Based in San Francisco, I lead the Catastrophe...
How would you like to save your organisation half a million dollars a year and increase its market share? Then I believe you need to take an integrated approach to corporate resilience.
When corporations are designing their offices, factories or other facilities, responsibility for resilience should span different departments. Without this, a building designed to be safe may well fail to provide valuable business continuity in the wake of disasters like earthquakes, severe weather events or terrorist attacks.
Yet currently, responsibilities for real estate, risk management and business continuity are often split across departments and budgets. The real estate department focuses on designing a building to meet the organisation’s needs. The risk management team is responsible for insuring against potential risks. And it is the job of the business continuity department to plan what to do in the wake of a disaster.
Usually, each department has separate leadership and a separate budget. So there’s often no direct incentive for them to work together. If they did, I believe they could create a facility that could withstand an earthquake, tornado, flood or other disaster and allow business to continue in the aftermath. The insurance premiums for such a building would also be lower.
For example, a building with base isolation would meet seismic codes and ensure life safety, protecting the people inside. But it would also survive an earthquake intact, enabling business to continue.
I’ve seen just how incredibly valuable a joined-up approach to resilience can be. I led an Arup team that helped a US manufacturing company make its Japanese facilities more resilient and reduce its insurance costs by US$500,000 per year.
When the Tohoku earthquake struck the company’s facilities in 2011, they remained operational throughout while those of a nearby competitor were offline for over a year. As a result, our client was able to significantly increase its market share.
As you can imagine, there is huge value to be unlocked if organisations can connect real estate, risk management and business continuity. I have seen organisations reduce their total cost of risk (including insurance premiums and potential loss of earnings) by as much as 50%.
If organisations really want to embrace resilience, they need to break down the internal silos that currently stand in the way. This integrated approach is something that Arup is urging business leaders to embrace.