Show Me The Money: Continuity of Operations and Disaster Cost Recovery
An organization’s response following a disaster may last only a few weeks, but the post-disaster cost recovery process may go on for years. Fulfilling your primary mission during a crisis is the subject of a Continuity of Operations Plan (COOP); avoiding financial stress (or failure) is part of a separate but overlapping effort, Disaster Cost Recovery.
COOP is the effort by organizations to ensure that their primary mission and essential functions are performed during a wide range of emergencies, including but not limited to natural disasters.
1. Essential Functions
2. Orders of Succession and Delegations of Authority (internal resources)
3. Devolution of Control and Direction (to external resources)
4. Continuity Facilities Continuity Communications
5. Vital Records Management
6. Human Capital
7. Tests, Training, and Exercises
8. Reconstitution (return to normal)
An organization’s success in timely recouping disaster-related expenses is greatly impacted by a centralized effort to “follow the money.” Successful, timely Disaster Cost Recovery requires reverse-engineering the documentation that FEMA, state relief agencies, and private insurance companies need related to hours, operating expenses, and contracted services to quickly process your claim.
Some key aspects include:
1. Detailed asset inventory, including pictures and in-service/out-of-service status
2. Asset replacement value, which may not be consistent with existing accounting information or insurance declarations
3. Assignment of work orders and purchase orders against assets
4. Documented, properly contracted mutual aid agreements with other agencies or emergency response contractors
5. Properly contracted and performed Damage Assessment Reports
The Disaster Cost Recovery process involves personnel from nearly every department of an organization, including accounting, purchasing, risk management, operations, maintenance, engineering, environmental, information systems, and administration. It involves consultants and contractors, too.
COOP and Disaster Cost Recovery are complex (meaning they have many parts) but are not necessarily difficult. Structure, discipline, and well-developed business processes are essential. COVID-19 impacts are a reminder that such efforts are ever-changing and need to be updated and maintained.
Hurricane season in the US Southeast will be peaking over the next month. There is no time to develop new plans at this point; however, there is still time to review the basics and update fundamental aspects such as work order structures, emergency contracts, and mutual assistance agreements.