Have you prepared your business for the unthinkable? How will your business survive a fire, flood, tornado, blizzard or hailstorm? What about a workday disaster that leaves your staff stranded at the office?
Chances are you’ve thought about protecting your business against theft, employee accidents or even a cyber breach (if you haven’t, stop reading and call us right now at 303-721-1145—you need help!)
But most businesses don’t have an emergency management plan in place. Did you know that according to FEMA, 40 percent of businesses will not survive a disaster? Don’t become a statistic. Here in Colorado fires, floods, tornadoes, blizzards and hailstorms are a fact of life. A business disaster plan is as important as a family or personal disaster plan.
Many people create emergency plans for their homes and families, including 72-hour kits, emergency communication plans and home evacuation plans, but it’s often overlooked at the office. Many large office buildings hold an annual fire drill, making sure employees know how to exit the building in an emergency, but some emergencies may require employees to remain inside. Roper Insurance wants to help you make sure your business – and your staff – is prepared for all types of emergencies.
Why Do You Need A Formal Emergency Plan?
Emergencies of all types, wherever they occur, often create chaos and can lead to panic. Having a formal business disaster plan in place before an emergency can help create calm and confidence. It eliminates the need to try and “figure things out” in the middle of a disaster. In addition, implementing steps to prepare for and respond to disasters can help to reduce loss. In order to protect your business from unavoidable interruptions, it is recommended that you have a plan in place.
Having a plan in place serves the following purposes:
- Protects employees, personnel and customers
- Prevents environmental contamination
- Protects revenue, assets and information
- Prevents loss and containing loss that occurs
- Protects your reputation
How to Minimize Business Impacts
Here are six steps you can take now to help minimize business impacts in a disaster:
Determine the Risk
When determining the potential risks for business disasters and emergencies, consider both environmental risks and human risks. Additionally, consider which risks are preventable and which are not.
Once the risks are identified, you can begin to understand all elements involved, such as the hazard itself, the assets at risk, vulnerability to the risk and the ultimate impact of the risk. In order to be best prepared, rank each risk according to the likelihood of occurrence and the severity of impact.
Calculate the Cost of a Potential Emergency
After the risks have been ranked, analyze the impact of each risk. In calculating cost containment, the following should be considered:
- Possibility of injury and illness and the associated financial and human costs
- Lost sales or income
- Increased expenses
- Regulatory fines or contractual penalties
- Delay of business
Understand Your Insurance Coverage
The next step would be to review your insurance coverage. Business interruption insurance generally comes into effect in the case of one of three circumstances:
- Physical damage to the premises that cause suspended operations;
- Damage to property that is covered by the insurance policy and prevents customers or employees from accessing the business; or
- The government closes an area due to property damage that is covered by the insurance policy and prevents the customers or employees from accessing the business.
Since business interruption coverage can differ significantly, it is important to understand the policy terms, such as exclusions, coverage limits and waiting periods. Coverage is provided for lost net income only for the duration of regaining operation. If you have any questions about your business coverage, we are happy to review your policy with you at no charge. For help with this, call Roper Insurance at 303-721-1145 or email [email protected].
Implement Steps for Prevention and Mitigation
There are three different approaches for controlling and containing potential hazards:
- Prevention: This method identifies preventable hazards and implements steps to avoid occurrence of the hazards.
- Deterrence: This method identifies potential criminal activities that create business hazards. Steps are taken to prevent the criminal activities.
- Mitigation: This method identifies hazards that cannot be prevented. Steps are taken to control and contain the hazards in case of an occurrence.
Create a Crisis Communication Plan
Create a crisis communication plan in order to provide employees and customers with updates and critical information. The communication plan should have the following:
- Chain of command: A chain of command allows for information to be shared efficiently and ensures that all personnel receive information.
- Pre-scripted messages: Eliminate confusion by pre-scripting messages that will be shared with customers, employees and the public.
- Bi-directional communication network: Allow for communication to occur in multiple directions in order to efficiently pass information.
Prepare an Emergency Plan
An emergency plan should be prepared and in place before a hazard occurs. The plan should be practiced and reviewed to ensure the effectiveness of the plan. The plan should include the following elements:
- Workplace Emergency Kit: Each location of your business (and if your facility is large, plan for emergency kits in multiple locations) should have an emergency kit with tools, first-aid supplies, non-perishable food and water, and other supplies for sheltering in place. You can download a sample business emergency kit list here.
- IT and data recovery: Implement a data backup program to protect and recover important and sensitive information. Create a technology policy that assists in preventing data leaks in the case of telecommuting employees.
- Contracts: Pre-arrange written contracts with other businesses and external suppliers in order to continue fulfilling commitments to customers.
- Resources: Prepare an inventory of resources that are essential to regaining the ability to operate as a business.
- Test: Run a test of the plan to ensure the plan’s success.
These steps are a good beginning to a solid emergency plan. With them it is possible to minimize potential hazards and to limit the impact of hazards. In order to be completely prepared, contact Roper Insurance & Financial Services today at 303-721-1145 or [email protected] for assistance reviewing and updating your business disaster plan.