The Impact Of Hurricane Katrina On Organizations: Valero Energy Case Study

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Hurricane Katrina is the terrible natural disaster occurred suddenly in nature which resulted a serious damage and many deaths. It’s almost been 10 years, Hurricane Katrina hit most of the states. This hurricane caused so much loss and destroyed several houses and many people died in this natural disaster. Many companies and charitable trust came forward to help people who lost their properties and their belongings.

Valero Energy Partners LP is the organization that I am using in this case study which was affected by Hurricane Katrina. Valero was established in the year 1980 in Texas. Valero will operate and develop crude oil and refined petroleum products pipelines, terminals and other transportation and logistics assets. It is most single dominant refiner in the country.

How was the organization impacted?

When the disaster occurred, Valero closed its refinery which lead to drop in crude oil prices but there is a price jump in gasoline prices. Lots of their capacity and refined products were exported while this disaster which their situation worst.

The disaster recovery and business continuity

Below is the disaster recovery plan and business continuity plan that Valero has in place.

  1. Valero had developed to practice a contingency plan for their CEO which includes strategies to manage the emergency situation like whom to contact and what to reveal and how to handle the situation.
  2. Valero had an additional team who acts as backup when the actual key personnel is not available at the emergency situation. They make they train their employees as backup to perform the tasks when a disaster occurs.
  3. Valero conducts meetings on a regular basis to analyze the situation and estimate the cost of damage and to discuss the procedures to follow when this hurricane occurred. It made sure and success in practicing the crisis communications with employees, customers and outside world. It also setup and alternate means of communication when cellular networks are down.-
  4. It prepared a list of employees and executives who needs to take part in recovering their damage and to respond in emergency situations.-Valero also implemented a practice session to make the business continuity drill realistic to check the way employees respond at that actual disaster.
  5. It also involves third party vendors in the plan who can help the recovery team giving the information that is required by the team and allows the third party to become familiar with organizations website.
  6. It tests it recovery plan on a regular interval and make sure to update if there are any changes.

The lessons learned

Need for Quality Planning

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Company had learnt quality planning as it important for an organization to control the disaster with by following standard procedures that they implemented which consists of planning, performing and acting upon the results. Though the process is in place we need to make what process has to use at that particular situation. They should determine the methods that are needed to implement at the effective operation and control the damage further.

Risk Tolerance

Risk tolerance is nothing but the deductables. For example, if there is car damage, then you choose your risk tolerance amount as deductables and insurance pays the rest of the amount.In the same way company has higher tolerance than others and therefore becomes costlier when it recovers the damage. As Valero is the refinery company, it should make sure to remove the damaged pumps and replace new with new pumps which is expensive for the organization. In this case organizations have to define their infrastructure when there is a disaster and also implement the maintenance methods. As rebuilding and maintaining the infrastructure take time, there will be a down time to make sure it’s up and running. Company has to bear the consequences in this downtime.

Surge Capacity

Every organization should feel responsible and play their roles in emergency services. Every company should have its own risk reduction plan in place to implement in disaster. This includes arranging additional staff, availability of spare parts, identify alternate plan to use in emergency situations.

All the employees in the organization should know their roles and responsibilities when a disaster occurs in prior. Disasters like Hurricane occurs so fast and make huge damage. It does not allow a resource to think and react. Every person should be prepared to fact the damage and help to recover. When Hurricane Katrina occurred, things became worst so quickly. All the necessary tools and procedures should be in place to reduce the risk.

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