david alexander - the impact on business continuity of buncefield and eyjafjallajökull
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The Impact on Business Continuity of Buncefield and Eyjafjallajökull
David Alexander Global Risk Forum - Davos (CH)
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The ingredients of resilience
Redund
ancy
Attitude
Part
icipation
Adaptability
...and communication
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CRISIS
OPERATIONS (ACHIEVEMENTS) REPUTATION
Perception
Communication
Concrete developments
• positive • negative
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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
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Civil contingencies
Resilience
management
The risk environment
Business continuity
Civil protection
Civil defence
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Buncefield
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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
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Motorways
Oil storage depot (22 tanks) Business park
Residential area
Entrance to site
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The effects of the explosion extended 3 km with damage to 1000 houses and 300 companies.
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Interruption of traffic circulation, of commercial activities for 300 firms, and to the lives of 3,500 people.
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Effects on the nearby commercial area.
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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
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• 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.
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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.
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At Buncefield three multinational companies suffered serious effects, but 8000 jobs were saved by having business continuity plans
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Northgate Ltd administered the payment of salaries for 209 clients ....and it was almost Christmas....
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Northgate started work again the next day from other sites, including employees
working from home by Internet.
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The local municipality, Dacorum, had a business continuity plan, which it used in
parallel with its emergency plan.
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Recovery and reconstruction
planning
Strategic, tactical & operational planning
Aftermath
Disaster
Monitoring prediction & warning
Permanent emergency plan
Business continuity plan
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Eyjafjallajökull
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• 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
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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.
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• 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
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• 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
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• 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
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Active context
(members'
tools)
After: Argote and Spektor (2011)
Environmental context
Latent organisational context
Practical experience
Knowledge
Active organisational
context
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[email protected] www.emergency-planning.blogspot.com