5 tips to minimize the risk of a disaster for your business
3 minutes read
A natural disaster, extreme weather, fire, flood, explosion or cyberattack can disrupt day-to-day operations. A criminal act or the serious illness of key personnel can also hurt your business.
Recovery is critical for the survival of your business.
So how do you get your business back up and running? Creating a well-designed post-disaster plan will help you minimize the risk to your employees, clients and suppliers, ensure business continuity and safeguard your bottom line.
“It’s all about being prepared for any interruption to your business operations,” says David Rowland, Senior Analyst, Operational Risk Management at BDC.
Highlight what is essential to keep your business running
Whether it’s a disaster recovery plan or business continuity plan, everyone will need to know about it. You will also need input from your employees when creating your plan, says Rowland. And it should be broad enough to cover different types of disaster scenarios.
“Focus on activities that are really essential to the delivery of your products and services. That really goes a long way to reducing your downtime,” he says.
For example, Rowland says your employees should be able to work remotely, if possible, to keep your business running.
5 tips to recover from a disaster
Every plan should start the same way: Call emergency services and make sure that your employees are safe.
From there, however, Rowland advises businesses to look closely at these five areas when creating their post-disaster plan.
1. Ensure your plan is easily accessible in an emergency
Make sure your plan is stored electronically and employees have access to it through a cloud service no matter what they’re doing or where they are working, Rowland says. If you’re not onsite with your company, your employees need to know what to do.
To make it easier to follow, consider writing your plan in the form of a checklist.
Also keep up-to-date copies of documents such as insurance policies and legal papers on a cloud service to access them at any time.
2. Line up solutions to continue your operations
When you create your plan, think of how you will continue to operate your business following an emergency. If you provide a service, for instance, your plan should include arrangements to rent temporary office space with an estimate of the cost.
If you can’t ship your products, have a new supplier or delivery company ready to step in. Look at your supply chain and see where there are alternatives to keep your product in your customers’ hands.
If customers can’t reach you and can’t get what they expect from you, they are going to move on and find someone else.
It’s also important to let your customers know right away what has happened so they will understand if there are delays or other problems in getting your product.
“If customers can’t reach you and can’t get what they expect from you, they are going to move on and find someone else,” Rowland says.
If you are a manufacturer and your plant burns down, for example, you won’t be operational right away. You will either need to rebuild your plant or find other premises.
3. Have an up-to-date inventory of your assets
Having an updated list of all your inventory and assets can make it much easier to deal with your insurer following a disaster.
Rowland says business owners need a detailed list of their assets, including any buildings, equipment, software, stock and furniture. The inventory can include photos, equipment serial numbers and other information that will easily identify a particular asset.
Contacting your insurer should be done as soon as possible to begin the claims process. You should know the value of what you have and what has been lost or damaged and make sure that your business isn’t underinsured.
“It’s never a bad idea to enlist the help of a professional with experience to establish the appropriate documentation that you need when contacting your insurer after a disaster,” he says.
He adds that you should also find out if you are eligible for disaster relief from municipal, provincial or federal governments.
4. Protect your cash flow
Protecting your cash flow should be a priority following a disaster since your expenses are likely to go up, while your income could decrease due to disruptions to your operations.
It’s a good idea to contact your bank early on to let them know you have been hit by a disaster. You may need to extend your line of credit to cover expenses. A term loan with flexible terms can also be useful to protect your cash flow while your get back on your feet.
Rowland adds that it’s a good idea to contact your suppliers to extend payment terms, if necessary, to keep the business running.
5. Test and update your plan once a year
Doing a yearly practice run of your plan can ensure everyone on your team understands their role in case of an emergency.
This will also ensure that your plan reflects your current business needs and allow you to correct any problems or address lessons learned, if needed.
“You really want to make things crystal clear so that anybody who picks up your plan can follow it and understand what needs to be done and what the priorities are,” says Rowland.
A high-stress situation
Quick, clear and effective communication is the key to managing a disaster or crisis. Your employees need to be notified quickly, and it may be necessary to have a designated spokesperson to deal with media inquiries, he says.
A disaster can really be a high-stress situation, he adds. Having a plan in place will ensure you are ready to meet the challenge.
“With many different types of disasters, the responses are going to be completely different and the impact is going to be completely different. It’s all about being prepared.”