Post 26/11: Corporates learn to live with terror

MUMBAI: Disaster recovery plans now acquire a prime place in corporate strategy sheets after the 26/11 attack made India’s business leaders wake up to the threat that terrorism poses in a globalised world. Hindustan Unilever, Godrej, Marico, M&M, the Birlas and others are now setting aside funds, hiring experts and consultants to work out a viable recovery plan for organisations to survive such disasters and resume normal operations in the quickest time possible.

“The fact is that businesses are unable to bounce back immediately from the after-effects of catastrophes such as 26/11. We are now working on creating a support system as a back-up to ensure that business does not get affected in case of such an eventuality. Businesses are getting global and it is critical to have a plan B in place,” said Marico chairman Harsh Mariwala.

The company has hired Deloitte to work out a contingency plan for the company’s operations across the world, including drawing possible disaster scenarios and strategies to cope with it, in addition to a succession plan.
IT&BPO companies have been more active in putting in place a business continuity plan especially centred around terrorism while the telecommunication sector is waking up to the risk, say industry experts.

The deterrent is that companies need to commit funds over a long period, though most of them have significantly hiked budgets on security coverage this year. There have been some industry-level discussions, led by the Confederation of Indian Industry (CII), to set aside a corpus to tackle terrorism and other similar acts that threaten business and life.

Says Dinesh Anand, executive director, KPMG, “In terms of recovery, corporates have to prepare a back-up contingency plan like identifying another office and running security audits on how secure the existing offices are. Most companies these days have alternate offices, which can be functional in the shortest possible time.”

Transition at the top or risk planning is something most companies do not see as critical to business. “I think, Indian industry is far more resilient and has the ability and spirit to bounce back. Take bomb attacks or the 26/11 attacks last year, the industry has got back on its feet. As a group, we have tied up with international security agencies to ensure adequate precautions. But issues like terrorism are such random acts which cannot be predicted,” says Harsh Goenka, chairman of RPG Enterprises.

According to Santrupt Mishra, Group HR Director, Aditya Birla Group, recovery plans for resuming business are designed for all kinds of eventualities including natural disasters. “They include having alternate plans to take care of situations. But our philosophy has been to not let employees feel they are prisoners,” he says.

Top management of multinational companies now shun publicity and are now extremely tight-lipped on their travel plans and ensure that the details of the stay such as hotel rooms, vehicles used for travel and flight details are known to very few. The Godrej group has also put in place an emergency succession plan (ESP) initiated by the group HR head whereby all senior management officials including Adi Godrej, group chairman, has a nominated successor in place.

Nitin Bhatt, partner, advisory services practice, Ernst & Young said that risk management now factors in issues such political turmoil, business volatility, economic problems and natural and manmade disasters such as fires and network failures which can eventually have a massive impact on an organisation.

“While some sectors, like the hospitality industry, immediately prepared for contingency, a large number of Indian companies still see risks from terrorism as an uncontrollable risk. Hence, they take small steps such as buying an insurance cover for their businesses and investing in some short-term protection measures,” said a senior official in one of the top three consulting firms that offers such BCP services.

Industry watchers say only about one-third of the top 50 companies are serious in preparing a contingency plan and have got themselves audited by security firms. “They invest in conducting diligence on who they hire and who they work with. An incremental investment is also done in training and how to react with. About 90% of the firms that do such contingency plans take the above measures, while only 10% invest in creating the physical infrastructure,” the official said.

“We have taken the entire risk management prices very seriously within the group. sought the help of M&M’s Security to tighten security measures within the campus and set in place a Disaster Recovery Process (DRP) by ensuring that a centralised group business information in put on another server in a completely different location. “ said A Mahendran Group FMCG director.