CONTINUITY OF OPERATIONSPLANNING AND PROPERTY INSURANCE

Continuity of Operations Planning Overview

Continuity of Operations“Is an effort within individual executive departments and agencies to ensure that Primary Mission Essential Functions continue to be performed during a wide range of emergencies, including localized acts of nature, accidents, and technological or attack-related emergencies.”

-FEMA

Essential Functions“Those functions an organization must continue in a continuity situation”.

-FEMA

Goal“The ultimate goal of continuity in the executive branch is the continuation of National Essential Functions. In order to achieve that goal, the objective for organizations is to identify their Essential Functions, and ensure that those functions can be continued throughout, or resumed rapidly after, a disruption of normal activities. The Federal Government has an important partnership with other non-federal government entities and with private sector owners and operators who play integral roles in ensuring our homeland security”.

-FEMA

Continuity of Operations Planning Overview

Question:What emergencies may result in the interruption of your agency’s business operations?

Continuity of Operations Planning Overview

Property Insurance• “All direct risks of physical loss or damage… not otherwise excluded”Types of Covered Causes of Loss• Fire• Frozen Pipes & Water Damage• Hail• Flood• Windstorm (tornado, hurricane)• Terrorist Events• Arson• Accidental Breakdown of Equipment

Phase I: Readiness and Preparedness

• Development of the plan• Test, Train, and Exercise• Risk Management

Phase I: Readiness and Preparedness

Risk AssessmentHelps to determine an organization’s vulnerability to hazards, including human-caused incidents that pose a threat to the facility or personnel. Factors to consider when comparing hazards:• Frequency of occurrence.• Potential magnitude and intensity.• Probable spatial extent and duration.• Speed of onset.

Statewide Property Insurance Program Resources:• Swiss Re “CatNet” – natural hazards assessment based upon

geographic location• Catastrophe Modeling – computer simulation of realistic

disaster scenarios based upon your agency’s exposures• Hartford Steam Boiler Property Surveys – on-site analysis of

fire and related hazards• Infrared Thermography – onsite analysis of electrical

hazards• American Appraisals – replacement cost valuation of your

facilities

Phase I: Readiness and Preparedness

Other Resources:• Local/State Fire Marshal (AHJ)• Local/State/Federal Law Enforcement

Current threat levelsPhysical security analysis

• Maps – 5 mile building radiusPotential targetsHazMat sites

Phase I: Readiness and Preparedness

Budgeting and Acquisition (CGC 1):• Through the budgeting process, an organization’s leaders and

staff will ensure critical continuity resources are available to continue performing the organization’s Essential Functions before, during, and after a continuity event.– Identify and provide continuity funding and specific budgetary

requirements to establish and maintain the requirements for all elements of a viable and resilient continuity capability.

– Identify provisions for the acquisition and procurement of necessary equipment, supplies, resources, and personnel that are not already in place at the continuity facilities on an emergency basis and needed to sustain operations for up to 30 days or until normal operations resume.

Phase I: Readiness and Preparedness

Phase II: Activation

Activation of continuity plans and all associated procedures necessary to support the continued performance of Essential Functions.

If your property is damaged as a result of a covered cause of loss, contact SORM to initiate claims process.

Phase III: Continuity Operations

Activities to continue essential functions, including communicating with supporting and supported organizations, customers, and stakeholders.

Emergency Relocation GroupTeam that continues agency essential functions.

Phase III: Continuity Operations

How Property Insurance Supports Continuity of Operations• Coverage is tailored to offset the financial costs

resulting from an event– Potential advance payments for large scale disasters

• Pre-loss – Preservation of Property – funds expended to prevent

impending disaster– Emergency Vacating Expense – cost to evacuate

students, patients, occupants

Phase III: Continuity Operations

How Property Insurance Supports Continuity of Operations• Post-loss – Extra Expense – additional costs expended to

maintain operations– Business Interruption – loss of revenue due to loss– Civil Authority – prevention of access to facilities

Phase IV: Reconstitution

Definition:“The Process by which surviving and/or replacement

organization personnel resume normal organization operations from the original or replacement primary operating facility”.

-FEMA

Implemented when the emergency, or threat of emergency, is over, and organizations initiate operations for resuming normal business operations. Organizations can plan for reconstitution prior to activation of their continuity plan and concurrently with continuity operations.

Phase IV: Reconstitution

Phase IV: Reconstitution

• Insurance will repair or replace facility with like kind & quality– If building codes have changed, upgrading to new

code requirements– Extra expenses required for returning equipment

to original location• Support of SORM Coordinating Claims Adjuster– York Risk Services helps facilitate claim payments

on behalf of SORM agencies

• Speed of payment– Insurance

• Partial advance payments possible in 1-2 weeks• Continual payments until final closeout of damages

– FEMA Public Assistance Grants• Only applies for Federally Declared Disasters• Lengthy claims process, continual audits of distributed funds• Recent reports show average FEMA closeout period to be

10 years– State Legislature

• Must get approval• Timing of payment?

Phase IV: Reconstitution

Continuity of OperationsPlanning and Property Insurance

QUESTIONS?

Andres Campo, ARMDirector of Risk Management

Email: andres.campo@sorm.state.tx.usState Office of Risk ManagementPhone: (512) 936-1561Fax: (512) 370-9029

Chris R. Connelly, ARM-PArea Senior Vice President

Email: Chris_Connelly@ajg.comArthur J. Gallagher Risk Management Services, Inc.200 S. Orange Avenue, Suite 1350Orlando, FL 32801Direct: (407) 563-3513Mobile: (410) 905-7180Toll-Free: (800) 524-0191 Ext. 3513Fax: (407) 370-3057