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Disaster Drill: Practice Makes Perfect

As one of the nations largest insurance companies, USAA is in the business of managing risk. So it makes sense that the company uses exercises, simulations and drills to learn how to respond in the event of a disaster.

IT'S 5:30 A.M., and USAA's top executives and their staff are summoned to company headquarters. In a room flanked by computers, 650 of USAA's executives and staff have gathered to hear a terse announcement by the company's CIO, Steve Yates. "A major U.S. bank has just reported a bomb threat at its headquarters," he says.

Outside, employees are starting a normal workday, slowly trickling in to USAA's sprawling 286-acre San Antonio campus. To them, it's just another hot, muggy day, the kind that one expects at the end of July in south Texas. But deep below the company's headquarters, in a concrete bunker built to withstand a Force 3 tornado or a direct hit from a 727, things are anything but normal.

The day before, the corporate situation management team (CSMT), composed of business unit representatives and many of the company's executive counsel, along with staff members from finance, human resources, e-business, general counsel and corporate communications, were told that the FBI was warning of possible terrorist activity at financial institutions planned for July 24. In addition, a hurricane was reported to be forming off the Virginia coast, posing a potential threat to USAA's Norfolk office.

Yates's report hushes the room. "We have a live event," he tells them, setting off a flurry of activity as the team shifts into disaster response mode.

In truth, however, there was no live event. This was only part of a drill, an elaborate business continuity exercise USAA had devised to teach its executives and employees to deal with disasters: everything from anthrax and bombs to an outbreak of severe food poisoning. Before this daylong exercise, the company's employees knew they would be participating in a drill. What they didn't know, however, was the exact nature of the "emergencies" they would face throughout the day.

While USAA's approach to continuity planning is extreme, so are the stakes. This Fortune 200 company manages $64 billion in assets. Its Texas campus houses 16,000 to 20,000 people on any given day—roughly the same number of people who work in downtown San Antonio. With 5 million square feet of office space, it is one of the largest horizontal office buildings in the world (second only to the Pentagon). So if a major security event ever hit the facility, significant casualties are a possibility. USAA provides property, casualty and life insurance and banking, brokerage and investment management services, primarily to members of the military and their families. So, as an insurer, USAA is also in the risk management business and has significant experience dealing with unanticipated disasters.