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A Little Preparation Now Could Keep You in Business if a Disaster Hits

03/28/2016 Mike Ballenger

An ounce of prevention is worth a pound of cure.

Of course, there are some things that just can’t be prevented. But with planning, they can be later cured.

One in four businesses closes after impact by a major disaster, according to the Institute for Business and Home Safety. This is usually because they weren’t ready with a recovery plan they could put into place quickly.

Disaster recovery planning can stack the odds in favor of your company’s survival.

Following are some guidelines for creating such a plan.

Develop a team

The first step is to form a team that will both do the planning for a disaster and manage the response should one occur.

Choose members with a variety of attributes that would be useful after a disaster, for example, calm demeanor, good communication skills, and knowledge about the physical plant, business processes and databases.

The team needs a leader. Often this will be the president. If not, it should be someone who reports to the president.

Identify major risks

The team should start by doing a vulnerability analysis, which consists of two parts. First, assess the likelihood of occurrence of various natural and manmade disasters. For example, along the Gulf Coast, hurricanes will figure prominently in the planning, but earthquakes much less so. Just the converse will be true for the Pacific states.

Second is an impact analysis for the most likely disasters. How would your business be affected by each type of disaster? Which ones warrant the most planning?

Plan for the worst

The next step is to create a disaster plan and put it in writing. There are two parts to this plan: one for business continuity and one for responding to the needs of employees.

Plan for business continuity

Determine which staff, materials, processes and equipment are essential to business continuity –that is, to meeting your customers’ needs. Then, with the results of the vulnerability analysis, determine which of these would be at risk in the event of a disaster.

You will need to create (1) safeguards for each of these assets and processes where possible, and (2) backup plans where safeguards are not possible or not foolproof. Where can you quickly get more staff or equipment, use of a different facility, backup data from your data management system, or alternate contractors and suppliers?

Create a contact list, including emergency numbers, for all employees, critical contractors and vendors, and local emergency services. Get a copy to everyone on the team.

Arrange programmable call-forwarding for your main business lines so that, if you can’t get to the office, you can call in and program the phones to ring elsewhere.

Define responsibilities in the event of a disaster. Make sure people know their roles and receive any training needed to carry them out.

Cross-train employees to step into key roles that could become vacant. Have contingencies for replacing everyone up to and including senior leaders who are out of action.

Plan for employee needs

No business can operate without its employees. This makes employee communication critical after a disaster. Employees need to know where they can get assistance for their immediate needs, as well as what the company expects of them.

Disasters can shut down some means of communication. Consider how often power and phones are out after a storm. The solution is to have redundant means of reaching your employees.

Consider the following options and select the ones you think would work best for your company:

  • On-site, face-to-face meetings
  • A toll-free number for employees to call to receive live answers to their questions and concerns
  • A toll-free number on which you can record an announcement for employees
  • A page on your intranet where you can post and update information
  • A telephone call-tree to reach a large number of employees quickly
  • An e-mail distribution list of all employees

Develop disaster-related policies

It is important to have clear policies on issues that may arise during a disaster. These include:

Attendance: Who decides whether employees need to report for work? Will absent employees be required to take vacation? Do these policies apply differently when there is difficulty or danger involved in reporting, or when employees have personal problems preventing them from reporting (for example, damage to their homes)?

Pay when out of work: Will employees be paid for missed work? For how long? Does their reason for missing work make a difference? How will you pay employees if they are dislocated, cannot come in, and/or the banking system is disrupted?

One size does not fit all when it comes to disaster management planning. But it is better to do too much than too little in preparing for events that could paralyze your company if not handled well.

Without good management, construction projects will run over budget and behind schedule.

For additional information or guidance related to this article, contact Mike Ballenger at mballenger@vlcpa.com or 800.887.0437.

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