Hurricane preparedness for oil & gas industry policyholders
From updating staff records to running table-top simulations, review the steps policyholders need to take before extreme weather hits.
With a potentially record-breaking hurricane season underway and the most severe portion of it a few months out, now is the time for oil and gas policyholders to ensure they are prepared for extreme weather events. This includes taking the usual precautions businesses deploy, but as with most things post-pandemic, there are a few new points to reflect on.
“We also have to take into consideration that the world looks very different today than it did last hurricane season,” says Jim MacDonnell, director of crisis management and business continuity at BDO USA LLP. “More people are vaccinated and more are used to working from home. Those day-to-day complications of operating in the COVID environment are more stable.”
He notes that despite this, some things remain the same. For example, knowing how to manage a distributed workforce will continue to be critical.
“When everyone was in the same office, you just had to worry about that backup generator. When they are working from home, you have no control over when those services are restored,” he says. “Having discussions about personal preparedness was beneficial to companies last year, and it will be again this year.”
Further drawing from the year prior, MacDonnell explains companies that responded most effectively to 2020’s challenges were those that focused on staying proactive and making fact-based decisions.
“Companies that were distracted by the newest, bright shiny object in the media or have analysis paralysis tend to struggle to the greatest extent,” he adds. “The grace period for COVID woes is done at this point. Customers, boards and other stakeholders have expectations that companies can operate effectively in this environment now.”
What follows are tips on how oil & gas companies can prepare for extreme weather events:
• Run simulations: Go through the trajectory of a hurricane event, starting with the notion that the incident will be short and will offer several days of advance notice but will still carry uncertainty. What are the criteria to shut down operations? How long will you wait? Evaluate all of these decisions.
“Companies can fall into the trap of waiting too long to shut down,” MacDonnell cautions. “The flip side of that is being too early, the hurricane ‘turns off’ and you lose productivity.”
With these in mind, continue through the height of the event, where communication with staff could be limited or non-existent.
“Be sure to walk through all the nuances and decision-making criteria,” he stresses, adding, “Exercises give you the luxury of time; a hurricane isn’t inching closer.”
• Administrative updates: Have any employees changed address, deciding to reside away from their home of record? Have any long-time employees moved since being hired but maybe failed to update their records with HR? Make sure to have a thorough accounting of where workers are now. As part of this, consider any new risks they might face as a result of relocating.
• Communicate with vendors, stakeholders: Reach out to business partners and third-party vendors to discuss any changes that were put in place due to the pandemic. Of particular importance is to talk about any changes in coverage that might have occurred.
• Continuity plan scrutiny: For larger networks of companies, a focus on shifting and mitigating risk among business partners is coming into sharper relief. There are also heightened expectations around continuity planning as well as contract terms.
“It is now the cost of business. You have to demonstrate you have these capabilities. If you can’t deliver in an uncertain volatile world that will affect your position in the market” MacDonnell says. “More and more the expectation is: ‘We are relying on you, so you better show up on game day and deliver the product or service we expect.’”
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