Growing corporate interdependencies present significant challenges when infrastructure disruptions or loss occurs. Basic physical structures are necessary for society to be operational. However, critical services and the companies that provide them depend on these structures in order for an economy to function. When these structures are damaged, those economy stabilizing companies must seek alternate ways to remain operational.
Securing the critical physical infrastructure through mitigation, emergency preparedness, and business continuity planning efforts is on the forefront of the U.S Department of Homeland Security (DHS). But efforts should not be left to government entities. Companies must prioritize emergency preparedness and business continuity initiatives in order to minimize supply chain interruptions that could affect the ability to provide critical services.
“Mitigating our most significant vulnerabilities and/or mounting a timely and efficient response and recovery effort at a major municipal, regional or national level requires strategic thinking, investment and capacity building well in advance of a paralyzing disaster.” -Revitalizing American Manufacturing to Protect, Respond and Recover
The present global risk environment is highly unpredictable and incidental impacts may be far reaching. After the massive 2011 earthquake and subsequent tsunami in Japan, the world’s manufacturing supply chains, most notably in the auto and electronics sectors, felt the aftershocks of limited supplies. Businesses within Japan and internationally, experienced production problems and supply chain interruptions. The loss of critical infrastructure will have an effect on local companies; however the disruption proved to adversely affect businesses far from the impact zone. Risk managers and business continuity advisers should be alert to lessons learned from the crisis in Japan and re-evaluate their company’s ability to respond as necessary if loss of critical infrastructure affects supply chains.
In addition to naturally occurring events with the potential to damage or disable U.S. infrastructure, the infrastructures are deteriorating due to generations of use. The 2009 American Society of Civil Engineer (ASCE) Report Card gives the U.S. infrastructure an overall grade of "D" or "Poor". The report reveals that an investment of more than $2.2 trillion through 2014 is necessary to address the most critical needs. Unfortunately, a sluggish economy has slowed reinforcement efforts.
The combination of deteriorating infrastructures and naturally occurring threats make emergency preparedness and business continuity planning crucial for companies, especially those that fall into DHS’s critical infrastructure sector. Companies should prioritize and initiate response coordination with local authorities and establish continuity plans to counteract infrastructure failure.
Threats and risk that have the potential to affect infrastructure and supply lines include, but are not limited to:
- domestic and international terrorism
- oil spills and other environmental incidents
- technological failures
- pandemic influenza
- malicious cyber intrusions and disruptions
Given the current state of the U.S. infrastructure and the continual occurrence of high-risk scenarios, supply chains that perpetuate operational productivity may be unreliable and fleeting. According to the Business Continuity Institute’s “Supply Chain Resilience 2011” study, supply chain incidents led to productivity loss for almost half of businesses surveyed. If essential resources, both internal and external, fail, companies need to arrange sustainability through outside resources. Highlighted areas to review include, but are not limited to:
- External facilities and equipment needed to produce company’s products and services
- Necessary products and services provided by suppliers, especially sole source vendors
- Lifeline services such as electrical power, water, sewer, gas, telecommunications, and transportation
- Operations and personnel vital to continued operation
Corporate and facility emergency managers should pre-identify critical processes and the equipment necessary to function. Through this process, alternatives can be explored and a business continuity plan can be developed that may reduce the impacts of infrastructure disorder and associated supply chain disruptions. Business continuity preparedness can prevent unnecessary downtime, increased recovery efforts, and protect the financial bottom line.
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