Businesses, Living on the Edge of Disaster

My opinion piece that is appearing in this week's edition of the Puget Sound Business Journal.

by Eric Holdeman / January 28, 2019

The only "paper" paper I read any more is the Puget Sound Business Journal (PSBJ). I do so to keep track of business developments and information in the broader regional community where I live. This region has had several close misses over the years with infrastructure failures. It is a topic that most people don't give much thought to — until there is a business interruption caused by an infrastructure outage. 

All the above led me to write the op-ed below which is running in this week's edition of the PSBJ:

Opinion: Businesses should be prepared for anything

Special to the Puget Sound Business Journal, January 25, 2019.

We have become a highly efficient and modern society. For business and industry, we have figured out how to save pennies wherever we can.

Lean manufacturing concepts have eliminated the need for warehouses full of parts and supplies. The less inventory you have sitting on the shelf, the more cost effective your production process becomes. Overhead costs are reduced, more income is realized, quarterly statements look good, the stock price goes up and everyone is happy. Until there is a glitch in the system.

This is the issue we face today. It all works, when it is working. However, one mistake, one third-party supplier, one natural disaster or one infrastructure failure can throw the entire system into chaos.

Here in the Puget Sound region, plenty of warning bells have gone off over the years. Some were minor disruptions, others lasted for months.

Today, traffic disruptions caused by the transitioning of the Alaskan Way Viaduct to the Highway 99 tunnel exemplifies what it will be like to lose just one major transportation route through the region. Eliminate one additional route because of a collapsed or damaged bridge, and there will be many months of significant traffic disruptions. Anything resembling a normal commute or commerce in the urban areas would largely cease.

In 2016, a power outage in downtown Seattle provided a small glimpse into what it will be like without electricity. Elevators didn’t work, traffic lights failed and buying food over the lunch hour was difficult for anyone who did not have cash.

In 2015, Washington’s position as a maritime state became quickly evident during the slowdown at West Coast ports. The immediate impact was felt significantly by the agricultural sector in Washington with the economic impact being estimated at $770 million. Fruit and other agricultural products were left rotting in fields and in cargo containers.

Twenty years ago, the Olympic Pipeline explosion destroyed a portion of one of two pipelines that delivers our liquid petroleum fuels to Western Washington and the Portland metro area. Fortunately, the explosion happened in a location where the two pipelines, which normally run in parallel, were separated. Jet fuel had to be barged down to Puget Sound to keep Seattle-Tacoma International Airport operational.

Lastly, a recent Seattle Public Utilities study highlighted the fact that where there is no potable water, life cannot be sustained. Even healthy people would begin dying at the 72-hour mark if water is not available. You cannot occupy a high-rise building without fire suppression systems functioning. And then there is also the need to flush the toilet — that would be disrupted.

Business owners have options available to mitigate the effects of interruptions like these. One is to obtain business interruption insurance. Not every business can afford the additional overhead that comes with having the insurance, but it does guarantee you a replacement income stream.

Business continuity planning is the other option. Understanding your supply chain vulnerabilities and other constraints on how your business operates normally will allow you to design alternate courses of action. This may include temporary or permanent relocation out of the area in order to survive. Part of this planning must include assessing and addressing the level of personal and family preparedness among your employees. How will you function if they are not coming to work either because they have issues at home, or they have a physical challenge of getting to work?

Some will scoff at the idea that anything will happen to them or their business interests. But know this: There is a 5 percent chance of an earthquake happening in any one year. Statistically, over time that is not a small number.

But it doesn’t take an earthquake to throw a wrench into business operations. We have had plenty of examples to draw experience from. Will you learn from experience, or ignore it?


Eric Holdeman is the director of the Center for Regional Disaster Resilience, which works on emergency preparedness and disaster resilience projects across the Pacific Northwest.