Home > Articles > Security > Network Security

  • Print
  • + Share This
Like this article? We recommend

Even "Undamaged" Companies Can Go Broke from Disasters

Damage to buildings and infrastructure has an adverse impact on a business, to be sure; however, research over the past decade demonstrates that a business need not suffer physical damage from a disaster in order to suffer business losses and subsequent failure. Many businesses that experience no physical damage, but whose customers or suppliers suffer loss, are unable to continue in business.

In such cases, such "undamaged" firms often find themselves without suppliers and/or customers for their products and services. These firms are victims of what has been referred to as "ruptured relationships"—relationships that were essential to the performance of business functions, and now gone by virtue of the disaster.

We have seen this experience firsthand. In the aftermath of Hurricane Ike, which struck on September 14, 2008, two competitive local exchange carriers in the Houston, Texas area struggled financially because their customers for local phone lines were also affected. Many customers simply stopped paying their bills, which created enormous financial hardships for both companies. One weathered the storm, both literally and figuratively. The other filed for Chapter 11 bankruptcy only two months later.

Relationships among individual components of a system are critical. Following a major disaster, it's not uncommon for local businesses to lose customers, who move out and may or may not be replaced. If they are replaced, it's often by people with different preferences or buying habits. Even those who stay in the affected area often spend their available money to repair or replace their homes, and not necessarily to buy new sporting equipment or meals in expensive restaurants. Consider the examples of Northridge, California and Homestead, Florida. Both sustained disasters, the former to an earthquake, the latter to a hurricane. In both cases, many residents moved away permanently following the disaster and were replaced by people with lower incomes, different consumer preferences, and different skills. This situation changed both communities permanently, resulting in long-term economic, political, and social effects stemming from altered relationships within the community system.

Another reason for losses to these "undamaged" companies stems from a phenomenon referred to as tight coupling—a systemic relationship between two or more components in which there is little or no slack in the relationship. A simple example is a just-in-time (JIT) relationship between a supplier and a manufacturer. Organizations that rely on JIT for delivery of goods and services from a single supplier are efficient when everything works according to design. However, when a disaster slows or interrupts delivery, both parties suffer, along with potential customers who must find a replacement or do without the required services.

So what does this mean to the corporate planner? As an example, it might mean some new expenses for warehousing in lieu of JIT. In disaster-prone areas, warehousing might make more sense than just-in-time delivery because it provides requisite slack in the production (or distribution) system. Production costs go up by the cost of warehousing, but are offset in a disaster by having goods available and being able to continue to do business. Many regional, national, and international economic activities have become increasingly tightly coupled. And the only way to really be able to justify expenses completely is to have accurate information regarding the probability of a natural disaster occurring.

Many companies and private organizations these days proceed on the underlying assumption that reconstructing a building flattened by a disaster constitutes recovery. In truth, this is only part of the task. Serious recovery planning means also looking at how to re-create the relationships that make business systems viable.

Success boils down to finding, screening, interpreting, and presenting data in order to garner management support and funding of the initiative. There are places where such data is available for those inclined to look for it. Insurance companies are one good source for information about probabilities of disaster. The downside to depending solely on such providers is that they tend to think strictly in actuarial terms (such as the cost of rebuilding) and don't usually concentrate on fractured business or customer relationships. One possible exception to this rule might be some providers of business-interruption insurance.

Another option is to look for places where people on the federal, state, or local payrolls have done part of the job (and have therefore borne part of the expense). In previous articles, we've mentioned the Pacific Disaster Center (PDC) as "content central" for information combined with the tools to make that information understandable and meaningful. The PDC literally receives terabytes of data as raw material from myriad state, federal, and worldwide organizations. In its years of existence, the PDC has devised tools to draw useful conclusions from that data.

What the PDC hasn't really done yet is apply this data to private-sector organizations that seek to "go the extra mile" in contingency planning. Energy companies come to mind. We've all heard the scary stories. A hurricane hits a major refinery or offshore drilling platform, and suddenly we're all paying $6.00 U.S. for gas. Many energy companies today feel the public pressure to look into some hard probabilities of this possibility occurring, and what can be done about it. As a first step, the ability to visualize data streams from sensors, satellites, buoys, and other sources is time-consuming for the recovery planner—but absolutely compelling when completed and presented to policymakers.

Consider the diagrams in Figure 2. Pictures are compelling and immediately understandable. Cartoons and animations don't stand alone, however. To be really compelling, they must be based on actual data from recognized experts.

Figure 2

Figure 2 Diagram courtesy of the Pacific Disaster Center.

  • + Share This
  • 🔖 Save To Your Account

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020