From natural disasters to data breaches, risks for businesses of all sizes are on the upswing. There were 24 weather events in 2024 whose losses exceeded $1 billion, according to NOAA, with the tens of billions in losses caused by Hurricane Helene alone.
In the face of increasing threats, a business continuity plan is a crucial part of operational risk management. Considering that 43% of small businesses don't reopen after a disaster and another 29% go under within two years, according to FEMA, a business continuity plan can be a powerful tool to ensure organizational resiliency. How will you keep your team safe during an emergency? How can your organization stabilize facilities after a disaster? Can you recover vital documents and data under duress?
A solid business continuity plan identifies risks, prepares for potential losses, and plots a road to recovery during disruption. Here are some steps on how to create and implement a business continuity plan.
Step 1: Identify Risks and Potential Impacts to Your Business
The first steps in business continuity planning are completing a business impact analysis (BIA) and a risk assessment. A BIA identifies your business core mission, as well as vital resources, materials, and processes to support this mission, so you can keep these running and safe during unexpected events.
A risk assessment for business continuity planning will delineate actual and unique threats to critical resources such as people, facilities, operations, data, and supply chains. While some on-site hazards such as water leaks can be monitored with early warning systems, a risk assessment tool can sort potential perils and define a clear-eyed approach for disaster recovery.
Step 2: Build a Business Continuity and Disaster Recovery Plan
From software failure to hurricanes and wildfires, each hazard comes with its unique challenges. Tailoring an emergency response plan for each of these diverse risks is crucial. FEMA has a YouTube channel breaking down the essential components of business continuity planning, and an internal business continuity team can tackle these steps systematically.
Once a team's roles and responsibilities are clear, they can create a plan to manage disruptions and disasters when they occur. Here are steps the team might take while compiling a plan:
Assess the strengths and capabilities of people, systems, and equipment, and strategize how those resources can be stabilized following an incident.
Determine interdependent needs such as water, electricity, connectivity, and fuel, and show how to access or circumvent these during an emergency.
Compile off-site customer lists, vendor and supplier lists, account numbers, and contact information for use in the event of data loss.
Communicate with local police, fire, and EMS departments to assess their knowledge of hazards to your physical location(s) and team response times.
Firm up standard operating and emergency procedures, from evacuation and shelter-in-place guidelines to rules around confidentiality.
Make sure proper insurance policies are in place.
Define teams and delineate tasks in the event of a disaster or emergency.
Determine strategies and likely recovery times for critical materials, data, and equipment.
Step 3: Test and Revise the Business Continuity Plan
Testing can ensure your organization's disaster recovery plan is solid, identifying gaps and oversights before an event occurs. For instance, a simulated power outage might assess the effectiveness of emergency procedures. Tabletop exercises for scenarios such as blizzards or security breaches can also stress-test facets of the plan.
With disaster recovery plan strategies and processes tried and tested annually, the team can make sure their business is resilient and ready for the unexpected.
Step 4: Use Your Business Continuity Plan to Manage Crisis
Ideally, a business continuity plan never needs to be deployed. Yet when disaster strikes, that plan springs into action, ensuring that essential business functions and processes are stabilized and resources recovered.
According to Ready.gov, IT recovery strategies should be designed to restore technology quickly enough to satisfy business requirements. With well-defined and tested disaster recovery plans, organizations can quickly restore essential systems and operations from a pre-arranged offsite location. This ensures team safety and business continuity through workarounds for any temporarily disrupted processes.
A Solid Plan Ensures Operational Risk Management
It takes time to create a business continuity plan, but that time is well spent. With a disaster strategy in place, large firms and small businesses can be calm and prepared for anything thrown their way, from winter weather to 100-year floods.
Philadelphia Insurance Companies (PHLY) is well acquainted with preparing for disasters. We offer policies and risk management resources to ensure prompt business recovery after such events. To find out more, contact us at PHLYRMS@phly.com.
Additional Resources
Resources for Business Continuity Planning
Standard on Disaster/Emergency Management and Business Continuity Programs - National Fire Protection Association (NFPA) 1600
Professional Practices for Business Continuity Professionals - DRI International (non-profit business continuity education and certification body)
Continuity Guidance Circular - Federal Emergency Management Agency
Open for Business Toolkit - Institute for Business & Home Safety
Additional blogs in PHLY's Disaster Preparedness Series
Summer Safety - Pools, Playgrounds, and Grilling- Philadelphia Insurance Companies (phly.com)
Hurricane Preparedness- Philadelphia Insurance Companies (phly.com)
Wildfire Prevention- Philadelphia Insurance Companies (phly.com)
Winter Weather Risks- Philadelphia Insurance Companies (phly.com)
Pipe Freeze Prevention- Philadelphia Insurance Companies (phly.com)
Residential Fire Safety- Philadelphia Insurance Companies (phly.com)