Companies must have plans for disaster.

THE media coverage of Hurricane Katrina focuses on the dramatic visible impacts: sudden death, human suffering, damage to the built environment, and public disorder. Officials are counting the dead, the injured, the evacuees, and are estimating the cost for repairing buildings and infrastructure.

What is absent is not so tragic but quite substantial--namely, the economic losses of firms and their employees.

In 1993, after the first World Trade Center terrorist attack, the Port Authority of New York and New Jersey asked me to estimate the losses not determined by engineers and insurance adjustors--the lost income of firms and their employees. The econormc loss from disaster has engaged my interest since then. A rough rule of thumb from earthquake studies is that economic loss adds another 30 percent to the property loss. The economic loss is tied to downtime, unlike the physical loss.

The major disaster facing Los Angeles is an earthquake. A study of the Northridge earthquake has shown that economic losses were tied to transportation disruptions as much as to property damage and utility cut-offs. Wholesale and retail firms reported that 36 percent to 46 percent of their losses were due to transportation disruptions. Losses were less for manufacturing firms. Such losses include getting goods as well as customers and employees in and out. San Fernando Valley firms reported that employee commuting times did not return to normal until two months after the earthquake.

Transportation disruption, an important source of economic loss from a disaster, could be rivaled by communication losses, especially in L.A. where the information economy (motion pictures, finance, insurance, and professional services among others) has become as large as the goods production and distribution economy (manufacturing, transportation, wholesale and retail trade).

Firms in the information sector critically depend upon communication infrastructure: computers, interconnected computer systems, the Internet, fiber optic links, telephone lines and wireless connections.

Many organizations of the information economy simply cannot afford downtime. The Lehman Brothers data center was destroyed in the 9/11 attack. A back-up facility in New Jersey was brought on line by their technology chief using his BlackBerry text messenger while fleeing down the stairs of one of the towers.

The bond trading firm Cantor Fitzgerald lost 700 employees at its headquarters on 9/11. But two days later when the bond market reopened the firm was trading from sites in London and New Jersey.

Financial firms tend to be more savvy than others about protecting data and software. But even financial firms, particularly banks, need help in the form of access to liquidity. When the twin towers went down, telecommunication failures made it impossible for many firms to cover their daily payment requirements. To prevent a meltdown, the Federal Reserve Bank pumped a record amount of funds into the financial system in the next few days.

What does this imply for disaster preparedness in Los Angeles? To minimize downtime, and thus economic loss, firms must have disaster plans that address possible communication disruptions as well as transportation disruptions. Employees should plan alternative routes to work assuming major freeway closures. Key personnel should have cell phones or text messengers with them at all times.

Although the communication-providing firms may be up to speed for a disaster, their business customers may not be. Firms should develop off-site locations for data, software, computers, and documents, sites that can be brought on-line in a moment. That can be as important as property insurance for firms in the information sector. Finally, the Federal Reserve should be prepared to ensure liquidity for Los Angeles' banks and their customers.

Matthew P. Drennan is a professor in the Department of Urban Planning at UCLA and author of "The Information Economy and American Cities."