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«VOLUM E 1 1, N UM B E R 1 I S SN 2 1 6 8 - 0 6 1 2 F L ASH DR I V E I S SN 1 9 4 1 - 9 5 8 9 ON L I N E T h e In s t it ut e f o r Bu s i n e s s an ...»

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It is proposed that state funding be used to construct a new facility for the BRC at UHWO to serve as a home for the “Institute” (or consider facility improvements/renovated space) that will include storage, GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 492 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1 conference and operational facilities. The State of Hawaii Emergency Management Agency (HI-EMA) may also provide technical support for systems integration and liaison with other State Agencies such as State Procurement (SPO) and DBEDT. The BRC will enhance the capacity of Hawaii businesses to promote disaster preparedness by contributing their personnel, materials, technical and management advice to businesses, organizations, communities, and agencies. The BRC will provide both outreach and dissemination of business recovery resources, in addition to serving as a hub for post-disaster logistic support, technologic innovation and information sharing.

Specifically, the BRC will engage local commercial and non-profit Hawaii businesses in a mutually

supporting role to:

fulfil resource needs of the County and State agencies strengthen connections between local businesses and these agencies to satisfy resource needs better understand the capabilities and limitations of local businesses and what assistance businesses may require to satisfy those needs.

The UHWO Disaster Preparedness and Management (DPEM) program faculty PI expect to contribute to

various roles on the BRC proposal with responsibility for the following roles:

assemble and manage the Business Recovery Team establish best practice business recovery procedures in collaboration with all entities and strengthen public-private partnerships develop operational practices to engage the private sector in disaster recovery liaise with other State Agencies such as State Procurement (SPO) and the Department of Business, Economic Development and Tourism (DBEDT) conduct the necessary outreach, seminars/webinars and training support for disaster preparedness

LITERATURE REVIEW

Small businesses (those with less than 50 employees) constitute a critical component of Hawaii’s economy, accounting for 94% of all businesses in the state: 86% of Hawai’i businesses have less than 20 employees (DBEDT Research & Economic Analysis, 2012) While researchers in the field of disaster and emergency studies have systematically examined business sector recovery for only a short time (Alesch, Holly, Mittler, and Nagy 2001; Chang and Falit-Baiamonte 2002; Dalhamer and Tierney 1998; Flynn 2007; Furlong and Scheberle 1998; Graham 2007; Kroll, Landis, Shen, and Stryker 1991; Runyan 2006; Tierney 1997;

Yoshida & Deyle 2005) they present a sobering picture of how disasters impact businesses, particularly smaller enterprises: a quarter of small businesses which experience a disaster never reopen --- and a third of the remaining businesses can be expected to close within two years of the disaster (Insurance Institute of Business and Home Safety, 2012). Particularly vulnerable are businesses with less than 20 employees and those that work from home (DBEDT 2012). According to the DBEDT Natural Disaster Economic Recovery Plan (2014) 38% of businesses surveyed in Hawaii did not have a Business Continuity Plan: those Hawaiian companies without plans were primarily smaller companies of less than 25 employees.

Larger businesses tend to fare better than smaller businesses in the event of a disaster, due to their increased access to resources and economy of scale. The smallest of Hawaii’s businesses are not well informed about available disaster recovery resources or the benefits of disaster preparedness: some depend on land owners or property managers for recovery, disaster preparedness training is not common, most companies do not have emergency supplies at their office location, data back-ups are often on-site and are not regularly updated (DBEDT, 2014). Specifically, a small business affected by an economic disruption has fewer financial resources (line of credit, cash reserves, capital assets, short term operating funds), lacks an extended network of employees and technical services located outside of the area of impact (to provide GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 493 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1 response assistance), and often depends upon a very small number of individuals to assist with emergency operations (and make other critical business decisions) in a crisis environment.

Interruptions of critical utility functions and the supply chain are the major impacts felt by Hawaiʻi businesses. These are magnified by Hawai’i’s dependence on imported resources, including fuel and food.

The loss of customers resulting from closures of airports and harbors could have a devastating effect, especially for the visitor industry. Neighbor islands are concerned about the vulnerability of O‘ahu’s infrastructure since their supplies come through harbors on O‘ahu. There is a demand for reliable, credible, and accessible information on preparedness that is tailored to small business. There is also a need for localized, up-to-date information on road closures and the status of recovery efforts. Businesses in high risk hazard areas need critical support in their preparedness, evacuation, response, and recovery. Many businesses anticipate insurance as their primary means of recovery assistance. However, less than half have business interruption insurance and many have incomplete or no disaster coverage. Some have difficulty finding recovery assistance and resources, or complying with the documentation requirements for insurance claims. This is intensified for those that do not speak English or that have other barriers to receiving information and support.





In the 2001 Nisqually earthquake in Washington state, large corporations such as Boeing were able to rely upon their extensive emergency plans, including the use of backup generators, activation of internal emergency operation centers, and the option to switch computing control to locations outside the region.

Although Starbucks’ Seattle headquarters was evacuated, it was able to continue operations because of its multiple locations outside the area of strong ground motion (Freitag 2002). Often smaller businesses do not have these same options. Small businesses have more difficulty absorbing costs associated with seeking expert advice and engaging in structural mitigation and risk reduction strategies. Businesses that develop and implement a disaster recovery plan are more likely to survive a disaster --- and typically sustain less damage, loss, and downtime --- than those that do not (FEMA, 2010).

Tierney (1997) found that the single location of a small business leaves an owner’s investments more vulnerable to total destruction when compared to a chain, where risks are spread. Often, recovery aid guidelines put subtle pressure on business owners to remain at their same location, despite changes in the economic and risk landscape (Graham 2007; Vale and Campanella 2004). Yoshida and Deyle (2005) found that small businesses were less likely to be knowledgeable about hazard mitigation and specialized insurance. Furthermore, retail businesses that rent their floor space are more vulnerable to loss than those that do not rent (Chang and Falit-Baiamonte 2002). In studying small businesses, researchers have also sought factors that increase the probability of small business recovery. Smith and Welsh (2007) found that past experience with the hazard, knowledge of how to run a business and having ran one in the past, having a business continuity plan, and knowledge of taxes and regulations were significant. In researching the 1994 Northridge earthquake, Tierney (1997) found that business that rent their space were typically less able than building owners to engage in mitigation and preparedness activities. However, businesses that were relatively larger, older and financially stable, or had previous disaster experience were more likely to have engaged in preparedness activities prior to the earthquake. Following the earthquake, newer businesses and better-prepared firms were more likely to increase preparedness levels post-earthquake.

UHWO CONTRIBUTION TO BUSINESS CONTINUITY IN HAWAII

There is clearly a need to enhance ongoing, short-term (days), intermediate term (weeks-month) and longterm (months-years) recovery for Hawaii businesses. The authors of this paper are examining comprehensive, all-hazards, integrated and risk-based business continuity planning strategies for Hawaii’s businesses which involves preparing, mitigating, responding and recovering from all possible threats and perils including natural, health-related, human-induced, hazardous materials and other technologic hazards.

As shown in Figure 1, our business recovery work will examine the three dimensions of in order to shorten the recovery time in the event of a business disruption and minimize financial losses.

GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 494 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1 Business Recovery Team (BRT) UHWO DPEM has begun to assemble a disaster recovery team with members from the private sector, trade associations, public sector and non-profit organizations with a primary focus primarily on economic recovery (most emergency operations plans are primarily focused on health and safety issues). There is a need to effectively engage and pro-actively recruit the appropriate local businesses representatives from across Hawaii in activities that will protect their business assets and expedite the recovery of the local economy in the event of a disaster. A mix of strategic public and private sector representatives will be invited to participate in the business recovery team. To ensure that economic recovery decision making contains the business recovery team will include economic development stakeholders (Economic Development Officers, chambers of commerce officials, business & trade association professionals, special districts), public and elected officials (including emergency management personnel) as well as a significant representation of the business community. Team members will be selected based on their articulated position of authority (to provide proper support to the team) and knowledge of the needs of the private sector. For example, the Community Economic Development Officer (EDO) will have understanding and knowledge of their community’s long term economic development resources, goals and plans, zoning laws, permitting processes and any laws or ordinances around the financing of various economic development plans.

It is important to understand the economic impacts of each post-disaster recovery action. Even the seemingly harmless decision of closing a few streets can slow recovery, force businesses to relocate or close, and drive residents and customers away – thereby affecting the resilience of the workforce and economy. Accordingly, our business recovery team will establish agendas, facilitate participation, discussion and information exchange from all representatives; delegate business recovery tasks and followup; and evaluate objectives and outcomes in an expedited yet comprehensive decision making process.

The business recovery team could specifically address the major pre and post-disaster economic recovery

issues that businesses and communities face such as:

understanding the capabilities and limitations of businesses;

providing assistance for business continuity plans;

selection of redevelopment priorities;

identification and implementation of disaster mitigation strategies;

development of post-disaster recovery financial and technical assistance programs; and expansion of response and recovery coordination between small businesses, the public sector and their surrounding communities

Best Practices for Business Recovery Procedures

It is recommended that the Business Recovery Center (together with local economic development authorities) conduct a business survey to better understand the disaster services and capabilities that local Hawaii businesses provide and the type of equipment they have on hand in the event of a disaster to be used in cleanup, debris removal, emergency response, as well as long-term rebuilding efforts. Future preparedness and disaster response activities will be strengthened by documenting the capabilities, essential services, and equipment of local businesses. Understanding the vulnerabilities and weaknesses of Hawaii’s businesses before disaster strikes will also help to identify emergency management gaps in the community.

Local and state government agencies should also work closely with the Business Recovery Center to effectively communicate and educate local businesses on disaster recovery and other preparation activities.

GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 495 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1 Figure 1: UHWO Contribution to Business Recovery Activities in Hawaii: Business Recovery Continuum Phases, Hawaii Business Threats and UHWO Business Recovery Leadership roles.



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