Businesses are far more likely to suffer from
extreme weather, such as flooding, rather
than fire, according to recent research
published by the Chartered Management Institute.
The most common causes of business disruption
are the loss of computers/IT and key staff.
The fact that firms usually place more emphasis on
planning to survive a fire than a flood suggests that
many businesses and other organisations need
to revise their priorities especially with the onset
of global climate change, which has been brought
into sharp focus by this summer’s unseasonal downpours.
Research from the British Chambers of
Commerce suggests that 80% of businesses
without a plan fold in the aftermath of
a disaster. A report on climate change
commissioned by AXA last year indicated that 90% of small
businesses are under-insured– with
one in three without business interruption cover to pay their wages and other costs.
The evidence clearly shows that the
key to survival, once disaster strikes,
is a business continuity plan that is
regularly updated and rehearsed. It is essential
to keep a copy of the plan away from the site.
The plan should be simple but focused, with the business
risks clearly prioritised and analysed according to their likelihood and potential impact.
A typical business continuity plan includes:
-
A planned sequence of actions to keep operations going and to recover fully.
- An outline of the role of individual managers and employees for each scenario.
- Details of the off-site IT data back-up and recovery services.
- A list of the key contacts including insurers and utility providers.
Businesses can plan to reduce the risks, but insurance
is still important as the ‘long-stop’. Business
interruption insurance can help a business recoup
financial losses from having to cease operations
unexpectedly for a few weeks or months. Key
person insurance can protect against the financial
consequences of losing key members of staff
as a result of death or serious illness. If it is worth
insuring assets like buildings, stock and equipment,
it is probably worth insuring the most important
assets of the business – the key people. |
