When uncertainty exists, there is always a chance for business risks. A business continuity plan is required whenever you apply for a loan or business insurance. The majority of applicants check yes without any actual plan even if they don’t have one.
I wouldn’t recommend that. Institutions ask for business continuity plans for a reason. Neither will you be irritated, nor will you have to do unnecessary work. Both you and their institution want to minimize risk. The law requires many businesses to have their own business continuity plans.
When something unexpected occurs, a business continuity plan provides directions on how to keep the business running. Even if you don’t need to apply for loans or insurance, a business plan is vital to your success, especially during uncertain economic times.
Business continuity plans have been shown to reduce disruptions, improve resilience, and help businesses recover faster from disruptions, according to research. It has been statistically proven that a business continuity plan has a number of benefits.
There are various types of disruptions, including natural and manmade disruptions. There are many disruptions that can occur to a business, including unexpected death, divorce, distress, disability, or disagreements. In particular, a smaller business can be devastatingly affected by any one of these issues.
The extent of the damage? Business disruptions cost an average of $81,000. Even so, 25% of businesses will be forced to close completely. When a business isn’t equipped with the resources to cushion the damage, that’s pretty devastating.
It may be possible to benefit from business interruption insurance if an incident causes significant physical damage that results in losses. Since many disruptions, including the pandemic, do not qualify for business interruption payments, many people found out the hard way. Talk to your broker or check the policy.
An internal job involves protecting the company’s growth, profits, and people from unplanned events. Outsourcing or delegation of this type of risk management and risk mitigation is not an option.
THE FOLLOWING INFORMATION IS TYPICALLY INCLUDED IN BUSINESS CONTINUITY PLANS:
- Contact information for in-house and external parties. Customers, suppliers, and other key stakeholders are also included in this, of course.
- Documents of key importance. The location of documents like leases, mortgages, and key contracts, along with who has access to them, should be recorded.
- Matters related to finances. Despite disruptions, businesses need to continue paying and receiving payments. A basic account overview includes information about where the accounts are located and who is authorized to access them.
- Workarounds for operational issues. How does the business run? What are the key tasks? If the current working model were to be impacted for some reason now, how would they continue to be performed? Cyber-attacks and cybersecurity are big topics right now. How would the business be able to continue operating if something were to prevent it from doing so?
A disruption response time can be minimized by thinking through and documenting this information in advance. In addition to reducing the number of decisions that would need to be made during a disruption, which is emotionally charged and can result in lost revenue, this level of foresight reduces the number of decisions that would have to be made during a disruption.
Instead of spending energy on operational decisions in the heat of the moment, business leaders can use continuity planning to make decisions that will help them navigate disruptions.
When a disruption occurs and the most important thing required is readily accessible information, documenting these areas ensures you have the relevant information at your fingertips. The people tasked with responding need to be trained and informed once the information is documented.
There are inherent risks associated with running a business. When business leaders experience this risk, they take proactive measures to prevent unpredictable and unplanned events from impacting their growth and operations. One of those steps is to have a business continuity plan.
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