Is the Stock Market "Disaster Drop" Really Inevitable?

Check our Latest products!

The newest James Bond movie “Casino Royale” is in part based on the theory that Osama Ben Laden and other terrorist groups profited from the down turn in the stock market following September 11, 2001 and other disasters. The movie suggests that a terrorist organization heavily invested in puts could cause a wholesale sell of stocks in an entire industry and profit from the ensuing options rush.

History certainly support the viability of this approach. The stock market and airline stocks dropped after 9/11. When a private plane strayed over the nation’s capital in 2005, the stock market fell as America held it’s collective breath and the tragic crash of a private plane into an apartment building in New York City was followed by another drop in the market that only reversed when it became clear that the crash was merely an over publicized accident.

While the drop in the stock market after 9/11 was unavoidable, the drops following these non-terrorism events was NOT inevitable. All these events resulted in a business and stock market panic that many “experts” have called both unpredictable and unavoidable.

These “experts” are wrong. To avoid being part of that statistic, you must “Be D.I.S.A.S.T.E.R. R.E.A.D.Y. & P.L.A.N. Each letter in the mnemonic stands for a key item in your disaster preparation checklist.

Go through each letter and take the necessary action. While this is not something you will complete in an hour, you do need to start now–long before any disaster. When you can check all these items off your list, you will be as prepared as possible for any disaster that may come your way and your business will survive.

Let’s start with D.I.S.A.S.T.E.R.:

D is Detect

Detect your own vulnerabilities and those of your community. You have geographic vulnerabilities and competitive vulnerabilities. You also have emotional vulnerabilities. The stock market dropped after the capital sirens sounded because those making the trades failed to detect their own fear of terrorist attack. If you identify your fear and prepare to respond calmly and effectively, you now have a competitive advantage.

Detect your community’s needs too. Consider how your business can help. If so, you’ve just detected a unique advantage you can offer to the community in the event of an emergency.

I is In Charge

Every community has one person in command in case of a disaster. That person, the “incident commander,” has a set of responsibilities to delegate that filters down through an established structure. Find out who is in that incident command position now and ask how you could help become a part of that structure. If you wait until disaster strikes, your offers of help may be too late. Do it now. The use of the Incident Command model also helps prevent “panic selling” by filtering all decisions through one person.

S is Safety

Know where your safety vulnerabilities are. Will the potential terrorist attack directly affect you or your place of business? If you were to lose power or cellular phone service, how will that affect your business? Be prepared. If you own stock, you will feel vulnerable. But are you? Ask yourself, would a successful attack really affect the stock price in the long term.

A is Assess

Assess your situation–either your current one or the potential one during a disaster. If keeping your business open is not safe, or if your employees have urgent personal or family needs during a crisis, you need to take responsibility for that and be realistic. Assess whether it is safe to continue to be open and ask yourself if your employees have needs that are outside of the business. If so, make allowances for those. You don’t have to stay open 24/7 or put yourself or your employees at risk. Letting your employees know that their personal needs are important will gain you their trust and loyalty. Track the effect the event has had on your portfolio and the companies in which you invest.

S is Support

Support works both ways. The easiest way to get support during an emergency situation is to give it as part of the support team. All emergency response managers are taught to reach in their community and make pre-arrangements for the resources they need. These are called mutual aid agreements. Approach the emergency response manager and say, “I can provide you the following things. Will that be of help?” You will most likely get a yes, especially if you do this ahead of time. You will be written into the county’s plan. Be prepared to deliver whatever you promise. An advantage to you is that when you have a need, you are already known to the people with the power. And since you’ve already detected what kind of support you’ll need, you can ask for it in advance.

T is Triage

Triage means to do the most good for the most people with limited resources. Even if you’ve been the best person and the most helpful to your community, if your needs are minor you will have to wait longer than someone whose needs are greater. The person with the greatest need will get help first–no matter when they ask. Adopt the same principle with your business resources. If you own stock, see how the businesses they represent have been effect by the completed attack. Once you have made this analysis, repeat your standard due diligence for each stock. Then and only then will you know what to keep, what to buy and what to sell. Even though it may be a hard decision to make, you are really benefiting your portfolio.

E is Exit Strategy

If you are called to evacuate, go. Orders to evacuate usually come in stages. When they tell the group you belong to that it’s time to evacuate, heed the warning–it’s unsafe to stay. Rest assured that businesses that are prepared and forced to evacuate in most cases will reopen when it’s safe to do so.

R is for Recovery

Recovery begins with your disaster planning–long before the event occurs. Deal with your fear, get counseling, do what it takes to recover.

And now for R.E.A.D.Y:

R is for Rely

Now that you’ve been through the disaster plan, you need to be ready within your own business. What do you rely on? What do the companies in your portfolio rely on? Are there key employees or key procedures that only exist in employees’ heads? Write them down now. You and the companies you invest in must keep a copy at business and another off-site at a safe location. Those processes are important. Are you heavily invested in a particular business, geographic area or business sector?

E is for Educate

If you become part of your community response, you will need to know how to access people and how they can access you. How are they going to identify themselves? How do you collect payment? Cash or a trust system? Develop a written procedure. Make sure your staff knows exactly what they should do. They’ll take comfort in knowing what procedures to follow in the event of an emergency. Do the companies in your portfolio have a written plan? Learn what that plan entails.

A is for Appreciate

Appreciate your employees every day. Not only will you experience a more pleasant workplace, but in a time of crisis your employees will pay you back with their loyalty. In the face of a disaster, continue to appreciate your employees–particularly the ones who came back. But still appreciate the ones who couldn’t come back. Some people will have more pressing personal responsibilities than others. Find out if the companies you invest in appreciate their employees’ efforts.

D is for Drill

You have dry runs of your disaster plan. Just as you have a routine procedure for a fire drill, the companies you invest in should perform disaster drills. If they don’t, panic will set in and their mind will shut down and your portfolio will suffer. When the mind shuts down, people revert to what is familiar–the day-to-day routine they’ve always done–not what they should be doing in a disaster. The companies in your portfolio must dedicate themselves to the entire process and drill.

Y is for You

For businesses, it comes down to you–each individual and each employer. Take responsibility for all your actions and your investments. Don’t be part of the selling panic. Plan ahead and be part of the recovery solution.

Finally, let’s P.L.A.N.

P is for People

The first step in making your plan is to take an inventory of who will be participating. If you are making a plan for your family, consider who will be with you and how to prepare each person for the disaster. If you have small children, you may need to talk to them about what is happening, and reassure them that everything will be all right.

Also, what tasks will each person perform? If you’re facing a hurricane, who will board up the windows? Who will make sure the dog gets into the car if you evacuate? Each person should have a function in ensuring the safety and security of everyone else. Even children can participate. A small task might make a child feel more purposeful, like a critical part of the plan, rather than a helpless bystander. So if your children are old enough to take part, put them in charge of the extra batteries or have them fill the water bottles.

Likewise, if you are making a plan for your business, consider who will participate and what role each person will fill. If you plan to close, you need to know who will be involved in the closing decision, and how you will secure the premises. If you decide to stay open, your plan is even more important because you will be responsible for the safety of your employees.

Other people in your plan include contacts outside the disaster zone. You need someone to serve as a message board for communication. Then everyone involved in your plan can call in and let the centralized person know they are safe and their location. If you decide to leave, you need someone out of state whom you can stay with.

Finally, consider what outside facilities you are going to rely on. If you have unanticipated emergencies, who are you going to call? Are they going to be able to get to you? If your entire plan is to call 911 and get assistance, you need to realize that in a disaster situation they probably won’t be able to assist you for seventy-two hours. In this case, you will need to reassess your plan.

L is for Leave

Next, consider leaving the disaster zone. When and how will you leave (evacuate)? Where will you go and how will you get there? Will your family or fellow evacuees meet before you leave or when you arrive at your destination? The decision to leave makes communication and your contacts outside the disaster zone critically important. How will you communicate while you evacuate and after you arrive at your destination? What are you going to do if you get separated? Operate on a buddy system; no one should be left alone. When you and your family or business associates become mobile, make sure everyone knows the plan. Then, if your plan fails, you need an alternative.

If you are not leaving, consider where will you stay and how will you stay safe. Will you all stay together or shelter in the place you are when the disaster strikes? Will you send some of your family to your evacuation destination while others stay? All these factors need careful consideration and planning.

A is for Anticipate / Adapt

Unfortunately, in a disaster situation, nothing always goes as planned. So anticipate plan failures and plan for the “what ifs.” This is a chance to brainstorm. Make a list of all the possible failures. What if the phone lines go down? What if your basement floods? What if you get caught in traffic? No “what if” is too extreme to consider. The only possibility that you can’t plan for is the one you didn’t think of.

Once you’ve brainstormed possible failures, you need to adapt to each one with an alternate plan. If the phone lines go down, can you use your cell phone? If your basement floods, can you seek shelter with a neighbor or in some other nearby location? If you get caught in traffic, will you have enough gas to evacuate successfully?

What if something happens that you didn’t anticipate? If you go through this process enough times and really work on your plan, then you will be able to adapt to the failure. You’re mind will be primed and you’ll be ready to think of alternatives, even if the failure isn’t anticipated beforehand. Anticipate that events will not unfold as planned. Be flexible. Adapt to the unexpected.

Remember: “Sempier Gumby” – “Always Flexible”

N is for Needs

In any disaster situation, you must be ready to go for seventy-two hours without assistance. Those first seventy-two hours are critical because emergency relief will be overwhelmed during that time. Fire departments, police, and medical personnel won’t have the resources to get to everyone.

After hurricane Katrina, many people died simply because they ran out of food and water in those critical three days. However, four days before Rita hit Texas, the community leaders were on the television warning people that if they decided to stay, they needed to be prepared for seventy-two hours because no one would be able to help them.

When working on your plan, make sure you account for all your needs for seventy-two hours. Be prepared to be self-sufficient during this time. Each one of your family members must have personal identification and photos of all others in your plan, two quarts (liters) of drinking water, seventy-two hours of food, seventy-two hours of clothes, two weeks of medications, two weeks of toiletries, a supply of cash (credit/debit cards can’t be verified if phone lines go down), a flashlight, a portable radio, batteries, a signal whistle, white/silver duct tape, a first aid kit, prepaid calling card, and a list of emergency phone numbers.

These needs should be kept in a rolling backpack that stays with the owner. Keep this bag, your Disaster Pack, readily accessible. And if a disaster is imminent, keep the Disaster Pack with you at all times.

Are You Ready?

Once you have taken an inventory of your family, made arrangements for evacuation, anticipated and accommodated failures, and gathered all your needs for seventy-two hours, you need to review and practice your plan each year.

Hurricane situations are timely because of what happened on the gulf coast, but regardless of what disaster situation you face you must have a plan. In a tornado, tsunami, terrorist attack, or whatever, you can use these steps to make your disaster plan and ensure the safety of your family and your business.

Take Action

Nothing you do can prevent a disaster. With proper planning, however, your healthcare facility can become “D.I.S.A.S.T.E.R. R.E.A.D.Y.” and “P.L.A.N.” Identify your strengths and weaknesses. If the worst happens, don’t panic. You already know the drill and what is expected of you. Be ready to do your best and activate your plan at the drop of a hat, ready to help those with the greatest need.

write by morris

Leave a Reply