Commercial property owners don’t want to find themselves at a loss in the event of disaster. Anything from a flood or hurricane to an act of terror or cyber-attack, can destroy a business. While most of these events are out of a business owner’s control, having adequate insurance coverage is critical. But it’s just the beginning. A disaster strategy plan that covers the bases from preparedness to recovery is a crucial piece of the puzzle that can help a business owner protect their assets if the unthinkable happens.
In Are We Ready for the Next Big Catastrophe?, we cited cybersecurity, climate change, and earthquakes as among Best’s Review’s “Next 9 Biggest Potential Casualty Risks” you need to be aware of. And while it’s important to understand and guard against the various specifichazards you need to be prepared to face, a bigger-picture approach to disaster management will serve your company in the event of most potential threats.
Your Disaster Strategy
Your insurance agent can help you assess your risks and select the right level of insurance coverage to protect your business from current and emerging exposures, but here are things you can do with your management team today to begin putting formal disaster preparedness and recovery policies in place at your organization.
Our recommendations are based on best practices shared by the US Small Business Administration as well as Ready.gov, which takes an “all hazards approach” following the NFPA 1600 American National Standard and the same program elements adopted by the U.S. Department of Homeland Security.
Disaster Preparedness
To get a feel for the various tasks involved in the process, review the following five steps in developing a comprehensive disaster preparedness program:
1. Program Management
- Organize, develop and administer your preparedness program
- Identify regulations that establish minimum requirements for your program
2. Planning
- Gather information about hazards and assess risks
- Conduct a business impact analysis (BIA)
- Examine ways to prevent hazards and reduce risks
3. Implementation
Write a preparedness plan addressing:
- Resource management
- Emergency response
- Crisis communications
- Business continuity
- Information technology
- Employee assistance
- Incident management
- Training
4. Testing and Exercises
- Test and evaluate your plan
- Define different types of exercises
- Learn how to conduct exercises
- Use exercise results to evaluate the effectiveness of the plan
5. Program Improvement
- Identify when the preparedness program needs to be reviewed
- Discover methods to evaluate the preparedness program
- Utilize the review to make necessary changes and plan improvements
You may want to look into joining the American Red Cross’s Ready Rating Program. It helps organizations prepare for disasters and other emergencies. Members can access tools, resources, and information that’s helpful in evaluating and improving their ability to withstand disaster, maintain operations, and protect lives and property.
Disaster Recovery
In the aftermath of a disaster, a contingency plan will help you and your workforce resume somewhat normal operations. The key is putting a plan together before an emergency situation, when decision-makers are thinking clearly. No one wants to lead in a time of crisis without having a plan in place.
AgilityRecovery.com, a solutions provider delivering business continuity and disaster recovery services, recommends identifying critical business functions and classifying them as high (most severe), medium, or low (least severe) as a starting point in the planning process.
Here are considerations when determining criticality of a function:
- What business objective/goal does this function support?
- How often does this function occur?
- How many business units (departments) perform this function?
- Does the successful completion of this function depend on any other functions?
- Are other functions dependent on this function for its successful completion?
- Is there a potential for revenue loss if this function is not completed?
- Is there a potential for fines, litigation, or other punishment for noncompliance due to a required regulatory requirement?
- Is noncompliance tied to a specific downtime for this function?
- Does this function directly impact the business’ image or market share?
- What priority ranking would you give this function as compared to other functions?
From here, businesses can decide how they want to manage each task—or task category—post-disaster. Which tasks need to be addressed immediately and by whom? How long do we have before addressing less-critical functions? What impact does task interruption have on the business’s ability to serve customers and pay employees? The list of questions is endless, but having a way to measure and prioritize business operations can keep a company afloat during the most difficult and even devastating times.
Talk to your insurance agent about adding business interruption coverage to your property insurance policy. This coverage is designed to pay for operating costs and loss of income you incur as a result of a disaster, while your permanent location is being repaired.
To find an agent near you, visit acadiainsurance.com
Acadia Insurance is pleased to share this material with its customers. Please note, however, that nothing in this document should be construed as legal advice or the provision of professional consulting services. This material is for general informational purposes only, and while reasonable care has been utilized in compiling this information, no warranty or representation is made as to accuracy or completeness.
