URL: http://entrepreneur.com/management/insurance/riskmanagement/article52606.html

Oklahoma City. Columbine. September 11. Every once in a while, we are reminded life is unpredictable. And if you're responsible for employees and customers, you've come to the conclusion that it's never a bad idea to imagine the unimaginable.

Two authors did just that in what was considered a humor book before September 11. Joshua Piven and David Borgenicht's Worst Case Scenario Handbook advises readers on everything from delivering a baby in a cab to dodging bullets. One day, Piven and Borgenicht might get around to writing such a handbook for entrepreneurs. As unlikely as it is that your business will be in the line of terrorist fire, your company might be in the path of a tornado. No matter how remote or ridiculous the odds seem to you, it's time to start thinking about a contingency plan. Here are a few situations to consider.

You're Kidnapped on a Business Trip in a Developing Country

You won't likely have to worry about this if your business hardly takes you to Atlantic City, let alone across the Atlantic. But should you ever wind up negotiating in, say, Columbia, here are some rules to remember, courtesy of David W. Johnson, vice president and director of operations at Washington, DC-based Investigative Group International (IGI). The company specializes in searching for the answers to complex mysteries-such as tracing embezzled funds to an offshore tax haven. Johnson has also been an FBI agent, heading SWAT teams and the Hostage Rescue Team, a 60-member counter-terrorist operation.

But what if it's not you but your employee who has been kidnapped? If you even slightly suspect that's the case, immediately contact the country's American embassy, says Johnson-even if the bad guys have been in touch with you and advised you otherwise. You certainly can't solve the problem on your own, and kidnappers will know you'll call the authorities, anyway.

Most companies targeted by terrorists have big marquee names, so if your company isn't quite there yet, the odds are even better this will never happen, says Johnson.

Still, if your company has been a presence in a neighborhood for a while, that could spell trouble. IGI chairman Terry Lenzner, a former private investigator who worked on, among other things, the Atlanta child killings of the early 1980s and the 1964 murders of three civil rights workers in Mississippi, recalls a particularly dangerous situation: "We did a post-analysis of some American workers in Pakistan in the late 1990s who were picked up [for] work every day in the same car by the same driver.

"One morning, a motorcycle came up and stopped the car. A van came up behind it, and members of a radical group, protesting the conviction of a Pakistani who shot CIA personnel, machine-gunned all five workers to death. They didn't have a chance. But one lesson learned is: Don't do the same thing over and over."

Prevention Is the Best Medicine:
"Plan ahead," suggests Johnson, "from the time you land at the airport to the moment you leave. But that doesn't mean you need to be paranoid the whole time."

Your Company Is Decimated by a Natural Disaster

Whether your office building is buried under a landslide or hit by a hurricane, there are three immediate steps you should take, says Dave Bowe at Crisis Management Worldwide in Wilmington, North Carolina.

Prevention is the Best Medicine:
You can't stop a tornado, but you can create a contingency plan and ensure you have insurance.

Your Company Is the Target of a Large Lawsuit

Maybe you've heard of the lawsuit that Kellogg's is fighting. Seems a Pennsylvania woman left a Pop-Tart in her toaster last summer before driving her kids to school. When she returned 10 to 20 minutes later, smoke was pouring from her house, and firefighters were on the scene. The woman is now seeking $100,000 from Kellogg's for damages to her house, and is also suing Black & Decker, the makers of the toaster.

If you're hit by an out-of-left-field lawsuit, consider some free advice from Patricia Eyres, attorney and president of Litigation Management & Training Services Inc. and author of The Legal Handbook for Trainers, Speakers & Consultants:

Think you'll never be on the receiving end of a lawsuit? Don't be so sure. "Regrettably, lawsuits are a byproduct of doing business," says Eyres. "Control it like a business, and select the best business outcome to meet your needs. This means reacting rationally rather than emotionally-not easy for entrepreneurs who have built their own businesses from the ground up. Don't make litigation personal."

Prevention is the Best Medicine:

• "Establish personnel policies and enforce them consistently," says Eyres.

• "When creating business records of any type, including formal letters, contracts, memos or informal e-mail," explains Eyres, "keep in mind, those documents may one day provide the basis for reconstructing the events that may be the subject of a dispute."

A Gunman Charges Into Your Office Building

First, if you hear the sound of gunfire in another room, don't run toward it, urge Carol and Duane Frederickson, co-presidents of Frederickson Consulting Inc., a workplace-violence consulting firm in Minneapolis. It may seem harsh or cowardly to suggest fleeing, but the damage has probably been done, and now you need to think about saving your own life. If you're unlucky enough to meet up with the gunman, be agreeable. "Don't try to rationalize with him," suggests Carol. "Remember, if [he] is waving around a gun, he's probably irrational."

If you're trying to avoid being seen, "stay as low as you can, and if you can, get under your desk and pull the chair in," says Duane. "Lives have been saved that way."

Prevention is the Best Medicine:

• Create a violence policy. If your employee manual has a policy outlining your definition of violence, long before a problem has gone out of control you can utter the words "You're fired"-without fear of a lawsuit-if an employee is committing what your manual states is a violent act, say Carol and Duane.

• Confront the volatile employee now, not later. Would you let a stick of dynamite burn?

Your Company Is Rocked by a Salacious Scandal

Think of Gary Thompson as a lifeguard, pulling entrepreneurs from the whirlpool wave that is known as the media machine. Thompson is executive vice president of the San Francisco branch of Waltham, Massachusetts-based Schwartz Communications. Though he specializes in helping small businesses, he also assisted Jack-in-the-Box after its infamous food-poisoning problems in the mid-1990s, watched colleagues try valiantly to restore Exxon's image after its Alaskan oil spill, and was in charge of maintaining corporate composure after a high-tech client's CEO was kidnapped several years ago.

Any worst-case scenario could bring bad publicity, which is why Thompson urges you to ignore your lawyer, who will advise you to say nothing, and follow his formula:

1. Acknowledge the problem. Saying there "might" be a problem will only make you sound wishy-washy.

2. Sympathize with those who are affected. And be specific. You feel bad for your employees, your shareholders, your customers or all of the above.

3. State what the company is doing. But "until you have something solid to report, it's not necessary to disclose to the press everything that's going on," says Thompson. "Just acknowledge you're working on the problem."

4. Assure the public on an ongoing basis. But only up to a point. "Studies show that after two months, reminding people starts to overstate the issue," says Thompson. "The American public tends to be very forgiving if you acknowledge swiftly there is an issue, and most customers will sympathize with the company trying to get to the bottom [of the problem]" and do the right thing.

Prevention is the Best Medicine:
There may be little you can do to prepare yourself for scandals, but creating a company values system and instilling it in the employee mind-set will help, says Thompson, who recalls the time when an insurance company CEO who came to him after employees refused to give an elderly woman her money because of some minor glitch in her paperwork. The CEO wanted the woman to be compensated-and so did the employees. But the staff believed they had to strictly follow company policy. Says Thompson, "Your employees need to understand [your company's] values give them a certain latitude with dealing with the public."

Insure and Reassure

You probably don't need convincing. Everybody knows insurance is important, but do you have the right coverage? Don't do business without these:

• Business interruption insurance: If your warehouse is insured, great, but if you're out of products for three months because of a fire, and insurance isn't paying your employees, then-well, do you really want to pay everybody out of your retirement fund?
• Key employee insurance: You can get this for yourself, or for staff members who are important to running your business. If that employee dies-or if you die-the money will be there while a replacement is recruited and trained.

"Sure," the cynic might think, "and then after the disaster, the insurer will drop me." Maybe, but as one insurance expert told us: "Quite frankly, if we dropped everybody who had a loss, we would not have customers."

Do You Have a Contingency Plan?

Dave Bowe and Randy Uzzell at Crisis Management Worldwide specialize in contingency planning, a concept with which every entrepreneur should be intimately familiar. Some things you should do as part of planning for the worst:

• Take a walk around your building. Determine where you're vulnerable, says Uzzell. "Ask yourself what's logical to prepare for," he adds. "Obviously, you're not going to spend much time preparing for the 100-year flood...unless it's been 99 years since the last 100-year flood."
• Think about various potential scenarios. Try to conceive how you would handle them, and look for your weaknesses. Then devise plans of attack for each.
• Develop a crisis communication team. Bowe advises that a core of your corps needs to know how to talk to the media. Take as many preventive measures as possible. That includes everything from backing up data on a computer and storing the information off-site to finding the right insurance to optimize your company's protection.

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During the course of researching this article, a torrential downpour rocked Cincinnati. Geoff Williams' home office was flooded. He did have insurance. He can be reached at gwilliams1@cinci.rr.com.