple, redundant services and the proximity of vendors to the potential disaster area.
• Remote access is an important component of business continuity planning. Firms should consider their employees' ability to work from home in a crisis event. Firms should also consider enhancing the capabilities of staff that work from home by identifying technology and communications products and services that could increase efficiency.”

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The National Exam Program ran a similar review of Financial Advisors(2) and came to similar conclusions.

This advice is as relevant today as then and, in fact, the challenges posed by climate change are becoming more evident, amplifying the need for businesses to assess their resilience capabilities against these considerations.

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Climate's Alarming Shift

The data speaks volumes. According to the FEMA paper “Climate Essentials for Emergency Managers”(3), the frequency of significant climate events has surged. While the annual average of major events from 1980–2022 was around 8, the period of 2018–2022 saw this number rise to approximately 18 events per year.

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The National Climate Assessment from the U.S. Global Change Research Program (USGCRP)(4) provides further insight, noting that 16 of the past 17 years rank among the hottest recorded. The primary driver behind this trend? Human activity. The consequences include a rise in extreme weather patterns, varying from intense hurricanes to prolonged droughts.

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In essence, businesses and communities must prepare themselves for more unpredictable and severe weather events akin to Hurricane Sandy in the coming years.

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The Imperative of Remote Work in a Disrupted Climate

Remote work is widespread, however, it is becoming increasingly important as risks increase to ensure that employees can work remotely, even in the face of power or communication outages. This level of preparedness might encompass backup power solutions, decentralized work locations, and satellite communication tools.

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Similarly, essential services such as emergency or crisis response, healthcare, and utilities must prioritize enabling their key personnel to operate remotely, necessitating robust, redundant communication systems coupled with backup power solutions.

Using Remote Work to Enhance Resilience

Business continuity and resilience professionals will know this well, but it is worth re-stating that having employees spread out across diverse geographical regions becomes a company's own insurance against disruptions, be it from natural disasters, internet or power outages.

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Moreover, remote work paves the way for operational adaptability. With the world changing so rapidly, this flexibility ensures businesses can pivot seamlessly, facing new challenges head-on. The reduced reliance on physical infrastructure further adds to this resilience. It's a stark contrast to traditional setups, where something as simple as a power outage could halt operations for hours or even days.

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Furthermore, the very nature of remote operations prepares businesses to manage diversified supply chains efficiently, adding yet another layer of resilience. And let's not forget the beauty of community strength. Being physically present in their localities, remote workers can rely on and contribute to the immediate community, strengthening bonds and fortifying social resilience.

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However, to enable these benefits at times of crisis, when they are needed most, the critical, valuable or high profile remote workers must themselves be resilient to ensure that they continue to deliver their value to their businesses and their communities.

Conclusion

In an evolving climate landscape, businesses must adapt. Ensuring that employees have the necessary infrastructure to work remotely, with reliable power and communication, is not just advisable—it's imperative.

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References, citations:

1.???? SEC Review of Business Continuity Plans in the light of Hurricane Sandy (https://www.sec.gov/about/offices/ocie/jointobservations-bcps08072013.pdf)

1. SEC Examinations of Business Continuity Plans of Certain Advisers

https://www.sec.gov/about/offices/ocie/business-continuity-plans-risk-alert.pdf

3.???? FEMA's Climate Essentials for Emergency Managers (https://www.fema.gov/sites/default/files/documents/fema_climate-essentials_072023.pdf)

4.???? U.S. Global Change Research Program (USGCRP) Climate Change Assessment (https://nca2018.globalchange.gov/chapter/2/)

5.???? 2022 U.S. billion-dollar weather and climate disasters?

(https://www.climate.gov/news-features/blogs/beyond-data/2022-us-billion-dollar-weather-and-climate-disasters-historical)

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