Making a Business Continuity Plan? Start by Asking These Questions

The majority of businesses that DON’T have a comprehensive continuity plan – over 70% of them – will FAIL to recover from a significant interruption event.

Some businesses’ biggest vulnerabilities will primarily relate to natural disasters. Others might be more easily crippled by a data breach, or breakdown of machine. If you’re a landlord, maybe you need a plan for a fire, explosion, or other event that would dislocate your renters, interrupting your income. Try to account for for any interruption that would cause a total downtime.

Whatever your situation, there’s no one-size-fits-all approach. However, all businesses can get the process moving by asking the same set of fundamental questions.

1. What are the risks?

First, perform a risk assessment. When we think about business interruption, most of us think of the obvious disturbances: natural disasters or extreme weather events. Tornado. Blizzard. Earthquake.

But what about the less obvious ones? Theft. A hazmat spill. Equipment breakdown. Major utility outage. Cyber-attack. Terrorist attack or civil disturbance.

What about the death or illness of a key “gatekeeper” or “brain trust” in your organization?

2. What are the impacts?

You’ll likely end up with a lengthy list of possible risks, but their actual impacts may vary tremendously. It’s time for the business impact analysis (BIA). You may even find that the impacts affect the various parts of your operation differently. Determine the specific adverse effects of interruption to each of your critical business functions, and then think about what the ideal recovery scenario would look like for each. Different areas like customer service, fulfillment, accounting, property, and even external vendors should all be considered separately.

Leverage the expertise of your insurance provider to effectively get a handle on this part – we do this every day!

3. What are your mission-critical functions?

What are the core functions that your company needs to continue? What are the minimum resources necessary to keep those in operation? Identify these so that you can shift your focus to protect those when needed. How many of your daily operations can be performed on portable devices, such as phones and laptops? If you use specialized or foreign-made equipment, how easy would it be to replace or substitute? Can you sustain a short-term interruption to your overall supply chain?

4. Can you operate out of a different location?

It may be that much of your business operations can function from a different location – say, staff working remotely from home. Some businesses take the neighborly approach of entering into reciprocal relationships with other businesses, agreeing to help each other with space or equipment in the event of an emergency. If your facility suddenly became unusable, where could you go?

5. Can you retrieve crucial data and contact information from anywhere?

Computer and important hard-copy records should both be backed up regularly and stored off-site, or in the cloud. Also, remember that communication is critical. Maintain a list of emergency contacts that would be your go-to contact list in an interruption: include the essential clients, suppliers, partners and staff, as well as utility companies and emergency responders.

6. Are you covered?

Business interruption insurance is the best way to maximize the effectiveness of your continuity plan. It replaces net income while you’ve ceased operations, so that you can meet all your regular business expenses (like salaries). It can also cover the costs associated with additional expenses incurred during your transition back to normal operations (like temporary offices or equipment). It can even cover losses you incur when a key supplier or customer’s property is damaged.

Also available is an extended period of indemnity (EPI), which would offer supplemental coverage if your business doesn’t bounce back to the same level of revenue right away when you resume operations.

Finessing your plan

Once you’ve asked and answered all these questions with expert help from your provider, a skeletal plan will start to emerge. You’ll know what parts of your operations to focus on in the event of an interruption, and you’ll have identified the crucial chain of communication within your organization. Now’s the time to get your team together and start reviewing roles and responsibilities for different scenarios.

By doing this exercise, you’ll get new ideas and identify blind spots in your initial plan, and you can proceed to refine and clarify. Consider creating focused exercises for key processes/chains of command. Once you have a more robust plan hammered out, review it again. Then, spread the word: all employees and external players need to know what’s expected of them.

Finally, keep it current. Make it a point to schedule regular sessions to review and revise your plan and your insurance coverage to make sure you’re always up-to-date.

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