In the water's wake
Written by: Jasna Sýkorová
Photo by: Tomáš Kubeš
Firms that were affected by the August
floods had one thing in common - the element of surprise. No one
could guess how high the water would go or whether it would threaten
AT EIGHT in the morning on Tuesday, August 13 - the first major
day of the flood - it seemed like the high water was still far away.
One week later, the Linea Recta advertising agency, headquartered
in Modřany, still could not return to its offices. A two-meter high
pool of water destroyed the offices so badly that now they cannot
be used. "Nobody was expecting it," says Filip Žák, one
of the agency's managers. "If we had known that it would be
such a long time before we could return, we would have taken everything
out. Even though we had only five hours until the flood wave came."
Thus Žák summarizes the problems of many firms. Linea Recta was
lucky that the situation in Modřany was not severe, and although
water washed over the ground floor, it quickly subsided. So after
all necessary permits were obtained a couple days later, the firm
was able to move most of its undamaged equipment to newly-leased
space in Novodvorská.
Reader's Digest publishing house, with its offices in Karlín, wasn't
so lucky. All data, computer systems and documents for orders were
trapped inside the office. So the publishing house, which does 99%
of its business through mail orders, had to seriously limit its
activities. Luboš Beniak, Director of Reader's Digest, estimates
damages caused by the move to inadequate alternative office space
and lost profits to be in the millions of crowns. It is not the
killing blow for a firm with a turnover of CZK 1.2 billion, but
it is still an unpleasant complication. Losses were not higher because
Reader's Digest had a basic crisis plan prepared. Beniak estimates
that even in the case that a real crisis occurred, it would take
no longer than two weeks to completely restart the entire operation.
Clients without a telephone or internet connection
- this is the problem that many telecommunication
operators had to resolve. One such operator was international
firm Etel Group ČR, provider of information and voice
services for over 1,500 corporate clients. Its exchange
facility on Benediktská street, which contains the
key technologies, was not damaged, but it was inaccessible.
According to the firm's director, Richard Pinc, the
technologies cannot simply be transported, they must
go through the complicated process of being "revived".
Therefore, his company was not able to prevent a delay
in service that lasted several days. Pragonet and
Nextra shared the same exchange facility, and Internet
Online in Karlín, was one of the most affected. "Each
interruption in operations costs us money because
of services we cannot provide," says Pinc. He
doesn't expect customers, requiring a 100% guarantee
of service, especially at a time of crisis, to change
operators. "A completely reliable operator does
not exist. Even the largest one had problems,"
says Pinc, referring to Český Telecom. He feels that
the consequences of this event will probably only
show up in contractual conditions that will make it
easier for clients to withdraw from contracts.
Good crisis management was invaluable to firms during the flood.
Linea Recta, a small firm with 25 employees, didn't have a plan
prepared in advance. However, its four managers have worked together
for many years and know each other's weaknesses and strengths extremely
well. They divided their responsibilities so that two of them managed
work for clients from their homes, one ensured the proper permits
and administrative issues concerning the flooded office, and the
fourth looked for new premises. They arranged regular telephone
meetings with their employees. They handled the situation, and Žák
says that it was almost as if they had been at a team-building workshop,
which they go to regularly.
Nevertheless, the larger and more complex firms could not exist
without a crisis plan that includes several scenarios on how to
proceed in the case of power outages, evacuations, etc. Elvia Assistance
can be used as an example. Its partners, and the lives of people
with health or accident insurance, depend on the services of this
agency, which ensures services associated with insurance claims
for many brokers and other contracting clients. Therefore, this
company, with 100 employees and a large information and telephone
center, cannot afford to interrupt operations for even a short time.
"Our crisis scenario enables us to move to alternative offices
within six hours without interruption of operations," insists
Miroslav Doležal, general director of Elvia. So during these six
hours the firm moved, under normal operation, into the offices of
partner insurer Allianz, transferred the telephone lines, installed
alternative technologies and resolved the emergency, with only 10%
of its employees being kept away from work due to the flood. Just
obtaining an alternative source of power cost them CZK 1.5 million,
but considering the half million clients with travel insurance or
the almost two million clients with car insurance who might need
assistance at that time, this sum was insignificant, Doležal explains.
According to Doležal, some other business and government entities
upon which his firm depends unfortunately didn't behave in the same
way. "I believe that the vast majority of companies were not
prepared for the crisis. It is a pity that legislation does not
impose such obligations," he says. So, despite the fact that
a firm may be hoping to spare its customers the inconvenience of
a crisis plan, the result depends on such factors as the panic level
of a telecom operator, the functionality of a bank or the professional
reactions of other business partners.
||Photo: Libuše Rudlinská
Washing away business
Novotného lávka in Prague is an attractive location. Or rather,
it used to be. Sanjiv Suri, owner of the luxury restaurant
Mlýnec, which has inhabited the site for two years, knows
what we're talking about. Nothing remained in the venue's
larger areas. "It will be like building a completely
new establishment," says Suri, who also operates the
restaurants V Zátiší and Bellevue, which were also partially
flooded. Renovating them will take several weeks, though Mlýnec
might take almost half a year. This means tens of millions
crowns lost revenues. Still, Suri doesn't complain, despite
the fact that he cannot estimate the total damages and the
impact on his business. "We have to get back as soon
as possible," he remarks. "We don't have time to
think about it too much or feel sorry for ourselves."
He doesn't intend to change locations, but he is now wondering
whether to rebuild the walls or not. "We haven't given
up!" is the message from the other damaged restaurants,
which, just a couple of days after the end of the flood alert,
came to life and started trying to make back everything that
the gap in operations caused them to lose.
For hotels, this process will take a little longer. For example,
according to Andrew Farnfield, sales director of the Four
Seasons Hotel (located on Veleslavínova street not far from
the Vltava), the hotel doesn't plan to renew operations before
the end of October. The estimated income loss is about CZK
100 million. And this despite the fact that the water only
seeped in and filled the underground. The most affected hotels
in Karlín, such as the unfortunate Olympik (it had a fire
several years ago) or the Ibis Karlín, can expect an operational
delay of one year, depending on the statics inspector's verdict.
Even hotels the water didn't reach can feel the damage. "Watching
the news on foreign stations, it seems like the Atlantic Ocean
poured into downtown Prague," comments Michal Chour,
sales director for the Radisson SAS Alcron hotel, which is
close to Wenceslas Square and wasn't hurt by the flood. "Tourists
are frightened, or unwilling to spend their vacations in a
problematic area, so they are cancelling their reservations,"
The floods have subsided, but the crisis isn't over. For
example, Unilever, with headquarters in Karlín and a plant
in Nelahozeves, is already back to normal. Yet with such a
large firm, the solution to the crisis does not end with resuming
operations, insurance proceedings and the calculation of damages.
According to Cornelia Roettger, general director of Unilever
ČR, it was necessary to reevaluate what should be produced
- with priority to cleaning products and groceries. Distribution
is also a problem; since much of the general infrastructure
was damaged, a new transportation program has been developed.
For its employees, the company has prepared a CZK 12 million
package for financial assistance, and for its business partners,
compensation for damaged equipment, loans, and solutions to
problems such as transport are being provided. "Our crisis
plan worked. We didn't lose contact with our customers, which
is consistent with our international know-how," explains
Roettger. However, as they were forced to arrange some deliveries
from abroad, Unilever wants to ensure that their suppliers
will be able to operate during a crisis in the future. "We
still want to use Czech suppliers, but we will have to reevaluate
the contracts," says Roettger.