6 December 2012IT & claims management analysis

Superstorm Sandy: a lesson in disaster recovery

Superstorm Sandy caused significant insured losses on the East Coast of the US. Considerable property damage was suffered, while for many there was significant – and for some, ongoing – interruption to their business operations. LSG, a leading litigation management innovator company that is an active player in the captive market, has offices in New York City and found itself caught up in the drama. Captive International spoke with Gary R Markham, chief executive of LSG, about the implications for their New York offices and the lessons learned from the event.

Like many firms situated on the East Coast the storm battered LSG’s downtown New York office. Staff remained on site until the storm struck, but following the arrival of Superstorm Sandy “all power was lost. Fortunately, both our phone and email systems are located in protected off-site locations, so other than working from home, we had no negative or service loss impact as a result”, said Markham. Nevertheless, the storm caused sufficient infrastructural damage resulting in staff being forced to work remotely until a likely return date of the third week in December, he said. Events had raised the spectre of potential business interruption and associated losses, but Markham said that sufficient disaster preparedness measures had been put in place to mitigate the effects of the storm.

The key lesson to emerge from Superstorm Sandy was the need to continually update and practice disaster recovery plans, said Markham, with LSG’s existing disaster recovery plan placing the firm in good stead following the event. LSG was able to shift part of its New York operations to its Philadelphia office while other staff were able to work remotely, with disaster preparedness able to minimise the disruption caused by the storm.

Client service and quality of operations were unaffected by events, said Markham, but what did become apparent was that certain essential business items that were on-site in New York were now inaccessible. As he explained, climbing 54 flights of stairs in semi-lit conditions to retrieve office essentials is “not fun”. Markham cautioned that those in catastrophe-prone regions should consider what equipment and materials they have in their offices, arguing that “it would make sense to keep a check of any key business items that may be required elsewhere in the event of a total power failure”.

Events such as Superstorm Sandy highlight the need for disaster preparedness and off-site back-up of essential services and information. And with events such as the Thai floods and Superstorm Sandy catching some businesses unawares, the need for businesses to consider potential business interruption coverage has become all the more pressing.