Creating an effective business disaster recovery plan

Posted in Business

Businesses face risks every day – from software failure to Mother Nature. Any one of these risks could force a business to close up shop. In fact, nearly 40% of small businesses close after a disaster1 and only 25% of those that close, will reopen.2

It’s vital that all companies have an effective business disaster recovery plan. If your business does not currently have a plan in place, follow these steps to get started.

Step 1: Delegate a team

Determine who from your internal organization will be responsible for helping out when disaster strikes. You’ll likely want your leadership and management teams to play a role in communications to other associates, vendors, customers and media.

Here’s a situation example:
There’s a power outage this morning at your retail shop caused by a strong windstorm last night. It will take three days for the electric company to fix the problem. You’ll need to determine who is responsible for communicating the situation, timing and next steps to associates, vendors, customers and media.

Step 2: Create a plan

Consider your most critical processes. This will help determine where you need to devote resources, such as time, money and people. Think about each and every aspect of your business (internal- and external-facing) and make sure it’s written down in your plan. You’ll want a full list of contacts, such as vendors and media, placed in your plan for quick reference. You’ll also want to plan out possible disaster examples, action items and who from your team will handle each task.

Think about the example shared earlier. If your retail shop is closed for a few days, sales could dip and you could lose customers. Will your business bounce back? Do you have a website customers could visit? Does your website have capacity for an uptick in visitors? Who will fulfill and ship orders if your shop is out of commission?

You’ll have to think through both short-term and long-term scenarios. A power outage is minor compared to a flood, fire or tornado. What about a complete system or software failure? These examples are significant and last longer than a week. How will your business respond?

Step 3: Review your insurance policy

Meet with your independent insurance agent to review your insurance policy and make sure there are no gaps in your coverage. Think of all aspects – the cost to repair or build, disruption to your business (loss of income, loss of customers), belongings and liability. Remember, most insurance policies do not cover flood damage; however, you can purchase and add this additional coverage to your existing policy.

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Step 4: Seek outside help

Connect with your local fire and police departments. Share floorplans and invite them to visit your office for a tour. The more familiar they are with your building, the quicker they’ll be able to assist during an emergency.

Step 5: Review your plan often and take it seriously

It’s encouraged to review your disaster recovery plan every six months. During that time, make necessary updates to the document, specifically with any changes to associates, vendors and media.

Schedule time to practice and play-out possible scenarios. Make sure those involved take these exercises seriously and know what their role is during emergencies.

Not all disaster recovery plans are created equal. When you create yours, make sure it’s effective. Once yours is complete, test it out. Put together a few scenarios with your team and use your plan as your guide. Does the guide help? Does your team know what to do next? If not, fine-tune it. Determine what works best for your team when it comes to responding and reacting to a disaster and document it.

Additional Resources:
Planning Checklist 
Planning Tip Sheet 

For more information, visit:

Federal Emergency Management Agency
Institute for Business & Home Safety
Insurance Information Institute (III)

This article is for informational and suggestion purposes only. Implementing one or more of these suggestions does not guarantee coverage. If any policy coverage descriptions in this article conflict with the language in the policy, the language in the policy applies. For full details on Integrity’s business insurance coverages and discounts, contact your local, independent Integrity insurance agent.

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