Does your business have a contingency plan? When it comes to keeping your business up and running prevention is the best risk management strategy and it’s important for all businesses to take a proactive and premeptive approach to loss prevention. We are all aware that crises come in many forms including but not limited to extreme weather, social, political, health, economic factors. Here are a few proven tips and tricks to help avoid and deal with things that can impact your business including: an emergency situation or unexpected event comes up, a disruption occurs to the organization, or something affects or threatens the company’s competitive position.
If you don’t have contingency plans in place before something unexpected occurs, it can cause a whirlwind of problems if a crisis occurs. Being prepared for expected emergencies can make your Canadian business better suited to deal with potential, unexpected and/or unforeseeable ones.
Why Does Your Business Need A Contingency Plan?
With a contingency plan in place, your business, whether it is small, medium, or large, will have a better chance of survival and a successful return to “business as usual”. Here are some other reasons why a business would want to have a contingency plan in place:
- Media Attention: Should a crisis occur, there is a potential for media attention which could be damaging to the company. Negative attention exposed for long periods of time could seriously harm the reputation of the company. How your business responds to this is how the business will be measured
- Legal Liability: Employers are responsible for providing a safe working environment. Businesses can be liable for third-party claims from damage to customers, employees, neighbouring properties, and more.
- Financial Costs: A business can protect themselves and their balance sheet from the cost of damages and business interruption with a well structured contingency plan combined with appropriate insurance protection, they also need to consider business opportunity loss. Loss of market share to replacement of goods, etc. No product of service is indispensable or irreplaceable.
How To Develop A Contingency Plan For Your Business
Your contingency plan should identify the following:
- Tasks
- Resources
- Contacts
- Action(s) required based on specific events or scenarios
- Assets required to minimize the impact of an emergency on a business
The complexity of the plan often depends on the size and/or complexity of the business and it’s operations.
How To Start Your Contingency Plan
To get started, identify all the potential risks to your business. This could include events like fire, explosion, flood, earthquake, burglary and theft, pollution, building collapse, computer failure, product recall, viral outbreak/pandemics etc. After you have done so, rate the events based on the likelihood and extent of the impact. You will then need to do an initial assessment of each risk and consider the following for each event:
- Consider the worst-case scenario
- The length of time to restore the business
- Seasonal issues
- Whether or not other business/property owners could be affected
After the initial assessment, you should be able to have an understanding of what loss events should be addressed first and how much time you would have to get back into business.
Plan Development:
- Identify the resources you need to run your business.
- Consider what you need to maintain your business temporarily – including having an inventory of equipment etc., identifying who will be in charge, and ensuring they understand the process.
- Assign tasks to trusted individuals. Ensure they are fully aware of their expected tasks in advance
- Ensure that financials are considered, including recovering financial records, completing updated inventory, notification of insurance and carrier claim processing, and confirming the procedures for reporting a claim with your insurance broker
- Managing records and dividing them into three main categories: Corporate existence, Financial and legl records, and operating.
- Communication – Prepare your communication plans and notify all affected parties.
Test and Maintain Your Plan
After you have fully planned your contingency plan has been put to paper you must do the following:
- Test it.
- Adjust it.
- Review it annually or after any major changes within the business.
Having proper insurance coverage in place is important, and ALIGNED Insurance can certainly help with getting your business insured and addressing many of the risks that have been identified, but you will still need a contingency plan in place to continue managing your business in the event of a disaster.
