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Recovery: Disaster and Crisis
Disaster recovery has become an important aspect of a company's strategic plan. The main reason for an increased concern can be attributed to the fact that integration and alliances at an international level have increased so that there are more linkages and higher interdependencies that have increased the exposure of people to international risk. This also means that companies are more prone to be affected by a force majeure impacting a vendor located in another part of the world. Some cases that have recently come to light in the spate of the Japanese Earthquake are the impact on General Motors leave alone Nissan. Moreover, giants such as Sony have been impacted in the wake of natural disasters in Thailand where a Tsunami impacted the Integrated Chip provider, making it difficult for Sony to continue to manufacture its products.
In light of these vulnerabilities it becomes increasingly important for companies to properly plan contingencies and arrange for suppliers who are kept as a backup in order that their operations are not impacted. As the world is moving towards ideal inventory conditions such as Just-in-Time inventories and single source suppliers, the occurrence and the frequency of natural disasters has made it imperative for firms to plan out their risk and aim for optimal disaster recovery solutions.
Much has been studied about the impact of disasters and how some companies have failed or have been a success in this regards. The first study that shall be evaluated here is titled, 'Service impact analysis using business continuity planning processes' by Stewart Wan (Wan, 2009) who states that in the field of IT there are problems that are associated with the fact that experts are relied on heavily to help in business continuity planning and there seems to be no formal framework for conducting this business. The study also states that IT management companies drive services very rapidly, going towards a fast boom, which entails sets of problems to do with burgeoning human resources which might lead to issues in management. In such a scenario companies tend to overlook vital components such as business continuity planning, as these are generally relegated to the last, as the probability of such an event occurring is marginal.
The study also indicates that in the IT sector, the new challenges in the field of disaster recovery seem to be the retention of workers who are experts in their fields as well as providing a detailed information base that can help in countering any such attacks.
According to the paper (Wan, 2009):
"BCP, it has been argued, forms part of a wider planning structure and process in business operations. In current business-aligned IT operations, the continuity plan needs to be integrated with ITSM if an organization is going to be able to manage fault realization and return to normal business operations. The materials presented in this paper aim to help organizations to better understand the inter-relationships of their underlying infrastructure and business service offerings. Traditional BCP and service continuity process provide preventive and recovery solutions to reduce risks in business operations." (Wan, 2009)
Another paper (Scholtens, 2008) indicates the disaster and crisis management in Netherlands and it says that the collaboration between administrative and operational management is important. According to the research conducted in this paper it is visible that when the disaster actually occurs the collaboration works. While the article indicates that there is a lot of emphasis on centrally managed collaboration, there are conclusions drawn that coordination in times of acute emergency cannot always be reached. The article goes on to indicate that while collaboration does not work in times of disaster, it does manage to aid in planning better contingencies as a wide view of the scenario can be observed and various aspects of the event can be looked at from various perspectives. It yields even better results when the team is multidisciplinary as it has wider experience in various functions of the business.
Considering in particular the case of Netherlands, crisis management is the responsibility of the local government, however participation from various agencies is based on their voluntary participation in the process.
Based upon disaster recovery planning the paper, 'Information Technology Disaster Recovery Plan: Case Study' (Omar, Alijani, & Mason, 2011), states the importance of computerized data to businesses today and indicates that disaster recovery planning is equally important for businesses to continue working. This paper evaluates the case of Houston Community College HCC) which implemented a disaster recovery plan after hurricane Katrina. The college lost important data in the wake of the disaster, and the study indicates that it is essential in planning recovery to identify critical data and have a clear recovery plan.
In the case of HCC, the plan was a success as after another hurricane, Ike hit Houston, the implementation worked and the college continued to function without fail. Quoting the paper (Scholtens, 2008):
"Implementation of the Disaster Recovery Plan using Oracle Data Guard to the Cyrus One Data Center ensured that the goal to replicate data and IT processes and procedures of critical applications was successful." (Scholtens, 2008)
Another article, (Jones, 2011) talks about Records and Information Management (RIM), and how a lot of companies while having business continuity management and plans, do not have proper data recovery procedures. This article talks about how RIM impacts an effective BCP and what aspects should be looked into in accordance with risk mitigation. The paper is a clear guideline as to how to prepare a BCP and what factors to look into.
Looking at disaster recovery and preparedness for the future, Naill Momani indicates that (Momani, 2010):
"It is important to understand the causes of business losses such as human, technology failures or natural and man-made disasters. When we understand the sources of these risks and their potential impacts we could advise strategies to prevent or reduce them to an acceptable level which could be used to prepare effective business continuity plans." (Momani, 2010)
Having analyzed all these theories and statements in light of the literature reviewed, Nissan has recently recovered from the disastrous earthquake and in its wake after a year the company has started to come out of the crisis. According to a report by Greg Keenan, in the article titled 'After a year of disasters, Japan's auto sector fights back' states that Japanese automakers such as Nissan suffered severe losses but despite the setbacks the Japanese industry is back to its value systems and its roots of continuous improvement and has taken all measures to gauge the impact of the crisis and to objectively analyze the disaster's impact.
The industry, although not prepared for a disaster of this severity has learnt its lessons and is now recovering from the aftershocks by planning in detail the alternate solutions in the event of such an event occurring again.
Nissan along with other automakers faced a severe dearth of microcontrollers and essential but very small component cars, the shortage of which woke up people to the necessity of this vital component, but by that time disaster had struck and firms had to cut production to cope with the shortage of microcontrollers.
Some of the key learning's from this case have been indicated as follows:
"The twin disasters of the earthquake and the Thailand flooding have given them a much more extensive and intricate knowledge of their supply base, an understanding that was previously confined to direct suppliers but now extends down to the third- and fourth-tiers. Executives hope this means that after the next earthquake, they won't have to spend weeks or months finding out what part comes from which plant located where. They are requiring some suppliers to keep slightly more inventory on hand than they do now. They will also insist that…[continue]
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