Does your business have a continuity plan?

Having an effective business continuity plan can be crucial to getting your business operating again following a major loss or disruption.

A comprehensive plan helps businesses recover faster by establishing procedures and priorities following a loss.

“It’s commonly assumed that insurance is all a business needs to recover following a major loss or disruption,” says NZI Risk Advisory Manager, Andrew Greatbatch. “Property insurance is designed to provide you financial support after a loss, but resilience, and operational emergency or disaster support needs to be planned in advance to give your business the best chance of survival.

Business Interruption insurance can support recovery but having a comprehensive business continuity plan can help you resume operations faster.”

This was highlighted after the February storm in Auckland, when a major supermarket was submerged in knee-deep floodwater. Thanks to a strong business continuity plan, which included agreements with major suppliers, it was able to reopen in just a matter of days.    

“The bottom line is that in an extreme event a business’s survival may depend on the effectiveness of their business continuity plan. When you’ve poured your heart and soul into getting your business up and running, spending a little bit of time and money on making sure you can get through extreme events is a no-brainer.”

Building your BCP

“A business continuity plan – or BCP for short – starts by thinking through how your business produces its revenue. What could stop it?” says Andrew. “Make a list of key dependencies, risks that could affect them, and plan for a scenario where you lose one or more of these.”

The longer your business is out of action, the more likely it is that your customers will have to go elsewhere for what they need. Some will never return. According to the US Government’s Federal Emergency Management Agency, about 25% of businesses don’t reopen after a disaster. “Anecdotally, from our experience, it’s likely to be a similar percentage in New Zealand,” says Andrew.

After identifying the risk areas for your own business, the next important step is to document who will do what, how they’ll do it and when, and the resources they’ll need to get it done.

“A communication plan is essential,” says Michael Burke, founder of Business Continuity Services, a consultancy that supports businesses to develop their own plans. “It covers how you’ll keep employees, customers and suppliers informed, as well as how people will continue to have access to critical business systems and data.

“I always urge our clients to create a management response team. Each person gets clearly defined responsibilities during and after the event’s impact.

“Then, once your plan is in place, stress test it regularly.”

An important part of any BCP is ensuring buy-in across senior management. “If business leaders aren’t completely behind business continuity planning, it won’t succeed,” says Michael.

“In smaller businesses it may be as simple as a verbal understanding between owners about who’ll do what in the event of a disaster.”

“That doesn’t mean it’s any less important though,” adds Andrew. “In fact, smaller businesses often have less resilience to cope with a disaster than larger ones.”

For more on how NZI can help you assess the likelihood and consequence of a loss to your business, as well as how to mitigate that risk, visit our Risk Solutions web page.

For details on the types of commercial property insurance we offer, visit our Property Insurance page.

Finally, NZI offers a host of free material to help you understand and manage risk. One guide we think you’ll find especially useful is the Small Business Risk Management Guide.