CRE v Wisconsin

Operating in the dark: How real estate professionals can prepare for tomorrow's outage

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Bob Kenyon

August 14 will mark the 10-year anniversary of the 2003 Northeast Blackout that left about 50 million people in North America without power. While there hasn’t been another outage of that magnitude since, blackouts continue to be a leading cause of business interruption and operational challenges for real estate professionals here in the Midwest.

Guest post by Bob Kenyon, Executive Vice President, Atlas Oil

August 14 will mark the 10-year anniversary of the 2003 Northeast Blackout that left about 50 million people in North America without power. While there hasn’t been another outage of that magnitude since, blackouts continue to be a leading cause of business interruption and operational challenges for real estate professionals here in the Midwest.

In 2012 alone, there were 125 reported power outages just in the state of Michigan, with 76 in Illinois and 67 in Wisconsin. Just because an outage doesn’t make international headlines doesn’t mean it can’t dramatically impact your business. Power outages cost the U.S. economy between $80 billion and $188 billion a year. The U.S. Department of Energy estimates that when power is disrupted to IT systems, 33 percent of impacted companies lose between $20,000 and $500,000; 20 percent lose $500,000 to $2 million; and 15 percent face catastrophic losses, facing more than $2 million in damages.

What can be done to prepare for blackouts? Here are a few tips based on lessons learned and emerging trends from more recent blackouts—from my experiences and those of Dean Schloyer, Global Head of Risk, Continuity, Security and Crisis Management for CBRE—on how to best safeguard your properties and businesses against unnecessary downtime.

Generate interest

The first and most obvious step to take is to invest in emergency generators. Some facilities (like hospitals) are required by law to have generators, but most properties not under such regulations are surprisingly unprepared. Taking basic steps to protect and care for your generators—locating them in an area that is safe from flooding and performing regular maintenance checks is well worth the effort.

Fuel up

Even the best generators are only as good as their fuel supply. What happens if fuel supplies are disrupted (as so famously happened in Superstorm Sandy)? For many firms, the solution is to invest in an emergency fuel program that guarantees that your business/property will receive the fuel you need when you need it most. When selecting a provider for emergency fuel services, be sure to ask detailed questions about whether they have the infrastructure, availability and resources required to back up their guarantee.

Fill the gaps

Since some generators require extra time to get fully powered up, many companies may need to rely on an uninterrupted power supply (UPS)—an electrical apparatus that provides emergency power instantaneously—to fill the power “gap.” The architecture and costs for UPS solutions varies and it is important to be thoughtful about selecting a vendor that meets the needs of your business or property.

Spread the word

One of the most important—and, unfortunately, one of the most frequently overlooked—elements of any business continuity and crisis management program is a crisis management plan: How are you going to communicate with tenants/patients/customers/the public? Emergency notification services—which can blast messages out en masse to phone and email—are one solution, and can be very effective for property managers who can simply upload their tenant list. As recent disasters have demonstrated, social media can also be an extraordinarily important means of communication, and property professionals may want to consider using services like Twitter and Facebook to convey important and timely information to large groups of people.

Pass the test

Once real estate professionals and business owners have the basic elements of a response plan in place—including lining up emergency fuel providers and suppliers, establishing systems and processes, and ensuring that all personnel understand their roles and responsibilities—the single most important thing they can do is to test, validate and re-validate the efficiency and effectiveness of that plan. Yet this is where Schloyer finds most companies drop the ball. He notes that decision-makers should continually conduct rigorous training and testing of emergency procedures, not just in the wake of an incident. If you have made prior assessments about who requires UPS coverage and who does not, for example, you need to re-evaluate that status periodically as roles, personnel and divisions change. Even the most comprehensive and well-designed plan will become less responsive and effective over time without regular updates.

The real estate community should not view the blackout as an event a decade in the rear-view mirror but rather a historic event that has helped shape best practices for today. Real estate professionals who apply these basic principles will find that a little bit of investment in thoughtful preparation and strategic planning can yield dramatic returns when it comes to protecting their properties against damaging and disruptive power outages.

Bob Kenyon is executive vice president of Taylor, Mich.-based Atlas Oil Company. Emergency Fuel Solutions, a division of Atlas Oil, specializes in providing emergency fueling for businesses including hospitals, data centers, food retailers, utility companies and financial centers.