Thinking the Unthinkable
 Copyright, Greater Washington Society of Association Executives, 2001 Reprinted by Permission

Publication
Executive Update

Publication Date
February 2001

Plexus Consulting Group, LLC
1620 Eye Street, NW
Suite 210
Washington, DC 20006
Phone:  202-785-8940
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At Universal Studios theme park in Orlando, Florida, a number of virtual-reality rides will take you inside a natural disaster. My personal favorite is Twister, where you get to be Bill Paxton or Helen Hunt stranded in the middle of a hellacious tornado. The wind roars and whips your face; pieces of debris fly through the air; and you’re generally scared senseless for three or four minutes. Then, the lights come up, you file out the exit door, and the whole thing automatically resets itself for the next group of tourists.

Unfortunately, recovering from a real-life disaster is infinitely more difficult. It’s an experience that can consume months or even years of an association executive’s life. Just ask Gary W. Donnelly, CAE, president of the National Lumber and Building Material Dealers Association (NLBMDA).

Up in Flames
In the early morning hours of November 17, 1997, a fire broke out in the NLBMDA’s Washington headquarters. It was the kind of nightmare catastrophe that no association wants to face and for which few prepare. The consequences were devastating:

• The building — an old townhouse that was sorely in need of renovation — was heavily damaged.

• Furniture, equipment — essentially everything — was unsalvageable.

• All of the association’s computers — with day-to-day files — were destroyed.

• While backup tapes had been made, these tapes were not stored offsite.

• Most of the NLBMDA’s business files were either seriously damaged or destroyed.

• Much of the association’s history was lost.

• Many irreplaceable items of personal property were destroyed.

While NLBMDA — under Donnelly’s leadership — recovered from the fire relatively quickly, the association soon faced another crisis. Just as the checks were coming in to help NLBMDA rebuild the headquarters office, a dishonest employee, just two days after the fire, opened up an account using the association’s acronym and began embezzling association funds (see sidebar).

Recovering From the Disaster
The association acted immediately. Upon learning of the fire, Donnelly caught the next flight back to Washington from an NLBMDA Executive Committee meeting on the West Coast. After surveying the fire and water damage, he assembled his staff in the nearby National Democratic Club, and they hammered out a plan of action. Clearly, getting "back in operation" was the immediate priority.

Within a few business days, NLBMDA did the following:

• Secured a temporary office, leased furniture and equipment, and re-established essential communications services. The association was back up and running in new space within five days.

• Sifted through the ashes at the old office and — miraculously — located a backup tape from the office’s computer server. Thus, many files were restored.

• Retained the services of a disaster recovery consulting firm. Working on a commission basis, that firm began working immediately with NLBMDA’s insurer to establish the value of items lost or damaged.

• Started a fundraising campaign to cover costs not covered by the insurance policy. From a single letter, the association raised more than $70,000.

• Began interviewing construction firms to repair and remodel the office.

A Long Road Back
Through much hard work, the townhouse was repaired and renovated; records were salvaged; furniture and furnishings were installed; and by October 28, 1998, NLBMDA was back in its old (new and improved) digs on Capitol Hill. By all accounts, the road back from this disaster was long and costly.

The first decision faced by Donnelly and NLBMDA leaders was how much of the recovery work would be managed in-house. Like other smaller associations, NLBMDA has only a handful of key staff. If staff resources were to be diverted from essential functions, then it was judged that the association would "suffer further." Accordingly, leaders decided to outsource as much of the "nitty-gritty" work as possible.

Despite this decision, Donnelly reports that he spent some 20 to 25 percent of his time in the year after the fire on the disaster recovery effort. Visits to the townhouse during recovery, repair, and renovation occurred approximately twice a week.

With respect to essential association records, NLBMDA caught some lucky breaks. Most of the files survived the fire but suffered substantial water damage. Spread out to dry in the garage at Donnelly’s house, the records were eventually copied by temporary help and returned to the association. (NLBMDA’s insurance company reimbursed the association for much of this expense.)

The association also found a way to stretch scarce funds when it came to replacing office furniture. By working with a firm that specializes in refinishing previously depreciated items, NLBMDA saved substantially on desks, chairs, credenzas, and other equipment. Donnelly reports that the cost of the refinished items was approximately one-third of the cost of similar items if purchased in new condition.

Lessons Learned
Asked what advice he’d impart to others, Donnelly has numerous suggestions:

1. Assume the worst can happen to you.
In this million-miles-an-hour world, thinking about the unthinkable — a disaster — is usually at the very bottom of an association executive’s to-do list. Don’t make that mistake. Disasters happen every day. Take these common-sense precautions:

• Review your insurance coverage regularly. With electronic calendars it’s easy to schedule "recurring events." Make an appointment with yourself to periodically (at least once a year) review your insurance policy. Include staff and the insurance agent in charge of your account.

• Protect mission-critical computer files. Insist that everyone in your organization stores essential files on the central server. Make sure that these files are backed up religiously and that the backups are stored offsite.

• Store business and historical records offsite. Establish record-keeping procedures and then follow them. Copy irreplaceable materials and store the originals in a safe offsite location.

• Encourage staff to leave "irreplaceable" personal effects at home. While everyone likes to be surrounded by cherished objects, it is more appropriate to keep these treasures at home rather than in the office.

• Keep photographic and video records. Just two weeks before the November 1997 fire, NLBMDA offices had been damaged from an overflowing toilet. Donnelly took photographs of the damage and then used up the remainder of the roll by walking through the townhouse and photographing other offices and common spaces. These photographs proved invaluable when it came time to settle up with the insurance company. However, a videotaped record would have been even more useful.

• Prepare a disaster recovery plan. This need not be elaborate. However, you should identify the essential products and services that would be needed to get you "back in business" should disaster strike. Of course, store the plan in a safe, offsite locale.

2. Consider retaining a certified public adjuster (disaster recovery consultant).
Before the embers had even stopped glowing, NLBMDA was besieged by "offers of assistance" from disaster recovery consulting firms. While first appearing on the scene like turkey vultures on roadkill, these consultants ultimately saved the association a lot of staff time and aggravation.

• Don’t reject these firms out of hand. A certified public adjuster will count everything — from the largest piece of furniture to the paper clips — and then catalog and price all items.

• Get multiple bids and check references. These are standard operating practices for most association decisions. Don’t cut corners here just because you are in the middle of a crisis.

3. Check your insurance policy carefully.
NLBMDA had coverage that reimbursed for the losses from the fire. However, there were definitely some surprises:

• Personal effects. NLBMDA policy capped reimbursement for the loss of personal effects at $2,500. This was an inadequate amount, and individual staff members had to use their homeowners’ policies to make up the difference.

• Leased equipment. The copier that the association was leasing was not covered under the policy. As a result, the association had to negotiate a settlement with the company providing the copier.

• Code upgrades. The NLBMDA townhouse was in need of renovation even before the fire. When it came time to rebuild, Donnelly discovered that necessary upgrades required by changed building codes such as wider stairwells and firewalls were not covered.

4. Choose your contractors wisely.
The NLBMDA assumed that because it was renovating and rebuilding in a fire-damaged space, it should choose a general contractor who specialized in such work. In addition, the insurance company encouraged the association to work with one of these companies. After soliciting three bids, association leaders selected a contractor. In hindsight, Donnelly thinks the association would have been better served by soliciting bids from a broader list of contractors who did not necessarily specialize in fire-damaged structures.

Conclusion
Disasters most often strike without warning. Don’t ever assume that a fire, flood, or some other calamity won’t happen to your association. A little foresight and planning can prevent an enormous amount of anguish after the fact. In the real world — unlike the make-believe universe of a theme park — it can take a long time to get things back in place after disaster strikes.