For more from our May issue on natural disaster planning in 2021, check out:
Armed with lessons learned from the 2020 hurricane season and pandemic response, risk professionals are preparing differently for natural disasters in 2021. Risk and insurance professionals discuss unique considerations, disaster planning for remote workforces, and first-hand perspectives of natural catastrophe response amid the pandemic.
Heading into the 2021 hurricane and natural disaster seasons, organizations must reassess their risk profile with regard to remote or hybrid workforces to ensure the safety of both operations and employees.
With approximately 600 locations spanning 49 U.S. states, restaurant chain Texas Roadhouse has weathered a lot of storms in the past year, from pandemic-related shutdowns to a wide range of natural disasters including hurricanes, wildfires and the severe cold and snow that crippled Texas in February. Patrick Sterling, senior director of legendary people and risk management, and Matt McMahan, senior manager of business continuity and records, sat down with Risk Management to share some of the lessons they have learned over the past year, preparations for natural disasters in 2021, and insight into building a people-first playbook for times of crisis.
Many types of disasters have increased in recent years,
from hurricanes to wildfires to severe storms, and you have to account for a
broad range of incidents given the size of your company’s footprint. Did
anything take you by surprise when responding to natural catastrophes last
Sterling: We certainly had a pretty robust plan on
hurricanes, but what really caught us a little off-guard was the winter storm
that hit. With a lot of your responses, whether they’re generators or water
purification systems, it’s a different experience in a winter storm in areas
that don’t have the experience or the resources or the infrastructure to deal
with extreme freezing temperatures.
In response, one thing we have done is assemble a
cross-functional team to incorporate the winter storms into our severe weather
response plan. There were some lessons learned in there that those areas have a
whole unique situation for response due to the lack of experience and resources
and infrastructure that are at play.
What were some lessons learned as a result of the Texas
winter weather crisis?
McMahan: A lot of the other types of
disasters—wildfires, wind, hail, rain—don’t have as widespread of an effect, so
we deal with those on a one-off basis as they come up. You often have a power
issue, you often have a “boil water”-type issue, if there are pipes breaking or
things like that—those all come down to the same type of things we have to deal
with in a hurricane.
What really made some of the winter storm issues a little
different is that, for example, with water purification, if you’re bringing in
machines but you have sub-freezing temperatures, then the water is potentially
expanding in the water purification machine, which could break those pipes.
There are just some nuances there that we don’t typically see in other types of
severe weather situations.
With so many stores across very different regions, how do
you manage monitoring and communication of the risks to your locations?
McMahan: We use a threat monitoring system. We’ve
geolocated all of our stores with a system and we get notifications when
certain types of threats hit. During the wildfire season, we would often get
these updates that were geolocated based on our stores, so we knew
approximately where the fires were in proximity. They never got that close to
us, but they did have impacts on our employees, which would generate some
response to make sure that our employees are taken care of.
Did any risk management measures prove especially
critical in your disaster response and crisis management efforts last year?
Sterling: This past year really emphasized the
importance of effective communication, and communicating not only in spurts,
but really having a regular cadence of communication and check-ins over a much
longer period of time than we’ve ever had to do in the past. Typically, crises
are fairly short-lived—maybe a week or so—but a whole year? Getting that right
amount of check-ins and communication was really important.
I think it also emphasized the importance of
cross-functional teams and having everybody in the room. This allowed decisions
to be made faster and projects to be completed quickly—you can move really,
really fast when you have everybody in the room.
This also applies to every call. In a crisis, we have
standing calls and everybody knows that, at 10:00 A.M. the next day or whatever
timeframe we have those scheduled, we’re going to have a call again, and we
make sure to have everybody that is on our emergency response checklists.
Whether it’s IT, purchasing, human resources, accounting, payroll—they’re all
on that call to be able to answer questions and to support our operators. Then,
if there is a question that somebody has or a special need, they have that
resource right there for them immediately.
Your restaurants are run by different managing partners
across the country. Is there anything that stands out in differentiating
between operators who best handled disasters last year and those who may have
Sterling: I think everybody did a great job this past
McMahan: Yeah, they did. I think they are all
successful, but the people who may have it a little easier, as Patrick has
said, are the people who really have the communication piece down. Making sure
everyone is on the same page prevents misunderstandings from happening and it
makes things easier when everyone is working in the same direction to reach the
Sterling: Communication is the differentiator—whether
it’s at the store level or at the support center level, effective communication
is the game-changer. At the store level, it is critical to have a really good
communication plan on how to connect with the employees and stay in contact
with them, especially if they have to evacuate.
As a brand, Texas Roadhouse talks a lot about care for
employees as a central value. When disaster strikes, are there any things you
recommend to better care for employees, and to balance ensuring everyone’s
safety with resuming operations quickly?
McMahan: Employee safety is our number-one priority
when these disasters hit, and every employee has a different internal risk
tolerance. Certainly there’s a time when everyone needs to leave town if
there’s anything dangerous, but before a storm hits, we also allow people to
leave earlier if they have concerns—not only from a life safety perspective,
but also from a mental safety perspective. We want them to feel comfortable and
to know that we care about them and we care about their concerns. Some other
people may want to stay a little longer, and that’s great too, but it is really
about listening to the employees and making sure that we’re all one team and
that they feel listened to and cared for.
You have mentioned emergency resources like generators
and water purification systems. How involved do you get in coordinating those
resources for different restaurant locations?
McMahan: We get very involved in it. For water
purification, we’ve worked for several years to try to get some machines
together that can help with water purification, so we store and send those out
to areas as needed. The generators are slightly different in that a lot of that
is done through relationships with third-party companies. Sometimes there are
local relationships where they source the generators themselves, but other
times we help out sourcing the generators from other locations. It really
depends upon the situation.
Particularly on top of COVID-related shortages in
supplies and disaster recovery services, it has been very challenging for some
businesses to get emergency resources in recent widespread disasters. How are
you managing that supply chain and business continuity issue?
McMahan: This goes back to being a good community and
also being involved in the local community—if you have those local relationships,
that opens up a lot of doors. We can and do have relationships with companies
to provide these resources, but where somebody has a close relationship with
other resources in the area, you can more easily get those resources because
those third parties are thinking about you—they’re wondering, what can I do for
Texas Roadhouse? Because we take care of them and they take care of us. You
don’t want to enter into a disaster and, when you’re calling somebody, that’s
the first time that they’ve seen your business card.
Sterling: I think this past year showed how fragile
the supply chain is. With the real-time inventory processes and manufacturing
processes that so many companies have right now, there’s just not a lot of
inventory out there, so when you have a significant break, it can have a big
impact on the supply chain. It’s something that we’re continuing to monitor and
it can go to everything from having a couple of major protein plants that have to
shut down or a shortage of truck drivers—there are a lot of things that play
Last year was undoubtedly rough for you in terms of
business continuity. What are the biggest risks on your radar this year?
Sterling: One key goal is that we still want to get
better and more efficient at power restoration and water purification. Those are
two things we’re continuing to develop, and [we want to] improve our capacity
to get quicker and more efficient in those processes.
McMahan: We continue to be concerned about natural
disasters and hurricanes. We’re hopeful that there won’t be as many hurricanes
this year, but nature is going to do what it’s going to do. Of all the risks
that I’m concerned about, it’s not the storms themselves—it’s the continued
stress on the supply chain and infrastructure, and what these natural disasters
mean to that in a world that’s still recovering from the pandemic.