• Nikki Sanchez

Why Have a Disaster Plan

Running a business or an organization can be rewarding, but also stressful. Planning can bring up some hard-to-swallow topics. As an owner, administrator, or employee, consider the following:

1. If a disaster strikes, how could this affect your business or organization financially?

2. Superstorm Sandy knocked out power for more than six weeks, and Hurricane Katrina left tens of thousands of people without homes to return to. How would you run your business without employees or power?

3. If customers, clients, or vendors can’t reach you - how do you plan on running your business?

Sure, you may hesitate to commit the resources or spend the funds to the development and maintenance of a Business Continuity Plan (BCP), but there are some pretty unavoidable, clear, and catastrophic reasons to have one in place.

1. Disasters Occur… A LOT

Disasters affect nearly 160 million people and kill over 90,000 each year. That is one single year. You may think, “I’ve never had an issue before because disasters are rare in my area,” but they do happen, and the amount is multiplying each year.

Number of reported disasters by country and continent in 2017, CRED (March 2018).

These numbers are on every continent. We also know that Florida and her neighbors to the southeast have been devastated by storms in recent years, so those numbers aren’t exclusive to specific spots. Think because you don’t live near a shoreline you’re safe? Try looking up a haboob...

The craziest part? The number of recorded natural disaster events has more than tripled in the last 20 years. That means that during the past 20 years, we’ve had more natural disasters recorded than the last 80 years combined!

2. Disasters Aren’t Slow-- They Happen Quickly

A disaster isn’t likely to submit a polite request or an RSVP; they occur with little or no warning. Regardless of where you live or what situation you’re in, a hurricane or the collapse of a bridge can suddenly and drastically cause a community or region incredible devastation, sending emotions and anxiety into overdrive. Think about how quickly a fender-bender can happen on the road. Now, imagine 155 mile-per-hour winds taking down multiple power lines at once…

3. Disasters Are Devastating...ly Expensive

Just like when you get sick with the flu, the bills don’t stop coming just because a disaster has occurred. If anything, multiple financial problems can arise simultaneously. In addition to your company’s regular expenses, you can experience the loss of sales, customers, or suppliers. Your employees are likely to have their own disaster-related problems, which can decrease productivity or even harm your company’s reputation. Cash flow will already be greatly reduced due to clean-up and damaged equipment or inventory, but material costs will skyrocket are if resources are scarce. That’s a lot of dollar signs, my friend.

4.You Can’t Assume Anything About Insurance or Government Aid

Especially during a crisis when communication is limited and thinking is erratic. It is nice to imagine your insurance provider or the government coming in on a white horse to swoop in with enough aid to get you back up and running. Unfortunately, it may not be enough, there’s the matter of a hefty deductible, and the scale of a natural disaster can delay a payout anywhere from six months to two years--that’s even if your policy covers everything; that’s not always a guarantee with disasters. A BCP can help make sure you’ve jumped through all the proper hoops before the months of headache-inducing emails and phone calls that still leave you wondering where your funds were when you needed them most.

5. The Value of Your Reputation

In the face of chaos, people don’t always make the most sound decisions, and in the event of natural catastrophes, your decision-making right-hand guy or gal can become unavailable. This can lead to a slew of ethical, legal, operational, or political problems. Remember Nike’s child-labor debacle in 97’ and 98’? What about the 2010 BP oil spill? Both companies lost billions in value dollars and took significant hits to their reputations. A practical and current BCP can assure that your company has resiliency, and lets clients, customers, or stakeholders know that you are confidently capable of looking after them (and their assets, of course).

So: Fail to Plan, or Plan to Fail?

Over half of all businesses in an area affected by a disaster never reopen, some closing their doors within two years. Bankruptcy filings often double within the five years following a disaster. Part of running a successful business or organization is making decisions with humility and logic. A lousy business day is tough to work through. A lousy business day with a fraction of your resources in the face of chaos? That’s a day your business may not survive.

#businesscontinuityplan #disasterplanning

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