Like many of you I watched as the disaster was unfolding in Japan with a great deal of sadness for the people of Japan.    The awesome power of Mother Nature yet again unleashed.  As you watched did you think to yourself “what would I do?” Did you run through several scenarios that you would put into place if you were in that situation?. Did your scenarios start with:  “my family would survive because…”, or my business would survive because…”? Did you even think of your business’ survival?  How about your employees?

Here in the Louisville area we have become all too familiar with the effects of major weather events. Ice storms, wind storms and flooding. These obviously are not on the scale of the recent Tsunami or Hurricane Katrina but if you are under one of the events when they happen, the effect on you, your family and yes your business can be just as devastating to you.  For purposes of our discussion, business survival, we will define disaster as any event (man-made or natural) that causes a significant disruption to the operation of your business.

“Due to the highly publicized storms in the past we have compiled much information regarding disaster recovery plans.   However, a disaster can be something as small as a failed switch or computer virus.  These seemingly minor events can have a shocking impact on a business, often bringing operations to a standstill.” –Terry Hyland ,V.P.  Hyland, Block and Hyland Insurance.

How many of the businesses that have been affected by these disasters have a recovery plan in place that will actually allow them to recover? How many of these businesses have continuity plans the will allow them to stay in business?   Does everyone else in your business know what to do? What if you are injured? Who will run your business if you are not there? Will the business your family relies on survive until you can return? These questions can all be answered by and effecting BC/DR plan.  Mr Hyland provided the following steps for creating a recovery plan:

1. Asses your risk - both internally and externally

2. Assess your critical business functions.

3. Plan for an alternate location

4. Consider supply chain preparedness

5. Appoint a crisis manager and develop an emergency management plan

6. Back up your data and plan to restore your technology

7. Create an employee, vendor and key client communication plan

8. Assemble an emergency kit.

9. Take a look at your insurance coverage - Is your insurance coverage adequate? Sit down with your agent to assure that you are insured for potential risks.  Consider business interruption insurance, which may compensate you for lost income should you experience a disaster.  Make sure you keep photos of your building, equipment lists and policy information stored in a safe and secure offsite location.

10. Test your plan

Fifty-five percent of businesses say they do not have business interruption insurance. Mr Hyland lists the following as reason why you should have one:

• It protects the income or profit of the business
• It replaces the lost sales and income of the business
• The business is able to keep its key employees
• The business will have the funds to operate temporarily while rebuilding
• Pays continuing expenses as well as profits
• Encourages prompt settlement of direct property (Building and/or Personal Property) loss
• Allows insured to retain customers

Still not convinced you need a plan?  

A survey by insurer Safeco uncovered the following statistics regarding business insurance and disaster recovery:

n  45% estimated it would take them less than three months to recover to their current level of operations if their business was totally destroyed -- half the time that insurance experts say is common

n  25% of businesses fail to reopen after a year 

n  40% of businesses will fail within five years of a disaster

The main reason by businesses for not having business interruption insurance is because they lack the information necessary to complete the applications. If you fall into this category get help from someone who can help with getting the information, developing a BC/DR , and provide additional support for  your business operations should you not be available for a prolonged period of time.  Following the advice in this article could just save your business.