Reference no: EM132861530

Read the case study below and provide short answers to the questions. Disaster Risk Management: A Case Study

It was a typical August day in Georgia: the temperature was in the 90s and so was the humidity! A roofing contractor had been working on TCB Company's copper roof for the last several weeks and was ready to begin installation of the new roof.

In the early afternoon, a roofing company employee took a propane torch and began to work on a vent in the roof. Although he was trying to be careful, the heat created by the torch passed through the copper and started a fire inside the building's fifth floor. The worker became aware of the situation because he could see and smell the smoke. However, he was on the roof outside the building, and the fire was on the inside of the fifth floor. By the time he reached the inside with a fire extinguisher, the smoke was so thick that he could not enter the space where the fire was located. He could not contain the fire. Meanwhile, the fire alarm had been activated, and the building was evacuated. All roofing company workers and TCB employees were unharmed, but the fire was out of control and spreading.

The fire station was less than a mile away, and firefighters were quickly on the scene. However, much of the fifth floor had been subdivided into small rooms, and it was difficult to reach the actual position of the fire. In addition, the building had asbestos sprayed on it and the ceiling tile had asbestos in it. Firefighters had to be concerned about asbestos fibers in the air. The surrounding buildings also made it difficult to drive the fire engines close to the building, and the use of an aerial ladder truck was delayed because trees had to be cut to make a path for the truck.

What started out as a fire located in a small portion of the building led to one that took eight hours and more than a million gallons of water to extinguish. The entire fifth floor of the building was destroyed, and smoke and water damage occurred throughout the entire building. In addition, the asbestos ceiling tiles collapsed under the weight of the water that came from the firefighters' hoses. Thus, there was asbestos contamination throughout the building, and after the fire the building was considered a regulated building. That is, it could not be used until the asbestos was removed. Clearly, the firm needed to activate its disaster plan.

Early the next morning, the firm's president called a meeting to inform everyone that the building restoration was the firm's number one priority, and temporary space would be rented while restoration took place. Once the fire inspector had conducted his analysis, the building was entered by men in moon suits to recover the computer equipment. Asbestos particles had to be removed, and any residue left by smoke or water cleared from the equipment. The building contained more than $2 million in computer equipment. Since the firm did not have the expertise to recover their equipment, it retained an outside expert-the same company that decontaminated Union Bank Tower in Los Angeles as well as One Market Plaza in San Francisco. Within two weeks, all equipment had been cleaned or sent to the junk room. Meanwhile, it was determined that part of the building could be put back into production within four weeks. However, it would take more than 18 months to replace the fifth floor and repair the rest of the building.

It was clear that several departments would not be able to return to the building for 9 months (later it was determined to be 18 months); space was rented, and those departments' computer equipment was installed at the temporary location. Rental furniture was obtained and placed in those departments where the fire and/or water had destroyed the furniture, and the telephone company installed new phones. Because of the asbestos contamination, all furniture that contained fabric was declared a constructive total loss (it cost more to clean it than it was worth).

While it took four weeks to repair the usable part of the building and to prepare rental space, the firm lost little business, because it was the slow time of the year and short-term (four weeks) emergency space was found. Employees who were needed at the office to conduct business reported to work daily, while others worked at home.

Because the firm's president provided excellent leadership and made events happen, TCB Company was able to maintain operations and meet its business goals. Because of his leadership, activities that often took a month were done in a week or less. There was adequate direct and indirect property insurance, plus the roofer's liability insurance. The firm had comprehensive property insurance for damage to property on a replacement cost basis (real and personal property), loss of business income, and extra expense insurance. In addition, the policy had coverage for increased cost of construction due to the enforcement of building laws and demolition insurance. Because there was little question as to whose negligence caused the loss, the roofer's liability carrier was involved from day one. While it took 10 months to actually receive a check, TCB knew that the roofer's carrier would pay. The total cost of the fire was close to $10 million.

Referring to the facts in the case above, discuss the following:

1. What factors occurred that contributed to the delay in extinguishing the fire?

2. Describe how the existence of commercial insurance made the recovery easier.

3. Explain the importance of executive leadership in disaster recovery plans.