Can Your Company Survive a Disaster?

When we hear the words “disaster,” we commonly think about earthquakes, fires, and floods. But, as demonstrated by the power blackout that occurred over a large part of the U.S. this past August, “disasters” can come in several other forms as well.

When disasters happen, they can destroy buildings, equipment, and hard-to-replace data, in addition to harming employees. They can disrupt businesses in more ways than one can count. It can take weeks — and sometimes months — for a business to resume operations after a disaster. Some never recover.

You can’t predict when a disaster may strike your business. However, you can certainly prepare for one. Disaster planning can minimize the potential damage and may protect you and your employees from harm.

Knowing what to do if a disaster strikes is half the battle. Wise business owners draw up disaster plans and update them regularly. They consult with experts and draw on the lessons learned from the past. They cross each “t” and dot each “i” by designating alternate business sites, arranging for the preservation of critical information, and ensuring that the business’ insurance coverage is sufficient.

Drawing Up a Disaster Plan

As long as you have a business to protect, it is never too late to devise a disaster plan. If you do not already have a plan for your business, now is a very good time to start one.

How do you put together a disaster plan? You can begin by forming a planning committee consisting of managers and key employees and assigning that committee the task of crafting and implementing a disaster plan for your business. Give committee members the opportunity to attend seminars and take training courses related to disaster planning. And, if the need arises, give them the ability to bring in a professional who can help guide them in their efforts.

If your disaster plan is to have any value at all, it must, at the very least, outline in detail all of the steps managers and employees need to take if disaster hits. The main goal is to have a blueprint for getting your business back up and running as soon as possible.

An effective and workable disaster plan should also cover personnel safety and, in the event of a worst case scenario, management succession.

Personnel Safety and Management Succession

An effective disaster plan should clearly identify an evacuation route as well as safety areas for employees. Specific individuals should be responsible for confirming that all employees have reached the designated safety areas. The plan also should outline a chain of command, indicating the responsibilities and duties assigned to each manager or employee during a disaster.

An important feature of the plan is to have readily available a list of emergency phone numbers — hospitals and other emergency care facilities, fire and police departments, and the company’s lawyers and accountants. Be sure to include the home phone numbers of employees and the names of family members who can be contacted in an emergency.

Ensuring management continuity after a disaster should also be a top priority. Procedures should be established that set forth the responsibilities and duties of each member of the management team in the days and weeks after a disaster.

The procedures should clearly define a line of succession and give instructions on how changes and other information should be communicated to employees, customers, vendors, and professional advisors. Creating and implementing these procedures will help keep your business operational during a very difficult time.

Alternate Business Facilities

Getting your business restored after a disaster is much easier if you store vital backed-up data at an off-site location. You’ll need to be able to access customer and vendor lists, accounts receivable records, and other critical data if you are to resume operations quickly.

Make sure you identify and classify corporate data according to its importance and begin to back it up and store it off-site as soon as possible.

It may be worthwhile to look into alternate business sites (essentially facilities with computers, work areas, and phones) that you can utilize when necessary. If a disaster strikes that destroys your main facilities or makes them unusable for a period of time, you then can move your personnel to the alternate site, at least temporarily.

Insurance Coverage Review

As part of your planning, review your business insurance policies to identify any potential shortfalls in coverage. Business interruption insurance — which compensates a business for the loss of operating income when normal operations are disrupted by disaster — is a key component in business insurance planning. Take the time to periodically re-examine your business’ liability, fire, vehicle, and property insurance. Keep copies of all your policies at an off-site location.

Don’t Let Your Plan Stagnate

Once prepared, your disaster plan is a living document. It needs to be reviewed and, if needed, revised on a regular basis. Your business is changing all the time. It makes sense that your disaster plan should reflect those changes.

Making sure the business has an effective disaster plan should be near the top of an owner’s or manager’s to-do list. Should a disaster strike, you will be thankful you took the time to develop and update your disaster plan.

The information provided in the newsletter has been obtained from sources believed to be reliable but its accuracy is not guaranteed.