U.S. Businesses Unprepared for Disaster

For nearly 40 percent of American businesses, said business continuity planning is not a priority. Almost one-third of businesses surveyed before Hurricane Katrina struck, did not have business continuity plans in place, according a report released Thursday by AT&T and the International Association of Emergency Managers (IAEM).


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“With today’s heavy reliance on constant access to information, even a few hours of downtime can have catastrophic consequences, including huge financial losses, a tarnished reputation and lost customer goodwill,” said Kathleen Flaherty, chief marketing officer at AT&T. “The results of this survey demonstrate that too many businesses still do not take business continuity planning seriously”

The report Disaster Planning in the Private Sector: A Look at the State of Business Continuity in the U.S. is based on telephone interviews with 1,286 businesses conducted between January and August 2005 by Opinion Research Corporation. Key findings include:

  • Almost two-thirds of companies that have suffered a disaster experienced lost business.

  • Nearly one-fourth of companies that have suffered a disaster have not taken action to prevent or minimize future business interruptions.

  • 16 percent of businesses that have suffered a disaster lost between $100,000 and $500,000 per day.

  • 26 percent of businesses that have suffered a disaster admit they don’t know how much it cost their company per day.

  • Fewer than half the companies that have had business interrupted by disaster have updated their business continuity plans in the past six months.

  • More than 40 percent of companies have not established redundant servers or backup sites for their critical business functions.

  • Nearly one-third of companies have not implemented basic security technology, such as firewalls, intrusion detection or password authentication.

All companies, regardless of size, need to identify their critical business components and effectively manage risks. Disaster recovery plans should not only specify redundant systems, back-up sites, employee communications and alternative work sites, they should include processes for maintaining customer communications from the time disaster strikes until business returns to normal.

A growing number of businesses are turning to experts for their business continuity planning needs. According to the study, nearly 30 percent of companies use a service provider for business continuity needs. Among firms where business continuity is considered a priority, nearly 38 percent are currently outsourcing this function.

“The results of this survey show that companies are taking an unnecessary gamble with their futures.” Said Elizabeth B. Armstrong, executive director of IAEM. “The cost of developing a business continuity plan and implementing a technology infrastructure to support the plan is minimal when compared to the daily financial impact once disaster strikes.”

The complete report can be found at http://www.att.com/presskit/business_continuity.

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