In an environment of increased uncertainty, more businesses are realizing that managing risk is no longer an option; but they are a key part of a strong business strategy if they are to survive and grow continuously.
Think of the word disruption and recent pandemics, severe weather events, and cyberattacks quickly come to mind, but personal events can also have a negative impact on business performance.
Especially for small businesses and entrepreneurs, there is rarely a clear line between personal and professional. In fact, the opposite usually prevails.
Take, for example, the case of a successful couple – owners of a retail store for 13 years. He fought hard during the pandemic, both of them fell ill; their business operations were suspended, resulting in missed payments to creditors. With no plan and no one with instructions or the skills to manage the business without him, the couple missed numerous payments that jeopardized the business’s finances. Although the couple recovered, their work did not.
Without proper security, any serious breach in a business owner’s privacy can have a major impact on their operations and the performance of the business. The subsequent impact on the network of people the business relies on – employees, customers and other key stakeholders – goes without saying.
For an anxious business owner, the anxiety and lack of control that uncertainty brings can be crippling, both personally and for the business.
The Importance of Timing
However, proper, timely preparation can minimize the negative impact of unplanned disruptions on the business and enable its continuous growth. Whether the failure is a cyber attack, severe weather or unforeseen illness; having the right contingency plan in place can prevent a case from going off the rails.
Creating a plan to anticipate and respond to unexpected events can be a critical activity that protects and protects people, operations and profits when a disruption occurs.
Such contingency planning for a business usually takes the form of a Business Continuity Plan (BCP).
Business continuity plans prepare businesses to respond to a wide range of disruptions—from cyber attacks to natural disasters and staffing issues within the business (such as the sudden departure of a key employee).
Research shows that business continuity plans work. Disaster Recovery Journal’s 2022 annual Business Continuity study found that organizations with a BCP can recover from disasters an average of 25% faster than those without a plan.
Business continuity plans reduce disruptions, increase resilience and improve recovery times after disruptions. Some institutions, such as banks and hospitals, are required to have business continuity plans. There is a reason for this.
When emotions run high, the middle of a disruption is usually not the best time to execute a plan or think about the smallest details of keeping the business running.
Sometimes the survival of a business depends on the speed of an appropriate response. The best time to make such decisions is usually well in advance of any potentially disruptive event.
Regardless of the size of the business, when there are people who rely on that business’s revenue, having a business continuity plan is both a prudent and strategically sound approach.
In the case of a small business, this contingency plan should be shared with a spouse, family member, office manager, and usually ensures that business operations can continue in a crisis.
What’s in a Business Continuity Plan?
A sound business continuity plan has documented directions and procedures in one place to guide the business to respond confidently and recover quickly from a disruptive event. It provides detailed information on how to continue or continue the operations of the business.
Although not exhaustive, a sound business continuity plan should include:
- MANAGEMENT: who to turn to in a crisis. This includes key stakeholders, including members of the business continuity team, and how to engage with them;
- INTRODUCTION AND DOCUMENTATION: Where to find critical information in a hurry. This includes the location of key documents, assets and partners;
- OPERATIONS: how to keep working. It includes critical functions and their solutions after Business Impact Analysis; communication plan; training approach and useful information to maintain key relationships.
No discussion of risk is complete without addressing the role of insurance. Insurance also plays a major role in reducing risk. While this is a key component of a business’s risk management strategy, it should not be the only component.
Insurance pays out only if certain factors are met that prove eligibility for claim settlement. It is important for businesses of all sizes to have the right types of insurance coverage to be effective.
With the increasing frequency and severity of unplanned outages, mitigating risk is no longer an option for businesses. Businesses increase their chances of survival by preparing for uncertainty with business continuity plans combined with the right types and amounts of insurance.
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