Disaster Planning: Plan for the Possible

According to the Institute for Business and Home Safety, an estimated 25% of businesses don’t reopen following a major disaster. The Federal Emergency Management Association (FEMA) paints an even bleaker picture, putting the number between 40-60%, with another 25% failing within one year.

Some disasters, like a hurricane, give you some time to plan before you evacuate, while others, like a fire or cyber-attack, offer no warning whatsoever. While there’s no way to predict or prevent natural disasters, there are steps you can take to minimize your business risk and plan for recovery.

Identify specific risks to your business. Play the “What if?” game and see how your business would fare in the aftermath of a disaster. Start small: What if someone falls in your lobby and sustains an injury? Then move on to bigger concerns: What if a fire guts the building and you lose everything in it? What if a small fire caused major water damage due to the sprinkler system and/or the fire department?

You should also ask, “What disasters are native to my location?” Identify the most logical risks and have a plan for each. Make sure your insurance advisor is part of this discussion so that your policies are up to date and the limits are appropriate for each type of potential disaster.

Back up your back-ups. You may be diligent about backing up your computer network and data, but have you ever actually “tested” your data back-ups? This is an easy thing to do and provides peace of mind that your data recovery will go smoothly. You should conduct periodic back-up tests, as well as ensuring all your significant systems are being backed up daily to avoid disruptive surprises.

Create off-site storage. Contracts, banking information, shareholder agreements and many other documents — both paper and electronic — should be stored off-site for easy retrieval in case of a disaster. Having this information accessible will allow you to reach customers and vendors more easily and, if necessary, smoothly transfer services to a new location. It is now much more common for businesses to have an off-site electronic storage solution in a different part of the county. Again, assessing the type of disasters your geographic location is prone to is a key part of addressing the proper backup solution.

Draft a disaster recovery plan. Putting your plan in writing compels you to make important decisions. Your plan should be updated annually and include choices about physical facilities, personnel, IT, communication and customer service. But don’t stop there, if you do not inform your personnel about the plan and how to react in the face of a disaster, you have not done enough. Key staff should be assigned responsibilities and each employee should understand the plan, the communication strategy and their expected actions in the event of a disaster. Run drills every so often to ensure everyone understands the plan and how to react.

There are many resources available to help you plan and prepare to respond to natural or man-made disasters. We’ve highlighted a few below:

Also, remember that a disaster doesn’t have to happen directly to your business to be disruptive. If a key vendor or support function is wiped out, this could potentially affect you as well.

About the Authors

James E. Merklin
James E. Merklin
Partner, Assurance and Advisory


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