Business bosses shouldn't think they are prepared for disaster without testing their recovery plans, says a Bermuda-based specialist who helps test the robustness of contingency arrangements.

David Ciera, manager of business continuity management in the Bermuda office of accounting giant KPMG, said companies can lose significant revenue if they are out of operation for even a few days, whether from a hurricane, fire, or an unforeseen crisis like last July's Island-wide Belco power outage.

Mr. Ciera's warning shot comes as Bermuda, and other hurricane-prone areas, brace themselves for another active hurricane year. Yesterday marked the official start to the Atlantic hurricane season. And the Island could be more prone to a strike this year with weather forecasters predicting greater North Atlantic activity, based on higher sea surface temperatures.

"Some companies have some form of strategy but if it is not tested, you don't know what gaps there are," said Mr. Ciera, in an interview. Companies that have back-up plans, whether to work from existing offices or to move critical parts of their operation to disaster recovery centres on the Island, such as QuoVadis operates, or off-Island, can get help from Mr. Ciera to test how their plans would function.

Some Bermuda firms, including some legal and financial services companies, must also be prepared for possible hurricane activity striking in the Caribbean, where a number have operations.

Mr. Ciera said one test he ran of a Bermuda corporation's disaster plan uncovered that moving key operations to a satellite office abroad would have faced a delay in getting up and running. The reason? Someone had overlooked the need to install reader software on the computers in the satellite location. The problem was easily fixed, after being picked up by the test, but could have cost the company dearly in lost revenue if the glitch wasn't detected before a crisis.

Mr. Ciera, who believes KPMG is the only accounting firm locally to be offering this service, said the cost for testing disaster preparedness will vary company to company, depending on the complexity of the operation.

"Testing should not cost you a fortune, but if you do it wrong (when a crisis strikes), that could cost you a fortune," said Mr. Ciera, who has seen the fall-out from a disaster first hand, having travelled to the Cayman Islands after 2004's Hurricane Ivan, to help struggling businesses get back on their feet. Many Caymans-based staff had to travel to makeshift operations overseas, after the devastation, which took months to right.

For the testing process, companies must be prepared to free up time for key staff to participate in the exercise. Mr. Ciera said it is critical that he enlists those who would be required to make decisions, and perform functions, in the mock test.

His clients include the Island's publicly-listed insurers, and banks, Mr. Ciera said. And it is most often senior executives, from the chairman to chief executive or chief financial officer, who drive efforts to have, and test, disaster plans.

The way Mr. Ciera tests disaster plans is by replicating scenarios from a list of real-life experiences.

"If you do a test and there is no problem, I would consider that an unsuccessful test," he said. "If there are some lessons learned, I take that as a success."

And Mr. Ciera counselled all types of firms, small to large, to implement plans for how they can continue functioning in an emergency.

"A recovery strategy should be (in hand) for everyone," said Mr. Ciera, pointing to the experience of New Orleans' business owners after last year's Hurricane Katrina. "I imagine hundreds of companies in New Orleans won't ever get back up and running."

"The question of how much (a disaster) is going to cost you is the cost of everyday you are not in business," he added.

And he said Bermuda companies looking to relocate operations overseas need to think through whether they have the legal or regulatory right to move files, and do business, even temporarily, overseas.

A 2004 survey of 700 international corporations found the "downtime tolerance" for companies, or how long operations could be down before there was a severe adverse impact on their businesses, averaged between two and 24 hours.

Mr. Ciera said publicly-listed companies are amongst those that must have a disaster preparedness plan that works because of the requirement to be able to make timely regulatory filings, as well as to mitigate the fall-out from investor concerns, which can bear on a company's stock price.

Credit agencies will also frown on a company that doesn't have the ability to get back on its feet quickly during a time of emergency.

"For insurance companies the key concern is their ratings which could be downgraded (in the event of a crisis knocking out operations), which clearly impacts their financial position," he said, as an example of one sector that needs to keep ratings firms happy.