Should you have a business continuity plan?
Forty percent of businesses do not reopen after a disaster and another 25 percent fail within one year, according to the Federal Emergency Management Agency (FEMA). Companies that plan for emergencies greatly increase the likelihood of staying in business and getting back to work quickly.
A business continuity plan can:
- Maintain business operations after a disaster occurs.
- Ensure continuity for providing supplies or service to customers.
- Uphold a good business reputation.
- Uphold shareholders’ interests.
- Minimize legal liability and insurance costs.
An effective plan needs to encompass how employees communicate, where they will go and how they will continue to do their jobs after an emergency. Based on experience, CNA estimates for every dollar of loss, three additional dollars are lost due to a damaged reputation, lost profits and indirect loss costs. Insurance protection alone is not enough. The time to plan for a disaster is now – not after a loss occurs.
Creating and Enforcing a Business Continuity Plan
- Identify types of losses that could affect your company and assess the degree of risk – loss frequency and severity potential should be analyzed.
- Identify operations crucial for survival and recovery.
- Determine security needs if an emergency were to occur to protect both people and property.
- Create a contact list of key vendors and business partners and keep that list off-site.
- Review the emergency plan at least annually and update as needed and hold realistic drill so that employees can participate as expected in the situation.
