Preparing for the worst: a two-pronged disaster management plan requires preparation and practice in responding to natural and man-made perils.

Recent studies show nearly one-third of businesses business continuity plan, and more than twice as many don't have a plan that is formal and tested. Equally startling is a quote from the American Red Cross: "As many as 40% of small businesses do not reopen after a major disaster like a flood, tornado or earthquake. These shuttered businesses were unprepared for a disaster; they had no plan or backup systems."

Disaster preparedness has certainly achieved heightened awareness in the wake of the country's most recent and tragic hurricane season. Compared to those businesses with an effective business continuity plan, those without such a plan can expect to suffer a more severe loss in the event of a fire, hurricane, tornado, flooding, earthquake or severe winter weather.

This column offers a general guide to creating and testing a business continuity plan. Counseling or guiding your business customers to develop a disaster property-management plan will increase your value to them, while also lessening the likelihood or severity of their losses. When you convey the following information, you set your customer's course toward a more informed and prepared future.

A disaster property management plan is comprised of two broad stages: preparedness and practice.

The preparedness phase is the core of disaster management. It should include a written plan, key activities and strategies to mitigate loss potential in the event of a fire or natural disaster. The key steps in this stage include:

* Establishing the right team. The main purpose of a disaster management team is to help develop and carry out the company's plan and its key strategies for mitigating loss in the event of a disaster. However, this team also may act as the core response and recovery team. Ideally, the team should include representatives from the executive team and operational areas.

* Developing a written plan and mitigation strategies and activities. To begin, the team will need management's full commitment, an approved budget to accomplish the tasks outlined in the plan, and the authority to carry out the plan. The plan should be written so it is clear to all, including non-English-speaking workers. It should address the specific needs of a company's various operations.

Mitigation strategies must be responsive, and therefore should rely on clear knowledge of unique variations in locations, facilities, operations and personnel needs. The written plan also should include a clear emergency escalation process so all participants know their specific roles. All responsibilities and authorities must be clearly outlined in the event of a disaster.

* Implementing the plan and the mitigation strategies. This begins with the release of a written mission statement that broadly defines the purpose and importance of the plan. More specific information should then be conveyed to employees, visitors and contractors. The plan itself should be accessible for employee review. Members of the disaster management team must be thoroughly trained in their roles and responsibilities in the event of a fire or natural peril. Thereafter, emergency contact numbers and evacuation instructions should be posted, and drills conducted. Establishing a periodic plan assessment and improvement process will ensure the disaster plan remains vital and up to date.

The second stage, the practice stage, introduces training and drills. During a disaster, things may not always happen as anticipated. Because of this simple truth, it is important that all employees have the opportunity to participate in a drill to assess their own understanding of their roles. They should have an opportunity to carry out their responsibilities, including sending out the "alert" and participating in a facility shutdown. The drill can help the company identify where it is strong, where it is weak, and what was forgotten. How well did the alert/communications system work? What activity did not take place? What action went wrong? What did not happen in the way it was expected to happen? If it doesn't work during a drill, it is not likely to succeed in the event of a real disaster. The drill is intended to give everyone the opportunity to prepare for "the real thing," to participate in a practice response mode, and to recommend and make improvements. It is crucial for the success of your ultimate response mode.

While St. Paul Travelers Risk Control division furnishes support that may include detailed disaster preparedness assistance for its policyholders, agents and brokers also can add to their customer's knowledge in this crucial area. And it's in everyone's best interest that they do so.

Contributor Alan Niederfringer is a second vice president in risk control at St. Paul Travelers. He can be reached [e-mail].