In light of the recent devastation that has struck Japan and the Southern part of the United States, businesses should develop a strategy to prepare for any disaster, small or large, that could have a significant effect on their business. While it is highly unlikely that many of us will have to deal with earthquakes, tsunamis or tornadoes, the possibility of numerous other potential calamities, both natural and man-made, is very real and should be planned for in order to minimize damage and lost time. The following is a checklist of areas that businesses should address in disaster planning.
- Identify what disasters may strike your business – List what potential threats might strike your business. This should include the threat of a cyber attack (for example, viruses, web site hacking).
- Test back up systems already in place – Good business practice usually calls for the implementation of a back up system, especially with regard to computer systems and data. But has anyone ever tested the backup to ensure that it is easily recoverable and that it works? Previously, most companies relied on tape backups. Oftentimes, someone would forget to change the tapes or not take a copy off site. With high speed internet access, it is recommended that you use a service that continually backs up your system and stores it electronically at secured locations. This will ensure that all data has been backed up completely.
- Prioritize business functions – Should your business be struck by a disaster, what are the most vital functions that need to be reestablished in order to get back in business? Listing these out will provide a focus as to where and how resources should be allocated.
- Identify and post evacuation routes, assembly areas and location of emergency supplies – It is important that all employees and customers know the quickest and safest way out of the building and where items such as fire extinguishers and first aid kits are located. A designated meeting place should be established for each department so that all employees can be accounted for. The manager of each department should be charged with accounting for all department staff. Additionally, a manager should be charged with ensuring that all customers have safely evacuated the building.
- Keep an up to date listing of contact information – It is essential to maintain a current listing of names, addresses, phone numbers (both land and cell) and e-mail addresses for all employees, key vendors and your insurance company. This will allow for ease of contact.
- Evaluate the requirements of an alternative work location – As part of your business resumption plan, you should contemplate what equipment, facilities and work space will be required. This may include the need to scout out alternative locations.
- Review your insurance coverage annually – Too often we assume that the coverage presented to us by our insurance agents provides blanket protection. It is not until an actual event occurs that we realize that not all disasters are created equal. Suddenly, the coverage thought to be there is either lacking or doesn’t exist at all. A thorough review of your coverage for any potential disaster, to expose the gaps that may exist, should be performed. Areas such as business interruption, emergency expenses, employee wages and business relocation should be addressed. It is also important to know what type of documentation is necessary to substantiate your claims.
The devastation that a disaster causes should not be compounded by a lack of planning or preparation. It is not uncommon for an ill prepared business to never reopen afterwards. By developing a disaster plan, businesses greatly maximize their chances for recovery and their ability to survive a disaster.
For more information on this topic , please contact Jamie Downey at 800-849-6022 or JMDowney@DowneyCoCPA.com.
