March 2014 Newsletter: Planning for Business Disruption

Contributor: Mallory Lundy

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From a widespread and environmental incident such as Hurricane Sandy in 2012 to an isolated event like the sudden death or absence of an employee, there are many possible causes for a disruption of business. Because of this, it is beneficial to have a plan in place before an incident occurs so that your business experiences as few disruptions as possible. While not all business disruptions are foreseeable or preventable, there are key elements to include in each business continuity plan. Warren Whitney’s Mallory Lundy offers some general advice on where to begin.

1. Know the key operations and key operators. It is vital to identify the essential operations needed to keep the business running, as well as the people needed to perform these tasks. Remember to cross-train for essential functions.

2. Keep original files onsite.

a. Original company files will need to be accessible in the event of an emergency; therefore, they should not normally be kept at an employee’s home.

b. Make sure there is an electronic copy of each original document in case the hard copy should become lost or damaged. Keeping the electronic copy saved in multiple places and backed up offsite will provide extra peace-of-mind.

3. Perform regular back-ups. Any important information (e.g., accounting files) should be backed up off-site so that they can be accessed from another location in  case a place of business cannot be reached. Be sure to perform these back-ups regularly. The cloud may be a beneficial tool. As an added precaution, also ensure you have applications on machines offsite as well to restore and run the data. This is especially important if you have legacy systems.

4. Identify an alternate work location.

a. Should a hurricane, snow storm, fire, or other event prevent you and your employees from reaching your place of business, have an alternate location identified in your contingency plan. This will cut down on losses from disruption of business.

b. Consider allowing employees to continue with key operations from their home when appropriate.

5. Create an employee absence manual.

a. This manual should include all of the information necessary for operations to continue in the event an employee is suddenly unable to perform his/her duties.

b. Define employee job descriptions with a detailed explanation of each task the employee performs. The task list should include important deadlines and where to find essential account passwords.

c. Identify who should handle an employee’s responsibilities in the event he/she cannot return to work.

6. Centralize contact information.

a. Update contact information frequently and redistribute the information on a regular basis, especially when gaining a new employee.

b. While traditional contact mediums are useful some companies may decide to use avenues such as social media to communicate during disruptions.

c. Consider whether you could need access to customer or vendor contact information and determine the best way to access and safeguard that information.

7. Inform all employees. All employees, including new hires, should understand the business continuity plan, their roles and how to communicate in the event of a disaster, prolonged employee absence, or other disruptive event.

8. Perform a regular review.

a. In some cases, documents and procedures will need to be updated on a rolling basis or perhaps quarterly or bi-annually. However, ensure that at least annually the plan and all documents are reviewed and practices, procedures, and documents are up to date.

b. If certain daily operations are essential to business continuation, perform disaster drills to test the preparedness and effectiveness of the business continuity plan, including testing the restore from back-up routine for each mission critical application.

9. Consider insurance. Evaluate, or review, business interruption insurance coverage annually with your insurance agent to discern if coverage makes sense based on the particulars of your business model.

 While these measures take time, in the event of a crisis, your planning will prove beneficial.