Hurricane season 2006 is approaching. Are you ready? June 1 marks the beginning of the next hurricane season, which some forecasts say may be severe. Three executives talk about their experiences in 2005--especially dealing with two key areas: business continuity and employees.

• Author: Heffes, Ellen M.
• Position: Business continuity

When multiple hurricanes stormed through the Gulf Coast and Southeastern U.S. last year, they left in their wake still-to-be accounted-for billions of dollars in destruction and death. Business, politics and the personal lives of those impacted were turned upside down and changed forever.

The 2005 season--the longest and most active Atlantic hurricane season since 1933--also sparked worries of a significant impact on the world economy, with Hurricanes Katrina and Rita disrupting oil production and refining in the Gulf of Mexico last August and September.

"Picture 1,000 football fields stacked 50 feet deep in debris," said George F. Mikes, a managing director of Marsh Inc. and chief operating officer, North America Risk Practices & Specialties, in describing the damage. However, reported risk and insurance-services firm Marsh in The Impact of Nature: The Aftermath of Hurricanes Katrina and Rita, published last November, "the damage to the Gulf Coast may have less of an impact on the economy than first feared," in that the Gulf Coast region is not a major contributor to national growth beyond its pivotal role in the oil and gas industry.

The report goes on to say that "Although of small comfort for those whose livelihoods have been destroyed in the Gulf area, the catastrophe will boost economic activity elsewhere," such as we've seen in other urban areas like Houston and Dallas, where many New Orleans-based businesses and residents have fled.

Relief and reconstruction efforts could reach $100 billion in fiscal year 2006 (October 2005 through September 2006), an amount, the report states, equal to less than 1 percent of gross domestic product (GDP), and one that will be spread out over the year. However, this does not mean that Hurricanes Katrina and Rita are not having an economic impact.

[ILLUSTRATION OMITTED]

"By causing a spike in oil prices, which quickly fed through to increases in gasoline prices at the pump, the storms have accelerated a decline in consumer confidence." The report noted that businesses can take steps to make themselves less vulnerable to future storms and other catastrophes, such as having a loss-management plan, performing a natural-hazards risk assessment and establishing plans for emergency response and business continuity.

Business Response

It's often said that the U.S. is a "crisis" society, responding to in lieu of preparing for untold events. Prior to the 9/11 attacks on the U.S., the Federal Emergency Management Agency listed the three most likely catastrophic events facing the U.S.: a terrorist attack on New York, a major earthquake in San Francisco and a hurricane strike in New Orleans. Unfortunately, the agency is now two for three! Thus, the levee situation in New Orleans was widely discussed, and even 9/11, some say, might have been averted--with better intelligence and action.

While businesses are not in the position to prevent large national disasters, they can take steps to plan and prepare their firm and employees for potential business interruptions. With the 2006 hurricane season approaching, are businesses any better prepared? What has Corporate America learned from last year?

It's obvious...