International Safety and Security Conference, NY Hilton

Contact:	Len Biegel
	202.659.0279

Thursday, February 9 2006.....Len Biegel Keynote Address

GOOD AFTERNOON. THANK YOU ALL FOR BEING HERE TODAY.

I WAS IN BARNES & NOBLE THE OTHER DAY AND STOPPED TO CHECK ON THE NEW SELECTIONS IN THE MANAGEMENT SECTION - AND WAS ONCE AGAIN AMAZED BY THE INCREASING NUMBER OF BOOKS ON HOW TO BE A BETTER MANAGER, A BETTER MARKETER, A BETTER THIS, A BETTER THAT. AND ALL THE BUSINESS CLASSICS ARE THERE AS WELL - FROM PETER DRUCKER TO TOM PETERS. BY AND LARGE, SOME GOOD STUFF. HUNDREDS OF BOOKS - AND THEY ALL CONTAIN A COMMON THEME, STATED OR UNSTATED - THAT THE BEST - THEREFORE THE MOST SUCCESSFUL - COMPANIES AND PEOPLE - LEARN FROM THEIR MISTAKES. AND IN FACT THE SMARTEST ONES LEARN FROM THE MISTAKES OF OTHERS. ON THE POSITIVE SIDE THE PERVASIVE TERM IS BEST PRACTICES.

BUT - AND HERE'S THE BIG BUT - WHO CARES? AND WHO PAYS ANY ATTENTION?

THE ANSWER IS SIMPLE: NOT ENOUGH COMPANIES PAY ATTENTION TO LESSONS LEARNED EITHER WITHIN THEIR OWN WALLS OR BEYOND - AND THIS IS ESPECIALLY TRUE OF DISASTER PREPARATION.

WHO DOES PAY ATTENTION?

WELL ---------------

THERE ARE THE VISIONARIES, THE CEO'S IN THE SMALL, MEDIUM AND LARGE COMPANIES WHO KNOW THAT CRISIS PREPARATION PAYS. THEY'RE STILL IN THE MINORITY - WHILE YET OTHERS ARE IN DENIAL - LET'S CALL THEM THE AVOIDERS - THE ONES WHO SAY IT WON'T HAPPEN HERE - AND, BY THE WAY, THE EXPENSE OF CRISIS READINESS IS AN EASY EXPENSE TO CUT. AFTER ALL, NO ONE'S REALLY GOING TO HOLD ME ACCOUNTABLE - UNLESS IT HITS THE FAN.

THEN THERE ARE THE VULNERABLES - THE COMPANIES IN HIGH RISK INDUSTRIES OR HIGH RISK LOCATIONS THAT ARE SO WELL PREPARED THEY BEAT ALL ODDS AND BECOME THE HEROES WHEN A WORST CASE DISASTER STRIKES. THE MOST RECENT EXAMPLE - WHEN HURRICANE KATRINA AND THEN HURRICAN RITA STRUCK THE GULF REGION IN THE WORST NATURAL DISASTER OUR COUNTRY HAS EVER FACED.

BEFORE WE GO ON, LET'S SET THE RECORD STRAIGHT ON EXACTLY WHAT WE ARE TALKING ABOUT.

A CRISIS IS

• POSSIBLE OR ACTUAL HARM TO PEOPLE - EMPLOYEES, CUSTOMERS, COMMUNITY AT LARGE
• THREAT TO "BUSINESS AS USUAL"
• THREAT TO COMPANY AND BRAND REPUTATION
AND
• MEDIA ATTENTION-IMMEDIATE OR POTENTIAL

AND, AS WE ALL KNOW, THE CAUSE CAN BE ANYTHING FROM AN ACCIDENT, A CRIMINAL ACT, A NATURAL DISASTER OR AN ACT OF TERRORISM.

IN THE FIELD OF CRISIS MANAGEMENT, WE TRACK LANDMARK EVENTS - AND 9/11 WAS SURELY THE EVENT THAT SHOOK US TO THE CORE - WHO WOULD HAVE IMAGINED A SCENARIO LIKE THIS? IF ANY OF US HAD EVER SUGGESTED THAT THIS COULD HAPPEN OUTSIDE A MOVIE STUDIO, WE'D HAVE BEEN IGNORED. BUT THE REALITY IS THAT IT DID HAPPEN.

THE LIST OF LESSONS LEARNED IS A LONG ONE - BUT A FEW STAND OUT FOR ME - THE STRONG "WE'RE GOING TO GET THROUGH THIS TOGETHER" STATEMENTS FROM RUDY GIULIANI - A MODERN-DAY ICON FOR COMMUNICATION. AND ON YET ANOTHER LEVEL, THE NEW CONCERNS FOR BUSINESS CONTINUITY PLANNING; FOR I.T. SECURITY; AND FOR EMPLOYEE COMMUNICATION. WELL,THE LIST GOES ON, AND YOU'VE HEARD THE LIST.

IF 9/11 TAUGHT US ANYTHING, IT TAUGHT US THAT A DISASTER CAN STRIKE AT ANY TIME, ANY WHERE.

LOOKING AT THE PRIVATE SECTOR AS A WHOLE, THERE'S BEEN SOME IMPROVEMENT, COMPANY BY COMPANY SINCE 9/11 - BUT FAR TOO LITTLE., IN FACT.

NOW ALONG COMES THE GREATEST HURRICANE KATRINA - AND, IN ITS WAKE, HURRICANE RITA.

AND THERE ARE STORIES OF GRIT AND PLANNING AND SUCCESSES AMID IMPOSSIBLE ODDS.

IN THE FACE OF UNPRECEDENTED ODDS:

• ALL COMMUNICATIONS SYSTEMS WERE LOST
• LOCAL MEDIA COLLAPSED OR FLED
• LODGING, FOOD, WATER SUPPLIES WERE DESTROYED
• LOOTING AND CHAOS WERE PREVALENT, PREVENTING SOME OF THE RECOVERY. WHEN, IN THE MIDDLE OF THE NIGHT, THE RAILROADS PLACED PORTABLE GENRATORS AT THE SWITCHES, GUESS WHAT! BY MORNING, THEY WERE GONE!

AND THERE WERE GASOLINE SHORTAGES. AND IF GAS COULD BE DELIVERED TO THE PUMPS, THE PUMPS DID NOT HAVE POWER.

THERE ARE OUTSTANDING EXAMPLES OF BUSINESS SURVIVAL. I COULD GO ON FOR THE REST OF THE DAY TELLING YOU ABOUT THE HEROIC, SUCCESSFUL EFFORTS OF WAL-MART, FEDEX, UPS, HOME DEPOT, FOLGERS COFFEE, EVEN SCRAPPY,DETERMINED ORECK VACUUM CLEANERS, WITH THEIR FACTORY IN THE AREA - AND THE LIST GOES ON.

AS THE COMPANY WITH THE TOUGHEST JOB IN THE AREA, LET'S TAKE A SNAPHOT OF WHAT ENTERGY, THE ELECTRIC UTILITY SERVING LOUISIANA AND SEVERAL ADJACENT STATES, DID. MY THANKS ESPECIALLY TO ART WIESE, VP OF ENTERGY, FOR SHARING EXTENSIVE INFORMATION WITH ME.

HOW AND WHY DID THE PUBLIC UTILITY, ENTERGY, NOT ONLY CONTINUE TO OPERATE FROM THEIR BACKUP OFFICE AND TAKE ON THE MASSIVE JOB OF RESTORING POWER TO A CRIPPLED COMMUNITY?

WELL, THEY'VE HAD LOTS OF PRACTICE IN SMALLER THOUGH SIGNIFICANT DISASTERS - AND THEY HAVE A CULTURE OF LEARNING - LEARNING FROM THEIR OWN EXPERIENCES AND THAT OF OTHERS - BECAUSE THEY ARE AMONG THE VULNERABLES.

THEY HOPED FOR THE BEST; AND PREPARED FOR THE WORST WITH:

• A DESIGNATED COMMAND CENTER AT THEIR TRAINING FACILITY IN JACKSON, MISS
• A STOCKPILE OF SPARE PARTS AND REPLACEMENT EQUIPMENT.
• ELABORATE CRISIS PLANS. UNLIKE GOVERNMENT, THEY DRILLED - JUST LAST APRIL - FOR A CATEGORY 5 HURRICANE HITTING NEW ORLEANS.
• DETAILED BUSINESS CONTINUITY PLANS.
• COOPERATION AND SUPPORT AVAILABLE FROM OTHER UTILITIES ACROSS THE COUNTRY.
• ALL OF THIS BASED ON AND FINE-TUNED FROM EXPERIENCE.

AND THEN KATRINA STRUCK

PEOPLE CAME FIRST

• THEY MADE A COMMITMENT THAT ALL EMPLOYEES WOULD BE FOUND
• THEY GUARANTEED EVERYONE A PAYCHECK, FULL BENEFITS AND A PLACE TO LIVE
• THEY PROMISED THAT NO EMPLOYEE WOULD BE PUT IN HARM'S WAY
• THEY MADE ASSISTANCE AVAILABLE FOR EVERYTHING FROM TEMPORARY TRANSPORTATION AND FINANCIAL AID TO STRESS COUNSELING, PRESCRIPTION REFILLS, REPLACEMENT CLOTHING, TEMPORARY FURNITURE, AND HELP IN FILING INSURANCE CLAIMS
• AND IN THE DAYS FOLLOWING, DAWYNE LEONARD, THEIR CEO, TOURED EVERY OUTPOST - FROM TEMPORARY OFFICES TO COLLAPSED POWER LINES - TELLING EVERY EMPLOYEE, FIRST HAND, BOLSTERING MORALE IN EVERY CORNER.

THE ENTERGY BAKER'S DOZEN OF LESSONS LEARNED IS WELL WORTH HIGHLIGHTING - AND HERE I AM GOING TO BREAK THE RULE OF KEY MESSAGES - THIS IS SO IMPORTANT.

1. IN A CRISIS, SPEED IS NOT EVERYTHING. SPEED IS THE ONLY THING.
2. CREATE DETAILED COMMUNICATIONS PLANS COVERING ALL KINDS OF CRISES - AND DRILL THEM.
3. HAVE A PRE-DETERMINED, PRE-EQUIPPED COMMAND CENTER. AND GET YOUR FIRST TROOPS THERE FAST.
4. MAKE YOUR OWN ORGANIZATIONAL DECISIONS ON ISSUES LIKE EVACUATION. DON'T WAIT FOR GOVERNMENT TO ACT - THAT MAY BE TOO LATE.
5. ENFORCE "ONE VOICE" COMMUNICATIONS.
6. ASSUME ALL NORMAL COMMUNICATIONS METHODS WILL COLLAPSE; HAVE BACK-UPS READY.
7. TOLL-FREE LINES AND KEY CELL PHONES NEED OUT-OF-REGION AREA CODES.
8. HAVE LINES OF AUTHORITY AND APPROVAL PROCESSES SET BEFOREHAND.
9. UNDERSTAND THAT EMPLOYEES - NOT CUSTOMERS - ARE YOUR MOST IMPORTANT AUDIENCE.
10. ANTICIPATE SIGNIFICANT EMOTIONAL STRAIN.
11. GOOD RESPONSE AND GOOD COMMUNICATIONS GO HAND IN HAND - IF ONE FAILS, THEY BOTH FAIL.
12. TAKE CALCULATED RISKS - ESPECIALLY IN DEALING WITH THE MEDIA. ABANDON YOUR CONSERVATISM.
13. LEARN FROM YOUR MISTAKES.

HOW AND WHY DID THEY DO ALL OF THIS? AND WHY DID IT WORK?

WELL, BY THE NATURE OF THE COMPANY AND WHERE THEY ARE, THEY KNEW WHAT A HURRICANE COULD DO. SO THEY TOOK THE WARNINGS SERIOUSLY AND HAD A PLAN AND AN INFRASTRCUTURE IN PLACE. AND AGAIN, PEOPLE CAME FIRST. THEY KNEW FROM THE HURRICANE IVAN EXPERIENCE THAT EVACUATIONS CREATE BIG TRAFFIC JAMS AND PANIC. ENTERGY HAD THEIR EMPLOYEES AND FAMILIES EVACUATE NEW ORLEANS 24 HOURS BEFORE THE STATE AND CITY-ORDERED AN EVACUATION.

SO WHAT DID ENTERGY AND ALL THE OTHERS HAVE IN COMMON?

THEY HAD WELL-TESTED PLANS FOR EVACUATIONS, COMMUNICATION AND CONTINUITY.

THEY HAD SWIFT, DECISIVE LEADERSHIP WITH LITTLE TOLERANCE FOR RED TAPE. AND, WHEN ONE SOLUTION OR ACTION DID NOT WORK, THEY ALWAYS HAD PLAN B AND EVEN PLAN C.

A DETERMINATION TO FIND AND HELP EMPLOYEES AND THEIR FAMILIES.

SUPPORT FROM OTHER PARTS OF THEIR COMPANIES AND, AS IN THE CASE OF ENTERGY, SUPPORT FROM OTHER UTILITIES.

AND FINALLY, CLEAR, CONTINUOUS COMMUNICATION WITH EMPLOYEES, CUSTOMERS AND OTHERS.

BUT WHAT OF ALL THE OTHERS - THE AVOIDERS - WHO AND GIVE THE CRISIS PREPARATION FUNCTION LIP SERVICE.

DESPITE SEVERAL SURVEYS FOLLOWING 9/11 WHICH INDICATED SUBSTANTIAL PROGRESS AMONG LARGE AMD MEDIUM SIZE COMPANIES OF ALL TYPES - STATING THEY WERE TAKING A HARD LOOK AT THEIR CRISIS PLANS; MAKING CHANGES; LOOKING SERIOUSLY AT BUSINESS CONTIUNUITY PLANNING - THE HARD REALITY IS THAT, TAKEN AS A WHOLE, THERE ARE ALARMING INDICATIONS THAT THE PROCESS IS SLOW.

IN A SURVEY RELEASED IN DECEMBER 05 BY OPINION RESEARCH CORPORATION, AMERICANS WERE ALMOST EVENLY SPLIT IN TERMS OF THEIR FEELINGS OF SAFETY IN THE WORKPLACE: 52% SAID THEY FELT THEIR PLACE OF EMPLOYMENT WAS TOTALLY OR WELL PREPARED. BUT 47% SAID THEY FELT THEIR WORKPLACE WAS NOT AT ALL PREPARED FOR A CRISIS OR EMERGENCY. IN ANOTHER SURVEY, JUST A YEAR EARLIER, HARRIS INTERACTIVE REPORTED THAT ONLY 58% OF EXECUTIVES FELT MORE PREPARED FOR A CRISIS AFTER THE BLACKOUT OF 03 - AN EVENT ONE WOULD HAVE THOUGHT WOULD HAVE BEEN ANOTHER WAKEUP CALL FOR INCREASED READINESS. THE SAME REPORT CONFIRMED THAT 38% OF COMPANIES ARE NOT INCREASING CRISIS READINESS BUDGETS.

THIS IS JUST AN INDICATION OF THE EXTENT TO WHICH COMPANIES AVOID PREPAREDNESS. WHEN WILL THEY WAKE UP AND CONNECT THE DOTS?

PAUSE…………………..

I'M AFRAID THERE IS A MISSING DOT IN THE PUZZLE - AND THAT IS INCENTIVE. UNTIL THERE ARE FINANCIAL INCENTIVES - WHETHER DRIVEN BY BOARDS WHO DEMAND CRISIS PLANNING AS PART OF CEO SALARY AND BONUS; INSURANCE PREMIUM INCENTIVES; OR TAX BREAKS, WE WILL CONTINUE TO HAVE A CHECKERBOARD OF COMPANIES IN VARYING STATES OF READINESS. ONLY THE VISIONARIES AND THE VULNERABLES WHO HAVE BEEN THROUGH THE WORST OF THE WORST DISASTERS WILL HAVE THE GUTS TO BE READY.

THE REAL TRUTH - WHAT SHOULD BE THE BEST INCENTIVE FOR PREPARATION - ALSO LIES IN THE ALL-IMPORTANT SHARE PRICE FOR PUBLICY TRADED COMPANIES. IN A RECENT STUDY MEASURING THE CORRELATION BETWEEN HIGH PROFILE CRISES AND A DECLINE IN SHARE PRICE, MORE THAN HALF THE COMPANIES TOOK 1 TO 5 YEARS TO RECOVER TO THE PRE-CRISIS STAGE. AND MANY - THE UNPREPARED - MAY TAKE LONGER OR NEVER RECOVER.

THE SAD TRUTH IS THAT OUR COLLECTIVE LEVEL OF DENIAL IS WAY TOO HIGH FOR TODAY'S HIGH RISK WORLD. WILL IT CHANGE? WHAT WILL IT TAKE FOR THE AVOIDERS - THOSE WHO PUSH PREPARATION TO THE BACK EDGES OF THE BUDGET - TO JOIN THE RANKS OF THE VISIONARIES AND THE VETERANS OF TOUGH TIMES.


IN OUR BUSINESS - THE BUSINESS OF CRISIS MANAGEMENT - WE ARE OFTEN SO ENGAGED IN THE EVENTS OF THE CRISIS THAT WE FAIL TO REALIZE AT FIRST THE FULL IMPORT OF WHAT WE HAVE GONE THROUGH. I WAS INVOLVED IN THE LANDMARK TYLENOL TAMPERING CASE AND I CAN TELL YOU FIRST-HAND THAT IT TOOK MONTHS BEFORE WE ALL RECOGNIZED THAT THIS WAS A DEFINING MOMENT IN CORPORATE DECISIVENESS, AND REMARKABLY GOOD COMMUNICATION BY A CEO, JIM BURKE, WHO, MOST OF ALL, HAD GOOD INSTINCTS.

FORTUNATELY, THERE IS INCREASING EVIDENCE THAT COMPANIES WHO HAVE GONE THROUGH THE WORST OF THE WORST TAKE THE TIME TO LOOK AT THE EVENTS AND LOOK AT THE GOOD, THE BAD AND UGLY OF THE EXPERIENCE - AND ASK THE TOUGH QUESTIONS - WHAT DID WE DO RIGHT AND WHAT COULD WE DO BETTER NEXT TIME?

YES, THERE WILL BE A NEXT TIME. IT WILL BE DIFFERENT, BUT THERE WILL BE A NEXT TIME. AS MARGARET THATCHER, BRITAIN'S FORMER PRIME MINISTER SAID, "THE UNEXPECTED HAPPENS. YOU HAD BETTER PREPARE FOR IT."

IN THE CURRENT ATMOSPHERE - WHERE WE HAVE FACED TWO UNPRECEDENTED CRISES IN THE NATION'S HISTORY IN LESS THAN FIVE YEARS - THE EVENTS OF 9/11 AND THE DEVASTATION OF HURRICANE KATRINA - THE BIG LESSONS FOR BUSINESS ARE OBVIOUS - AND I LEAVE YOU WITH THESE:

1. MAKE CRISIS PREPARATION AND RESPONSE A FULL-TIME COMPANY COMMITMENT, WITH A SENIOR EXECUTIVE IN CHARGE - WHO DOES NOTHING ELSE - AND WHO REPORTS TO THE CEO.
2. WORK AT THE CRISIS PLANS TO MAKE THEM AS CLEAR, CONCISE AND UP TO DATE - AND SMALL - THE BEST WILL FIT IN A POCKET.
3. THROW OUT THE OLD, COMPLICATED, FORMULA-DRIVEN NOTIONS OF HOW TO ANALYZE RISKS. INSTEAD - LOOK AT EVERY CONCEIVABLE RISK YOU MAY FACE - AND ASK THE HARD QUESTION: WHAT IF IT HAPPENS? ARE WE PREPARED?
4. PLACE A HIGH PRIORTY ON PEOPLE - HOW THEY ARE TRAINED, HOW THEY ARE INFORMED, HOW THEY ARE CARED FOR IN THE WORST CASE CRISES.
5. SPEND THE TIME AND MONEY TO BE READY - IN THE LONG RUN, A SMALL AMOUNT COMPARED TO THE LOSSES YOU MIGHT ENCOUNTER WHEN UNPREPARED.
6. AND FINALLY - FIND THE INCENTIVES FOR EVERY COMPANY TO BE AS GOOD AS THE COMPANIES IN THE GULF REGION

AT THE END OF THE DAY, IT'S NOT ABOUT WHO GUARDS THE GATES, OR HOW ELABORATE YOUR WAR ROOM IS, OR HOW OFTEN YOU CONDUCT A SIMULATION, OR TRAIN YOUR EXECUTIVES TO COMMUNICATE. IT'S ABOUT ALL OF IT.

TIME FOR QUESTIONS-------------------------------