State Office of Risk Management Helps State Agencies Plan,
Recover from Disaster
When Hurricane Rita hit Lamar University, Beaumont, in 2005, it was hard to tell which of the storm’s consequences was most catastrophic – the high water or the high insurance deductibles.
Because the policy stipulated a 10 percent deductible – 10 percent of Lamar’s total assets – the deductible was larger than the total damage.
“We didn’t get a red cent out of it,” says Dr. Roland Smith, who took over as the Texas State University System vice chancellor of finance just a month before the storm.
Flash forward three years. Ten days after Hurricane Ike wrecked havoc on the Lamar campus, school officials were holding a check for $10 million – the down-payment on the insurance settlement.
The difference came through negotiations and advice from the State Office of Risk Management (SORM), which allowed the school to quickly get back in business.
“They provided us the protection that was essential the second time around that restored our campuses in short order and allowed us to resume classes,” Smith says.
SORM assists Texas state agencies to protect the state’s physical and financial assets by reducing and controlling risk in the most efficient and cost-effective manner through its Business Continuity Planning (BCP) program, ensuring that essential functions can continue during and after a disaster.
SORM initiated the Business Continuity Planning program for several reasons:
- Auditor reporting
- Regulatory compliance
- Stakeholders’ demands
- Experience with an event or disruption
Undertaking a BCP program is challenging. The authors of a plan face the difficult task of identifying all the events that might cause business interruptions, anticipating their effects on the numerous business processes in the agency, and developing contingency plans to reduce the impact of the interruption – all while guiding the agency back to normal operations.
Some agencies buy insurance to limit their exposure to risks. SORM administers the Insurance Purchasing Program for state agencies, providing assistance, counsel and access to insurance for directors and officers, automobile, volunteer and property. The program allows each agency to customize its insurance policies to meet its specific needs.
Strategies for Successful Business Continuity Planning
- Commit the necessary funds, resources and time to activate a business continuity project, and understand the long-term cultural changes that will become a part of the day-to-day business.
- BCP may use change management techniques to ensure that the organization encourages a culture where all employees are sufficiently aware of everyday risks and their individual responsibility to report, manage and mitigate risks.
- A BCP program will allow you to identify what is important to your management and use that information to demonstrate value to the project, whether it’s product delivery, customer service, board member satisfaction, audits or other factors.
- When necessary, a state agency cost/benefit analysis should prepare to demonstrate the benefits of ensuring the protection and availability of those critical elements.
For more information about the SORM program, e-mail the Risk Management and Loss Prevention office or call (512) 936-2926.