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Business Continuity Impacts from the New Zealand Earthquake

October 2010

At approximately 4:35 am on Saturday 4 September 2010, a magnitude 7.1 earthquake struck the South Island of New Zealand, near to the nation’s second largest city, Christchurch. The quake struck at a depth of 16.1 km, approximately 40 km West of Christchurch. The resulting tremors caused widespread infrastructure damage, cut electricity supplies, closed airports, shutdown businesses, and created shockwaves that could be felt up to 400 km away in the North Island.

Up to 50% of the local population of 340,000 residents were immediately without basic utilities like water and electricity. The tremors that shook the earth caused major damage to underground water and sewerage pipes, and as a result residents were advised to boil water before drinking after reports of contamination. All schools were closed for several days and all public transport was stopped for three days. To add to the trauma felt by everybody in the community, in the first week after the quake, more than 400 aftershocks had been recorded throughout the region, most averaging above three on the Richter scale.

Remarkably, the impact of the largest quake to hit New Zealand since 1931 was surprisingly minor. There were a number of reported injuries, with only a few regarded as serious and although there was a 10 fold increase in the number of heart attacks in the 24 hours after the quake, no deaths were directly attributed.

It was estimated that 70% of the damage caused by the quake will be covered by the national disaster fund or private insurance. Although the cost of the rebuild was expected to exceed $4 Billion (representing around 2.5% national GDP), it was also estimated that the money spent on the quake reconstruction will boost the national GDP by about 1.5%.

What were the major damages?

In this instance it should be noted that the majority of the damage caused to buildings and infrastructure predominantly affected older, cultural and historical buildings and landmarks, most of which pre-date the 1931 Hawkes Bay earthquake. Historical examples of prior earthquakes as well as the geographical location of New Zealand, (which is located on some relatively unstable faults) led to the New Zealand government placing some very tough restrictions on building codes. Since the 1931 earthquake that killed 256 people almost all existing and newly built structures have been ‘earthquake proofed’. It is widely believed that the strict building codes in New Zealand was the main factor in minimising the damage and losses as a result of the latest quake.

Most businesses in the Canterbury – Christchurch area reported escaping without significant damage or loss. The general consensus was that the majority of business operations continued as normal after safety and structural assessments were made. Air New Zealand reported that flights were departing from 1:30pm on the day of the quake after engineers had given the all clear for all terminals and runways to be re-opened.

It can be duly noted that the New Zealand Government has played a significant role in having the foresight and the economic durability to implement a number of stringent systems and policies to ensure the structural continuity of the country’s infrastructure to withstand the potentially catastrophic effects of a major environmental event such as an earthquake. Organisational foresight and continuity planning has also seen the majority of organisations in NZ cope with the disruption without as much as a blip on their financial reporting. In saying that, there are always opportunities to reflect on an organisations response to a significant incident once their planning and actions have been tried and tested. A disaster may provide the opportunity to conduct a review of resilience plans and potentially pick-up deficiencies that may not have been otherwise accounted for in a simulated environment.

Effects on people and how it impacts business continuity

Not only will an earthquake have a devastating effect on the buildings and infrastructure of a city, it will also have a social impact on the fabric of its people. One example of the social impact on the community that can highlight the increased pressures is the example that in the week following the latest NZ quake local police reported a 53% increase in cases of domestic violence.

Impacts on staff are bound to have an increase on the pressures placed on workplaces to try and maintain critical business functions in the wake of a crisis. It has been reported that in previous examples of natural disasters that there is a 6 – 10% increase in the number of workplace accidents in the month following a disaster. How does an organisation account for the significant disruption to people’s home life, at the same time maintaining business continuity? Organisations may have implemented systems or procedures to ensure the workplace functions as normal, but what about the unimaginable effect a disaster may have on staff?

It may be difficult to account for the true social impacts that a major earthquake might have on staff and their ability to attend and focus at work in the days and weeks following the disaster. With schools being closed and public transport out of action, how easily staff are going to be able to attend work and be productive is questionable. With their thoughts distracted by their personal situation, staff focus will be of concern. Chasing personal insurance claims, organising new electricity connections, getting damage assessed, organising temporary accommodation, organising care for children, all these things take time, and in most cases for the individual they probably take priority over work.

How can employers help?

Flexibility and understanding seems to be the obvious solution for employers to account for the increased pressures felt by staff from their lives outside of the workplace. With family members at home that may have been injured, or having had their houses damaged or destroyed, employees may not be in the most productive frame of mind. Planning for this type of event should account for the very personal effects that a disaster may have on staff. Employers should be open and aware and be looking for the signs of stress or increased pressures faced by staff. Planning should consider – creating supportive networks, shift working to allow more staff to work reduced hours and if possible, consideration of additional support such as child care facilities.

This is where flexibility and understanding have to play a part for employers. In areas where disasters like earthquakes are a possibility, rigid plans with no alternative solutions or contingencies are not likely to be successful in a major disaster event. Recognising the signs of staff who are not coping, and having the planning in place to cope with their increased absence will ensure that an organisation has the most effective strategies in place to see itself through a disaster like that which affected the Canterbury – Christchurch area. Like any disruption that can be planned for, a natural disaster should always be factored in to the potential risk factors in your business continuity plan. The consequences of a disaster like an earthquake may be the biggest that an organisation may ever face.

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Categorized: Business Continuity