Businesses pay heavy cost for blackout: study finds

A study measuring the economic impact of the August 2003 US blackout has concluded that businesses paid a heavy price for lost production and man hours, yet relatively few are putting measures in place to prepare for similar crises in the future. The study was conducted by Mirifex, a business and technology consulting firm, and Case Western University's center for the study of regional economic issues, REI@Weatherhead. It measured the opinions of 142 leading executives across the affected region.

Of leaders surveyed, more than two-thirds lost at least a full business day due to the blackout. And a quarter of the businesses surveyed lost more than $50,000 per hour of downtime - meaning at least $400,000 of losses for an 8-hour day. Yet surprisingly, more than a third said they have no risk management or disaster recovery plans in place. And more than half say they are unlikely to invest more in risk management, business continuity and/or disaster recovery in the future.

According to Mark Slavik, Risk Services Practice Leader at Mirifex and co- author of the study, the findings are consistent with other past studies. "Gartner and Contingency Planners have both released reports in recent years finding that businesses - even when hit hard by crises - show remarkable resistance to change," Slavik said. "With growing reliance on ecommerce, wireless technology and the like, the business world is asking for trouble."

Among the threats businesses fear most, the study found that 26 percent believe that ‘Cybercrime’ is the most immediate danger, followed by ‘Utility outages’ - a leading danger to 24 percent of executives surveyed. ‘Loss of key personnel or employees’ was identified by 14 percent of respondents.

In addition to the risk management findings of the study, Gregory Stoup of REI@Weatherhead says the report also clarifies key policy issues the region should face up to. "More than a third of the businesses surveyed said the region's image would suffer as a result of the blackout. And 10 percent said it would impact their company's decisions with regard to growth or relocation in the future. These are big numbers," Stoup said. "The region as a whole needs to become engaged in a public dialogue about how we can learn from this event, and use it to our benefit."

Digital copies of the report and analysis are available free of charge at:
http://blackoutsurvey.mirifex.com/blackout_2003.cfm (registration required)

•Date: 24th February 2004 •Region: N.America •Type: Article •Topic: Power man.
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