Weather Any Storm: Planning Is the Key to Crisis Management and Recovery

By Dennis, Anita | Journal of Accountancy, December 2006 | Go to article overview
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Weather Any Storm: Planning Is the Key to Crisis Management and Recovery

Dennis, Anita, Journal of Accountancy


* Sound contingency plans can prevent or minimize damage in a crisis. Although natural disasters are the most obvious and dramatic, firms also should be prepared to resume business after a fire or theft, or the loss of a key firm member.

* Business continuation insurance can pay for time lost from client work to manage the disaster response.

* In succession planning, consider the possibility of the sudden death of a partner or other key firm member. At such a time, smaller firms can benefit from having built cooperative networks with other professionals.

* Don't put off crisis management and recovery planning just because it seems daunting. List possible crises to start your firm thinking about how you would carry on. Assign staff to a crisis management team and commit a plan to writing. Then file the plan off site where it can be easily retrieved should the worst come to pass.

You're open for business and dressed for success. You've planned your CPA firm's operations with budgets, flowcharts and contact lists. But are you really prepared? What if something sweep away documents, your equipment or, God forbid, key personnel? Fortunately, there's little under the sun or storm clouds that can't be foreseen--and the best possible time to think through how to handle a cataclysmic event is before it strikes. This article's crisis case studies offer valuable information about how to keep operating when really big setbacks happen. Pat Evans, CPA, was one of 11 people working late on March 28, 2000, when a tornado tore through downtown Fort Worth, Texas, wreaking havoc on the 35-story building that housed Sproles Woodard LLC, the firm at which he was managing partner.

"We hid under the library conference room table. When it quieted, we came out--to the biggest mess," he says. He stepped into the hallway to find rain and wind raging through broken windows and much of the furniture in the newly remodeled office in pieces or simply gone. Miraculously, the computer server was still running.


No one was injured, and there was another lucky twist: The firm had just moved back into its 7,000-square-foot offices, so many still-packed boxes of documents were intact.

But on the long walk down 23 floors to the street, Evans and other firm members could see the building had sustained extensive damage. The partners called a staff meeting the following day to brainstorm about regrouping and to reassure everyone about the firm's future. In its strategic planning, the firm assumed the IRS would not give it deferrals on the filing requirements for April 15, so it had to act quickly Another key concern was whether the landlord of the structurally sound but temporarily uninhabitable office building would release the firm from its lease--or whether the firm would end up paying rent on two locations at once.

The firm created a temporary staging area in a nearby church. Because of safety restrictions, only seven people were allowed into the office building to retrieve business materials, and only for one hour. So they devised a plan to carry out as much key equipment and data as possible, taking dollies and boxes with them.

A year earlier the firm had reviewed its insurance and improved its coverage to include the cost of a document recovery company, which located client records in the debris and restored them. Evans credits the firm's business continuation insurance with saving a great deal of expense. Among other things, it paid for the time lost from client work to manage the disaster response. "Trying to get us positioned again absorbed my life for the better part of a year," he says. The firm added work it did on the recovery to its time and billing codes to keep a record for the insurance company "Ask your agent what he or she recommends having insured in the event of a calamity," Evans suggests.

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Weather Any Storm: Planning Is the Key to Crisis Management and Recovery


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