Survey Finds U.S. Companies Lack Emergency Plans

Sept. 13, 2002
By Jim Krane The Associated Press

NEW YORK (AP) - After a year of wildfires, corporate scandal, war and terrorist attacks, almost half of large U.S. companies still have no formal plans to deal with a crisis - even though most believe they're at risk, says KPMG LLP, the accounting and tax firm.

These findings, from a survey of 135 companies with more than $500 million in annual revenue, fly in the face of conventional wisdom that said the Sept. 11 attacks had prodded firms to prepare for calamities, said Stuart Campbell, who heads KPMG's U.S. risk consultancy.

"These numbers surprised us, considering that how well you prepare for a crisis of any magnitude can make or break your organization in the marketplace if a major event does occur," Campbell said.

Among companies that prepare such plans, like New York-based Kroll Inc. or London's Control Risks Group, Sept. 11 spawned a slew of new contracts from companies that had all but forgotten about security.

"Most of them were drastically underprepared," said Jeff Schlanger, Kroll's chief of security services. "Their preparation ranged from nothing to a plan that hadn't been exercised for years."

At a cost of $10,000 to hundreds of thousands of dollars, Schlanger said, Kroll's consultants examine everything from a company's security camera placement to its guard rotation schedules, while organizing a crisis management team and a written plan.

Although fears of terrorism persuaded companies to hire risk consultants, Schlanger said the preparedness plans address other more likely scenarios such as fire, hurricanes and kidnappings.

Despite the rush to action, KPMG found that 47 percent of companies it surveyed had no such plan, and one in five companies did not rate crisis preparedness as a priority.

The study also found that 80 percent of responding companies believe they could succumb to a serious breach in operations, although all but a handful were confident they could rebound.

At Control Risks Group, a company created by British special forces officers to rescue kidnapped executives, consultants have been busy helping U.S. companies who normally worry about their overseas units.

Instead, U.S. firms are tightening security at headquarters in New York or Washington, D.C., said Armando Lara, vice president of North American operations.

"It's changed very dramatically. Now there's a very heavy concern to look within the borders," said Lara, former director of the FBI's office in Colombia. "Are they a chemical or nuclear or critical infrastructure type of facility? Or are they near what you'd call trophy targets - the White House or the Capitol?"

Crisis preparedness, said Schlanger, "is like taking vitamin C for a cold. You don't know when it's going to come, but when it does you want to mitigate the effects."

The phone survey was conducted from Aug. 15 to Sept. 2 and has a margin of error of 5 percentage points.

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