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The Impact on
Business Continuity
of Buncefield and
Eyjafjallajökull

      David Alexander
      University College London
Redundancy
The ingredients
of resilience


   Adaptability                   Attitude

                  Participation

                                     ...and
                                   communication
CRISIS

                         OPERATIONS
REPUTATION             (ACHIEVEMENTS)

 Perception                Concrete
                         developments
                           • positive
    Communication
                          • negative
Crisis management as a combination
     of management of events and
       management of reputation
               ACHIEVEMENTS
          failed               unknown, hidden
      succeeded                known, publicised

         positive              perceived
        negative               not perceived
                 REPUTATION
Inside influences                 Outside influences
Resilience of organisation      Resilience of system
Crisis management capability      External factors:
                                     "force majeure"
Civil contingencies

 Business     Civil       Civil
continuity protection   defence

          management
           Resilience
     The risk environment
Buncefield
The fire burned for
                  three and a half days




Explosion and fire at an oil storage depot,
Buncefield, Hertfordshire, United Kingdom
  Sunday 11 December 2005, 0602 hrs
Oil storage depot
  Business park       (22 tanks)


                           Entrance
                           to site



                           Motorways
Residential
   area
The effects of the explosion extended 3 km
with damage to 1000 houses and 300 companies.
Interruption of traffic circulation, of
 commercial activities for 300 firms,
  and to the lives of 3,500 people.
Effects on the nearby commercial area.
According to a study by the London
   Chamber of Commerce, started in
    2003 and updated ever since:-

• 80% of commercial companies that do
  not have a well-structured emergency
  plan risk bankruptcy within one year of
  suffering a major incident or disaster

• 90% or companies that suffer major
  losses go into liquidation within
  two years
• 43% of companies that suffer the
  effects of disaster never recover their
  market position
• In the United Kingdom, half of
  commercial companies have no
  contingency plan (data unchanged
  from 2003 to 2006)
• in the United Kingdom one company
  in 500 per year suffers a disaster.
More than 85% of the largest companies
       depend totally or largely on
         information technology.
  On average, a company will lose one
  quarter of its daily earnings by the
   sixth day in which it cannot access
its IT system. The figure rises to 40%
    for banks, financial service firms
      and public service companies.
At Buncefield three
multinational companies
suffered serious effects,
but 8000 jobs were
saved by having
business continuity plans
Business Continuity Management: Buncefield and Iceland
Northgate Ltd
administered
the payment
of salaries
for 209
clients
....and it was
almost
Christmas....
Business Continuity Management: Buncefield and Iceland
Northgate started work again the next
day from other sites, including employees
    working from home by Internet.
Business Continuity Management: Buncefield and Iceland
The local municipality, Dacorum, had a
business continuity plan, which it used in
    parallel with its emergency plan.
Permanent emergency plan
                                Aftermath
Monitoring Strategic,
prediction tactical & operational
& warning planning

                   Business continuity plan

                             Recovery and
                            reconstruction
                                  planning
      Disaster
Eyjafjallajökull
Volcanic Ash Aviation Hazard

• from 1935 to 2003 102 aircraft
  encountered significant
  concentrations of volcanic ash
• ash is not detectable by
  weather radar as it is dry
• ash can reach cruise
  altitudes in five minutes
• stratospheric ash concentrations
  may remain at circa 20,000 metres.
Eyjafjallajökull eruption of Apr-May 2010:
• started 20 Mar 2010, ended 22 May
• volcanic explosivity index VEI 2-3
• Vulcanian eruption style
• maximum plume height 13 km
• ash had 58% silica concentration.

Eyjafjallajökull eruption of 1821-3:
• started 19 Dec. 1821, ended Jan. 1823
• central vent, subglacial explosive eruption
• volcanic explosivity index VEI=2
• 4 million m3 of tephra emitted
Impacts of Eyjafjallajökull on business

• US$1.7 billion losses for civil aviation

• air delivery of perishables and
  medical supplies knocked out

• business travel down, meetings cancelled

• passengers left stranded everywhere

• imbalance created in
   tourism and business travel.
Implications of Eyjafjallajökull for business

• potential civil aviation mass bankruptcy

• need for regulation and integrated
   planning for transportation in general

• liability issues for transportation
   (EU regulations)

• alternatives to travel, meeting
  and delivery need to be studied
  (create redundancy).
Conclusions
• two big unanticipated (but
  not improbable) events
• longer or worse disaster of similar
   kind would equal threshold crossed
 to much more profound implications
• use scenarios to explore
  implications and identify needs
• in crisis radical changes needed
   in ways of doing business
• organisational learning.
Environmental     context
      Latent         organisational
            Active
          Active context
                            context
        organisational
           (members'
             tools)
           context

   Practical
                  Knowledge
  experience




                         After: Argote and Spektor (2011)
d.alexander@alice.it
www.emergency-planning.blogspot.com

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Business Continuity Management: Buncefield and Iceland

  • 1. The Impact on Business Continuity of Buncefield and Eyjafjallajökull David Alexander University College London
  • 2. Redundancy The ingredients of resilience Adaptability Attitude Participation ...and communication
  • 3. CRISIS OPERATIONS REPUTATION (ACHIEVEMENTS) Perception Concrete developments • positive Communication • negative
  • 4. Crisis management as a combination of management of events and management of reputation ACHIEVEMENTS failed unknown, hidden succeeded known, publicised positive perceived negative not perceived REPUTATION Inside influences Outside influences Resilience of organisation Resilience of system Crisis management capability External factors: "force majeure"
  • 5. Civil contingencies Business Civil Civil continuity protection defence management Resilience The risk environment
  • 7. The fire burned for three and a half days Explosion and fire at an oil storage depot, Buncefield, Hertfordshire, United Kingdom Sunday 11 December 2005, 0602 hrs
  • 8. Oil storage depot Business park (22 tanks) Entrance to site Motorways Residential area
  • 9. The effects of the explosion extended 3 km with damage to 1000 houses and 300 companies.
  • 10. Interruption of traffic circulation, of commercial activities for 300 firms, and to the lives of 3,500 people.
  • 11. Effects on the nearby commercial area.
  • 12. According to a study by the London Chamber of Commerce, started in 2003 and updated ever since:- • 80% of commercial companies that do not have a well-structured emergency plan risk bankruptcy within one year of suffering a major incident or disaster • 90% or companies that suffer major losses go into liquidation within two years
  • 13. • 43% of companies that suffer the effects of disaster never recover their market position • In the United Kingdom, half of commercial companies have no contingency plan (data unchanged from 2003 to 2006) • in the United Kingdom one company in 500 per year suffers a disaster.
  • 14. More than 85% of the largest companies depend totally or largely on information technology. On average, a company will lose one quarter of its daily earnings by the sixth day in which it cannot access its IT system. The figure rises to 40% for banks, financial service firms and public service companies.
  • 15. At Buncefield three multinational companies suffered serious effects, but 8000 jobs were saved by having business continuity plans
  • 17. Northgate Ltd administered the payment of salaries for 209 clients ....and it was almost Christmas....
  • 19. Northgate started work again the next day from other sites, including employees working from home by Internet.
  • 21. The local municipality, Dacorum, had a business continuity plan, which it used in parallel with its emergency plan.
  • 22. Permanent emergency plan Aftermath Monitoring Strategic, prediction tactical & operational & warning planning Business continuity plan Recovery and reconstruction planning Disaster
  • 24. Volcanic Ash Aviation Hazard • from 1935 to 2003 102 aircraft encountered significant concentrations of volcanic ash • ash is not detectable by weather radar as it is dry • ash can reach cruise altitudes in five minutes • stratospheric ash concentrations may remain at circa 20,000 metres.
  • 25. Eyjafjallajökull eruption of Apr-May 2010: • started 20 Mar 2010, ended 22 May • volcanic explosivity index VEI 2-3 • Vulcanian eruption style • maximum plume height 13 km • ash had 58% silica concentration. Eyjafjallajökull eruption of 1821-3: • started 19 Dec. 1821, ended Jan. 1823 • central vent, subglacial explosive eruption • volcanic explosivity index VEI=2 • 4 million m3 of tephra emitted
  • 26. Impacts of Eyjafjallajökull on business • US$1.7 billion losses for civil aviation • air delivery of perishables and medical supplies knocked out • business travel down, meetings cancelled • passengers left stranded everywhere • imbalance created in tourism and business travel.
  • 27. Implications of Eyjafjallajökull for business • potential civil aviation mass bankruptcy • need for regulation and integrated planning for transportation in general • liability issues for transportation (EU regulations) • alternatives to travel, meeting and delivery need to be studied (create redundancy).
  • 28. Conclusions • two big unanticipated (but not improbable) events • longer or worse disaster of similar kind would equal threshold crossed to much more profound implications • use scenarios to explore implications and identify needs • in crisis radical changes needed in ways of doing business • organisational learning.
  • 29. Environmental context Latent organisational Active Active context context organisational (members' tools) context Practical Knowledge experience After: Argote and Spektor (2011)