“Derecho” – another lesson in risk management

PRMS is located in Arlington VA, directly across the Potomac River from Washington DC.  On the evening of Friday, June 29, 2012, the “derecho” that formed in the Chicago area that morning hit the Washington metropolitan area with 80 mph winds and heavy rain.  For those of you lucky enough to have not been in an area hit by it, a derecho is a “string of storms that combined intense lightening and rain with hurricane-force gusts” (ABC News). 

Within 45 minutes, one million homes and businesses in the DC area lost electricity, the traditional phone network was a shambles, cable TV and internet systems were crippled, and even cellular service was spotty and weak even when you could get a signal.  Thousands of trees and utility poles were blown down, hundreds of streets, including major highways were blocked by debris, houses and cars were crushed; in other words, it was pretty bad.

PRMS tries hard NOT to live by the axiom “Oh, here, take our risk management advice – we’re not using it.” We debrief our performance after each unusual event, whether the source is Nature (e.g., blizzards and ice storms), terrorism (the Pentagon is about 3 miles from our office), or infrastructure failures (several years ago, a major water main break made access to our office impossible for a couple days).  Based on that analysis, we implement indicated changes.   For example, after the Washington area was hit with 40+ inches of snow over 4 days in February 2010, and local travel became impossible, we greatly increased the number of employees with company-issued smartphones so that in the future they could access policyholder information and respond to customer inquiries from their homes or the airports they were stuck in.

Accordingly, at our weekly management meeting this morning, we discussed what worked and what didn’t about our disaster plan. Despite the best planning, there are always unforeseen circumstances, which then need to be addressed with additional contingency planning.

That’s the risk management process.  We originally identified potential risks and developed strategies to manage those risks.  After the event, we looked at what happened and critically assessed our response to it, noting what we foresaw correctly and what we did not foresee.  For those unforeseen risks, we are modifying our plan as well as giving thought to additional unforeseen risks that could occur in the future.

The constant evaluation, modification, and re-evaluation is not easy, but it’s essential for all of us.