Planning to keep your business not only afloat, but thriving immediately after a disaster- is more important that you might think. Most of us believe that disasters will happen to someone else. From industry experience, most business owners and key management staff believe the same thing by evidence of their inaction on this matter. Research on the topic is sobering. According to a study performed for Gillis Ellis & Baker, “50 percent of businesses suffering a serious loss never reopen, and of those that do- more than 25 percent will close within three years" (1). The National Archives and Records Administration notes that “93% of businesses that lost their Data Center for 10 days went bankrupt within one year.". (2)
Think about the possible uninsured consequences of a major loss/disaster. Most businesses are significantly under-Insured (if they indeed are insured) for business interruption coverage. Loss of income does not always include the loss of a customer whom seeks assistance from competitors should they be unable to obtain the product/service from your company (we refer to this as “customer retention”). What about employees that require income while your business is down? Time and planning are crucial before a major disaster hits. Disaster planning is a very comprehensive topic (and it is impossible to tackle everything that is involved in a blog article), but here is one template/outline with the major elements of a plan…. I. Corporate Risk Exposure Assessment Basically, what are the most likely exposures and who should be involved in leading/managing the plan? Actions to take should include the following: 1. Risk Exposure Assessment “matrix” or chart that includes: v List risk exposures v Determine probability of event v Determine impact of the event v Make recommendations 2. Prepare the plan v Assign responsibilities v Define purpose of the plan v Set timetable for completion of the plan II. Readiness Assessment An honest and thorough assessment of readiness in every department/ area of operations is the first step of control. Questionnaires are helpful tools to assess readiness and may include: v Preparedness v Emergency Response Plan v Business Continuity Plan III. Preparedness Planning The plan may include the following: v Windstorm v Hurricanes v Tornados v Winter Storm v Freezing Weather v Earthquake v Vital Records Storage v Flood - Surface Water v Civil Disturbance v Fire IV. Emergency Response Plan v Evacuation Plan v Emergency Response Teams v Emergency Response Procedures v Fire v Bomb Threat v Power Outage v Phone Lists v Public/vendor/customer notifications V. Business Continuity Plan Once you’ve made it through the event(s of the disaster itself), this step covers implementing the resumption of business v Business Impact Analysis v Vulnerability Analysis v Strategic Planning v Business Continuity Plan v BCP Organization v Emergency Response v Disaster Declaration v Plan Testing VI. Restoration Plan What about the months and years afterward? Think “long-term” and strategically. v Restore or Rebuild? v Identify alternate site v Prep alternate site v Develop Plan v The Human Side of a Disaster Design/Development, Implementation, Testing & Monitoring, and Maintenance are all important stages of a plan. Many businesses develop and even implement plans, only to fall short on the later two stages- particularly the maintenance stage as staff and responsibilities shift over time. Simulations are very telling and will reveal the shortcomings of your plan. Westfield Group Risk Services is ready to assist your business in developing a plan to prepare and sustain your business. More information can be found at http://www.westfieldinsurance.com/business/business_losscontrol.jsp, or simply contact your agent and ask about us. (1) © Gillis, Ellis & Baker, Inc. (2) National Archives and Records Administration
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