Every now and then, there are companies that go out of business because they have failed to recover from disaster. In most cases, this was a result of poor planning and even due to the management (owners) believing such events would never happen.
Disasters fall into three categories:
- Natural disasters – Preventing a natural disaster is very difficult, but it is possible to take precautions to avoid losses. These disasters include flood, fire, earthquake, hurricane, etc. although I don’t think the last two are very likely, but lightning strike could well be one.
- Man made disasters – These disasters are major reasons for failure. Human error and intervention may be intentional or unintentional which can cause massive failures such as loss of communication and utility. These disasters include accidents, walkouts, sabotage, burglary, theft and criminal damage, virus, intrusion etc. It could be simply some incident happens locally and you cannot get passed a Police cordon for days.
- Technical Disasters – Power cuts, Break down of computer networks or loss of telephone line and broadband connection, gas leaks in or near you property.
Disaster can strike at any time, as I said it need not be your fault, and so often those issues that seem so small can make the highest impact to business failure, particularly to small businesses. As you probably rely on the use of computer systems and automated technology, such as call diversion or answer phone systems the loss of such equipment can result in severe financial loss and cause a threat to survival.
Hopefully I can make you aware of potential disasters and how you can prepare for them before it’s too late.
How Can You Prepare?
To help you begin preparing, you should ask yourself a few questions concerning, what would happen if…? Do not just think of what could happen in the near future, but also the possibilities of the long term.
For example, what happens if there is a fire, flood or theft Also, look at the issues of, say, a trade ban on imports, another petrol crisis like the latest in 2001? Contamination of you premises or stock. Loss of customer records, finance records both who owes you and who you owe and telephone numbers. If you lose power supply, telephone and broadband
When listing these potential disasters, don’t think ‘that will never happen’ the chance of someone setting fire to my shop is zero. Okay, but what about the shop next door or the cannabis factory in the flat above. Nothing is impossible.
In order for you to prepare, you should compile a list of those things that are essential to the running of your business, if you can pre-plan and be able to move in a morning you may mitigate the consequences of a disaster. Listing the actions you need to take to circumnavigate that problem will all help prepare for the worst.
Who can help with this plan ?
Everyone – your staff, family, ask your insurers what help you could get and are you covered for some of the events. Its also worth checking with them to see if you have missed something vital. If your big enough, get a consultant to advise. Ask you Bank would they be prepared to extend credit in such a case.
This all sounds very time consuming but for most of you it’s a couple of hours work, walk around your shop, workshop, house, van and make a note of what’s there, this could serve as an inventory in the case of a total loss, and note ‘must have’ ‘would be good to have’ ‘could live without for a few days’. This would be an essential step if you’re a mobile locksmith and your van is your living.
You could do your own ‘risk assessment’ on the disaster list: So if you start with terrorist bomb – what have you in the neighbourhood that anyone would want to blast? Police station, embassy, army installation or recruiting office, a major political party office. None of these then the ‘risk is low’. Lorry crashing through your shop front? Shop is at the bottom of a hill on a bend if a lorry lost its brakes it could end up parked on the key machines ‘risk high’.
You may also wish to add another column to you disaster plan, how long any disaster may last and what that would do to you: So the road closed and you can get in via the back door – no real impact except no customers. Power out for a couple of hours, have you a generator that can operate essential machines (beware a PC on a generator), and so on.
In some areas warning may be given flood defence or tidal surge, utility company telling you that on a date and time you will lose a service, you can pre-plan. Depending on your location, the threat of disasters will vary but the most common threat that you should consider is breakdown, crime, vandalism and fire. The amount of on-line computer crime is also increasing including fraud, theft and hacking, and is becoming a huge threat for web site based companies.
Prioritising Your Business Operations
The next section of the plan is to identify needs considered as critical to your business i.e. those things that are needed for the business to continue operating should it be effected by disaster. This may include:
- An operation e.g. printing, a manufacturing process, e-mailing, etc
- Information e.g. telephone numbers, customer details, etc
- Documentation e.g. invoices, application forms, etc
- Key personnel e.g. yourself if you are a sole trader
- Key Assets e.g. machinery, vehicles, computers, etc
Once these critical needs have been identified, you should order them by importance even if you need at least two of these for your business to operate at all. The final order that you have assigned will determine your order of approach for disaster prevention/security/back up and how long you can afford to delay any actions for each one.
This will form the main content of the plan and should be covered with great detail which will come from extensive research. You should consider every aspect of your business including the permanent/temporary loss of premises, software, hardware, communications, machinery, documents and vital information.
For example, if you are a Butcher and you encounter a disaster that prevents you from using the premises for a long period of time, do you have an alternative location that you can immediately use? Where could you get adequate freezer storage units so that you can continue trading? How long would delivery take? How much would it cost? Where would you get the finance. The premises would also have to meet health, safety and hygiene standards. There would be a lot more issues to consider but these are just some examples so that you get the idea.
When you determine recovery strategies, you need to consider the costs of implementing them. Be realistic to what you can afford and therefore don’t suggest anything that stretches your budget. But do not totally ignore unaffordable expenses: have a ‘best we can do’ option.
Testing and Reviewing the Plan
Once you have completed the plan, it needs to be tested and looked through to determine that it is feasible and that all the steps have been covered. When testing, you should read through the plan with a series of situations that may occur as a result of disaster: you should make an effort to simulate some of the actions that you have written.
By following the steps and strategies that you have complied, you should determine if the situation can be solved. If not, then you should identify what is missing or where you have been misled. You then need to update the plan.
Once the test has suggested that it is feasible and easy to follow, you should review the plan with everyone including your employees. You should assign responsibilities to people (which will be recorded on the plan) and talk them through it so they understand what needs to be done in every situation: always have at least two people who can do each task.
After the plan has been written, tested and reviewed, it should be approved by management and it will then become their responsibility to maintain and update the plan periodically (at least twice a year). Also when the plan is finished, you should immediately implement any actions that you have identified. This may be the search for temporary locations, making a back up of information, or anything that you have stated that needs to be done to prevent disaster or prepare for one.
Beyond doubt, commercial insurance should be the bed-rock of your disaster recovery plan. A visit to a commercial insurer is a must: however, most would be happy to visit you and provide you with a break-down of your insurance needs. Knowing what to do in a disaster is a poor second to not having the capability to make it happen.
Disaster could happen at any time to your business and therefore it is important that more action is taken than just making back up copies of data and documentation. You should also write and implement a disaster prevention and recovery plan which will include the involvement of all the management staff and supervisors with the additional input of the employees. The aim of the plan is to provide you with security that your business won’t suffer from financial loss during the period of disaster and even to avoid business failure.
The plan should determine all those areas and functions that pose a high threat to disaster and those that will have the biggest level of impact should disaster strike. You should also identify those things that you regard as critical for your business to operate so that actions for dealing with each issue can be prioritised. Your plan should determine recovery strategies for each function with a view to every potential disaster that could happen. This may include stand-by systems and also alternative methods for the continued operation of your business. Further, you should revise ways of preventing human disasters.
The plan itself is a form of insurance (but will not replace an insurance policy) that will give you the confidence that your business can continue operating after a disaster. The effectiveness of the plan will relate to the way it is written in terms of being able to understand and follow. Consequently, the level at which actions will be integrated will too be determined by the quality. It is important that the plan is tested periodically to be sure that it remains feasible and that it is updated with every little change your business makes