Before Superstorm Sandy, it was 9/11; and before 9/11, it was Y2K. And in between these, there were countless others. If there’s anything businesses have learned to accept over the last decade, it’s that catastrophic events happen almost every three to four years and businesses have to be ready. But as The Economist points out, “Each new disaster tends to surprise firms that thought they had good plans in place.”
Claims Management magazine defines business continuity planning as “the process of identifying internal and external threats and establishing specific plans to continue operations under adverse conditions.” But identifying all the potential threats that could arise out of all the potential disasters is intimidating, to say the least.
How can you possibly plan for every disaster? You can’t. But what you can do is plan for how you will react and attempt to work around a catastrophic event if it does impact your business. In order to do this, you must first conduct a Business Impact Analysis (BIA) and risk assessment.
As FEMA explains it, a BIA and risk assessment will allow you to identify exactly how you will be impacted – operationally and financially – in the event of a disaster. For example, it would identify the consequences of lost/delayed sales and income, increased expenses, regulatory fines, customer dissatisfaction, and delay of new business plans.
Even companies hit by Sandy that had invested in business continuity planning (BCP) had to learn a few lessons the hard way. For example, you can never overestimate a storm. Sandy also taught companies that you have to plan for recovery to last an extended period of time. And finally, you must take into account the impact of risks combined – for example, you have to figure out how you are going to operate if employees cannot get to the office and they cannot be reached by ordinary methods.
When you are not in operation, you are losing money. Even so, too many business owners decide to save money now rather than invest a lot of money into long-term protection against something that might never happen. But as the The Economist notes, you cannot always expect prudence to pay quickly!