Making Sure Disaster Plans Aren't Disasters
It's like practicing a fire drill and discovering that the fire alarm doesn't work.

Since the early 1990s, Countrywide Financial (NYSE:CFC - News) kept a well-honed and updated business continuity plan on how to keep running in the face of a disaster. The $10.5 billion company based in Calabasas, Calif., issues, buys and services mortgages for clients nationally. It was ahead of the curve in prepping for such events.

But it didn't take long for soft spots to develop. During a disaster drill this year, the company found it lacked the redundant networking needed at one location to keep data safe. Such safeguards were in place. But they had been discarded during a planned building move that was later shelved. The firm kept its offices at the site. But the network redundancy was gone, a fact that went undiscovered until the drill alerted managers.

The moral of the story? Firms with disaster plans find out if they work only if they drill regularly. It's a lesson that more managers are absorbing as U.S. companies prepare for unnerving events like bird flu, terrorism and natural disasters. Hurricanes, pandemics and al-Qaida aren't the only problems. Fires, hacker attacks and criminal activity also sideswipe firms.

Those who have been through the mill say the key thing to remember is that follow-through is crucial to success in business continuity. Plan and then test the plan. That will show what's missing and help people get familiar with recovery steps.

"It's very good to start with nothing and create something," said Phil Bigge, Countrywide's vice president of business continuity. "But the hard part for any company is to maintain current business continuity plans." Worries from Y2K to 9-11 to Hurricane Katrina and a possible avian flu pandemic are driving home the need for preparedness -- so much so that good continuity plans are de rigueur in some niches.

"Business leaders are starting to get it: 'If I'm going to be competitive and meet the requirements of my stakeholders, to deliver a profit, I have to think through these things. Because any one could bring my company to a halt,'" said Rob Dyson, leader of consulting firm Accenture's (NYSE:ACN - News) business continuity practice in North America.

Larger firms typically do some kind of continuity planning, Dyson says. Smaller ones have a ways to go.

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