How Prepared are you for a Disaster?

Is your business ready to operate with critical functionality for up to two weeks?  Will your staff be available to help you run your business in the days after a crisis hits? Lifesaving inventories (food, water, first aid supplies) need to be readily available, protected, and regularly refreshed to ensure the safety of you, your family, and your employees.

The first question small business owners need to ask is how long is too long to have your doors closed? Depending on the services you deliver, it may be as little as one week. Every day beyond the third day your doors are closed, the risk of going out of business begins to increase dramatically.

Most businesses have some sort of disaster plan and a few days of supplies on hand. Either because you feel it is the right thing to do, or state and/or federal laws demand your business be prepared.

Before we get into ways to help you determine your risk in a disaster, let’s not forget your most important asset – your staff. You can plan, stock, test, test, and test again. But, if your staff is unable to reach your office for one, two, or even three weeks, how will you respond? How will you run your business? Will your business survive?

If your plan is simply a bucket or two with food and water, and evacuation map, and list of emergency phone numbers – I recommend you review some of the issues the businesses identified below will face during and after a disaster. You may operate an entirely different business, but there are lessons to be learned from each of the following industries:

Local financial institutions. Most likely, unless you are grossly out of compliance, your plans are in place. Your risk begins to escalate the more localized your branch network. If an earthquake, or large storm (i.e. hurricane) disables or destroys all of your branches, what alternate facilities are standing by? More importantly, are those facilities able to manage your critical data and communication needs? Previously reported data from the Federal Reserve places banks and credit unions at a risk nearing 90% failure if they cannot open by the fifth business day. When was the last time a full test (not just a data center test) was implemented? Your systems are changing a near exponential rates. Are your recovery plans changing as quickly? And, how would a 70% absenteeism rate pan out for a couple weeks? Or, even for a month in the event of viral outbreak?

Financial institutions and related fiduciaries have strict access to various systems. Often a back-up person is in place. What if both are disabled? How will you access critical systems? How much critical information rests among just a few non-management employees? Now, for the non-financial institutions: What areas of your business would suffer if one or two key personnel were unable to arrive to work for a couple weeks? What additional plans might you put into place? What about critical systems? Who has access? What about those key systems only you can access? Who is backing you up in the event you are injured or unable to get to work? And, are you testing these plans?

Restaurants.  Most locally owned non-chain restaurants operate on extremely thin margins. Can you survive if you were to lose your entire food inventory? Without power and customers, you may have less than 24 hours before most of the food begins to spoil. Will your cash flow and reserves allow for a period of up to two weeks without customers? Once you are able to open, will you be able to secure deliveries? How will you accept payment if payment systems are down, or payment processing is limited? (You may think of cash as a backup. However, many of your customers may not have much cash left if ATMs have been dysfunctional for the previous week.) Even if you don’t own a restaurant, what critical business processes might you consider spoiled if you could not protect them immediately? And, how would you recover from such a loss? Are the payment contingencies you need to consider?

Accountants:  Depending on the time of the year, you have contractual obligations with your clients to meet regulatory deadlines. Although, contract law may excuse you legally, are you ready to face the reputation risk of not having a sufficient backup plan to adhere to your commitments? Think of your business as one delivering services to clients who don’t necessarily want the services, but legally need them in a very timely manner. You may not run an accounting firm, but there could be considerable reputation risk if you are not there to perform legal or regulatory duties for your clients.

Day care centers:  Many prepare for the save harbor and subsequent evacuation of their students. Since most day care centers are strictly regulated and have disaster plans in place – you may want to ask yourself how you might learn from their requirements to protect you and your employees. If a disaster struck during business hours, how will you care for those staff members who may not be able to leave, are injured, panicky, and so on. Like it or not, as a business owner, they will look to you for food, water, shelter, and comfort. You may want to pack up and head to your home to care for your family, but what if you have staff at the office? Tough question; with an answer not necessarily found in disaster plans.

I hope these few examples have you asking questions that are not in your disaster or business resumption plan. Remember to “expect the unexpected.” If you don’t believe your plan is sufficient, you don’t have a plan, or need to start over – please don’t hesitate to contact us.  We’ve written, tested, and revised disaster recovery plans ranging from single office recovery, multi-site, Y2K (remember that one?); and addressed issues from earthquakes to the pandemic flu.   It would be our pleasure to assist you with your planning needs.

Regardless of your plan status and needs, a great resource is the Disaster & Safety Library at the American Red Cross’s Website.  Here you will find information about every possible disaster, as well as information to help protect you, your family, employees, and even you pets!

Don’t forget your finances. Here’s a resourceful article from Bankrate to help you prepare your finances for a natural disaster.

There is no perfect plan for the perfect storm.  But, a fair plan is much better than no plan at all.


About Ron Woodbury

Owner and Founder of Ron Woodbury Consulting.