The real estate industry, like any other important segment of the economy, has a strong obligation (in many cases legally dictated) to protect themselves, as well as their clients, from unexpected problems or disasters to the best of their abilities.

A Business Continuity/Disaster Recovery (BC/DR) plan serves as the main resource for the preparation for, response to, and recovery from, a disaster (such as a fire, flood or hurricane) that affects any number of crucial functions in an organization. A BC/DR plan provides a framework for the decisions made and actions to be taken by company officials in order to insure that operations can continue while the incident is occurring. In addition, the BC/DR plan serves to ensure that companies will be able to recover and return business activity (hopefully) to pre-incident levels.

There is a saying in risk management/disaster recovery circles, "It's not if disaster will strike, but when." Real estate offices are certainly of no exception. Florida, which happens to be the most active real estate market in the country, is also Ground Zero for hurricane and flood risk. Iowa, in the heart of the Midwest, is tornado country. And of course there is the universal threat of fire, accidental or otherwise.

Simply a wire spark behind a wall, a copy machine having an electric surge, a cigarette not properly extinguished, or even arson performed by a disgruntled buyer, seller, or employee can start a disastrous fire that will cause irreparable damage to an office that is not properly prepared.

Data is critical to a realty business, and installing a process for the storage of (and retrieval of) data is considered to be a basic operational requirement for all businesses. Since the US economy is mainly a service economy, mainly comprised of companies that provide services, as opposed to manufactured goods, information and data are the key assets that need to be protected.

To state it as simply as possible, the first step in disaster planning is records protection. The safeguarding of vital and irreplaceable company records and documentation is absolutely crucial to company survival and recovery in the event of a disaster. If vital records that fall into certain categories, such as financial documentation records or sales records - are lost, and can not be replaced quickly enough, a realtor could lose serious business as competitors move in to grab market share.

In fact, all businesses that have something to lose need a vital records protection strategy plan, and one that especially incorporates measures to protect against fire. To lend some perspective to the question of how much are your vital records worth, according to statistics from the National Fire Protection Association, 47 percent of all businesses that suffer a catastrophic fire cease operations inside of one year. Ninety percent of those firms whose records are destroyed are no longer in business a year later.

So, in order to develop a vital records protection strategy, you must first assess the threats to your vital records. The first step is to identify specific risks, such as: facility and equipment hazards that can result in flooding to records storage areas, risky storage practices that increase the risk of fire, and periodic electric storms or tornados that could endanger digitally stored vital records. With electronic data you also need to consider poor care or storage -- simple things such as spilled coffee, poor handling, etc.

The basic lack of awareness that leads to the destruction of many vital records and media involved in a catastrophic fire is that most consumers don't understand the difference between a fire rating versus a classified fire rating. This simply means that the vault will protect the media stored inside it for at least two hours, and that the product has been tested and classified by Underwriters' Laboratory (UL) or another independent testing lab.

Standard filing equipment is believed to offer fire protection by a large majority of consumers. This thinking, attractive to management because it "seems" cheaper, is erroneous and potentially dangerous. It is imperative to seek products that are tested by Underwriters' Laboratory (UL) or other nationally known independent testing labs -- absolutely steer clear of equipment with manufacturers' or non-independent ratings. UL, in particular, is the best, as no other testing and standards organization matches their reputation.

Any agency that can properly assess and then prepare for the inherent risks that they are possibly facing is a business that has the ability to make their clients feel better about taking the risk involved in buying or selling a home with that particular agency. Storing vital records either in fireproof containers or sending them to an off-site facility will demonstrate to clients that your firm can appropriately plan for the future.

Patrick McCalman of Murphy, Murphy, & McCalman, P.C., in Andalusia, Alabama is an expert when it comes to the legal details of the real estate processes. He is well aware of what these agencies should do to maintain secure documents into the future.

"We've had a fireproof container for years and recommend that all businesses, not just those in real estate, use them to protect important items," he says. "Most of our real estate clients' final documents are housed by the court that closes them, but other things like IRS forms, bank statements, etc. are kept in fireproof containers to satisfy legal retention requirements imposed on us as a real estate closing firm."

Rex Blake, owner of Rex Blake Real Estate, LTD., located in Davenport, Iowa commented on the need for vital records protection in his office. "Facing the task of trying to reassemble all of our bank records, ledger accounts of past transactions, customer property abstracts, and back-up computer disks would be a major undertaking, costing us lots of time, effort, and money."

The process of installing well maintained fire suppression systems and using fireproof containers to house vital records and other important items is an essential way for realtors to insure that the least amount of damage will occur to internal or client documents in the event of an unexpected disaster.

Unfortunately, for themselves and their clients, not all companies in the real estate business are as prescient as Mr. Blake to make such a proactive purchase. Sue Bieber, owner of Bieber Real Estate, decided to purchase UL-rated fireproof containers for her office after living through a fire at her home, which destroyed almost everything in its path about two years ago.

"We actually lost quite a bit and most of the important things could have been saved if they were properly stored in fireproof containers. Since then, we've purchased a UL: -rated fireproof filing cabinet for our home, the office, and we've also decided to donate one to our local church for them to keep original sheet music in. If it weren't for these containers, we would again be risking the loss of many crucial items both in our business and at home. We already learned our lesson."

Regardless of the size of your business or the industry that you are in, proper risk management is one of the most important steps that a business can take to protect its future from disasters that could have been easily avoided. Installing effective fire suppression systems and storing important items and other documents in fireproof containers is the best a business can do to ensure that minimal damage will occur in the case of a fire. The cost of adding this equipment is negligible when compared to the cost of replacing what has been lost in a devastating fire.

Published: August 8, 2005

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