Catastrophe planning is vital in business. Can your business survive without you? Or what would happen if an earth quake or fire meant you can’t operate? How long would your business survive? How long would it take you to get your business up and running again? If you don’t have the answer to these questions, then should you not plan so you do have the answer?
At some stage, all businesses are affected by events that happen outside of our control. The events can range from something relatively small – say a broken leg from cycling crash, or it could be a monumental catastrophe like a fire or flood. Regardless of which, plans should be in place so that the business can operate in the least amount of time and continue in the absence or either key people and/or office space.
You may think why would this be of interest to you? We are only a small company, but what would happen if you were incapacitated for any reason? Would your company continue to make money or does it rely on you for all sales? ASOS, the global online retailer found this out to their cost. On June 22 2014, a fire tore through their warehouse in the UK, burning 20% of their stock, which accounted for over US$350m in losses. They had to shut their global websites for 24 hours. Bearing in mind that this particular warehouse housed 70% of their global (cost price) US$216 million stock, you can understand the damage that could have happened. This also meant that they had to post a 4% profit warning, which affected their share price…
That said, ASOS were praised for the fact that, despite such a horrendous thing happening, they had such strong plans in place that they were able to restore working conditions. They were able to release a statement on the Monday June 24 saying, “None of the technology, automation or structure of the building has been affected by the fire. The clean-up process commenced on Saturday morning and progressed quickly. Consequently at 2am this morning we recommenced taking orders. We are fully insured for loss of stock and business interruption.”
Shutting the website for just 24 hours as opposed to several days (as was feared), illustrates how effective their planning was. Within 48 hours the business was up and running, a plan affected to get the business back on track recovering loses (by the implementation of a sale of up to 50% off no less), and statements released to the shareholders. This better than expected news meant that the share price was up 0.9%, by close of business on Monday 24 2014, the first day of trading.
According to Bloomberg.com, “Disaster planning plays an important role for businesses in ensuring they can still operate after an earthquake, a blackout, or other serious disruption. Failing to prepare can mean millions of dollars in losses and major headaches while trying to recover”.
A business continuity plan means that you can prepare for a variety of hazards including fire, power outages and communication failures. You can use insurances to ensure that there there is a financial response available to hire in someone if the business relies on just one person (key man insurance) or even private medical insurance to ensure that you work force can return to work quickly after illness or injury. Contents insurance will enable office equipment to be replaced, and laptops will mean your staff can work from anywhere at any time. Ideally, you need input from every department of the business so that they can give their advice. Ask your staff identify and eliminate hazards which could kill or injure people, destroy and damage property or cause an interruption to business. Think of various events; fire, theft, illness etc. and what the likely outcome of these events would be including; what do you need to do at the time of the event to reduce the impact? What steps you need to take before you are able to successfully implement this plan?
Ultimately, you want to create a system that provides a fast effective response to a disaster situation. The Emergency Prepardness for Industry & Commerce Council (EPICC) in Canada recommends:
- Establishment of a “chain of command” and delegation of authority
- Coordination of requests for assistance and allocation of company resources
- Establish priorities and resolution of conflicting demands for support
- Coordination, direction and distribution of emergency public and employee information
- Collection, evaluation and distribution of damage assessments and other essential information
- Coordination and maintenance of communication with appropriate governmental agencies and news media
They state that, “In your emergency planning remember, that following a major disaster such as an earthquake, you may need to be self-reliant for 72 hours or longer. Government emergency services such as fire, police and ambulance resources will be fully committed and immediate assistance will not be available in the aftermath of a disaster. Roads, bridges, transit systems and essential lifelines could be severely disrupted. Senior staff may be unavailable, injured, at home or in transit. Continuity of management means planning for disruption of normal lines of authority.”
The EPICC suggest asking yourself some questions as a way to getting started;
- Do you have an emergency plan of any type?
- How vulnerable is your business to damage, injury and loss?
- What can be done to reduce risks to employees and their families?
- What will you and your staff do when the disaster strikes?
- How soon will you be able to resume business following an earthquake?
Once you have formulated the answers, you understand your weaknesses and can formulate your plan around this. Don’t forget simple things like how to evacuate/train your staff to quickly evacuate a burning building, and ensure that no one is left behind for example. Have a separate fire marshal and first aider and determine how best you can get your staff back to work.
What Areas Should be Considered?
If a fire was to destroy your office, what steps do you need to take to get it up and running? How can people work in the interim? What budgets do you need to be included? This will be costly, but by having all the details, you can ensure that you have the right insurance plans in place.
All business owners should have ‘Contents’ and ‘Liability’ Insurance at the least. If you own the property, then Buildings Insurance is vital. If the business operates in therein through one or two key people, then ‘Key Man’ cover should be included too. Keeping regular inventory of the items you have on site ensures that you have full coverage to replace destroyed or damaged equipment should the worst happen. Globally there is also Business Interruption insurance which could cover lost income in event of a disaster if your business has to temporarily close it’s doors.
If something vital was to happen tomorrow, and you and your staff can’t get into the office then what? Little measures here like phone numbers, and laptops work as it means you can all keep in contact as soon as the networks are back up and operational.
There is nothing more frustrating than working on something only to find that you have lost all of the information as you didn’t back up the document. Times this by 10 million and you probably aren’t anywhere near how angry you would be if you hadn’t backed up the work from your office for 48 hours – let alone a week. Ensure all work is regularly backed up so you always have a resource to return to should you be hit with something unpredictable. Hold this information remotely; If you back up in more than one facility, you stand a far better chance of being able to resume work as normal as you will have the information readily available. Consider outsourcing this; Burhani offer backup sites in both Dubai and Abu Dhabi. The British Government recommends that this information is retained about 50 miles away or subscribe to an online data backup service provider.
Yes, the cost in both time and finances is great, but ultimately, can you afford to not make any provision for disaster recovery…?
Read our article here for more ways to increase your wellness at work.