Regardless of the business or industry, unforeseen disruptions are unavoidable. In these situations, organizations can rely on their business recovery plans to minimize damage to company finances and reputation. This plan should outline a comprehensive multi-step strategy for companies to follow in the event of an emergency and ensure they can return to operations as smoothly and quickly as possible.
What is a Recovery Plan?
Natural disasters, cyber-attacks, and economic breakdowns can all pose unexpected threats to a company. For a small business, disasters can have an especially adverse impact, with up to 60% of small businesses shutting down following a disaster.
Though larger companies have more resources to recover from disruptions, it does not mean that they are completely immune. Data has shown that 25% of businesses that close after a disaster never reopen, regardless of their size.
This is why recovery plans are essential for businesses to deal with a range of potential operational disruptions. A recovery plan will evaluate a company's exposure to certain threats (natural or otherwise), review insurance plans, create resilience in the supply chain, and formulate a comprehensive strategy.
Disaster Recovery Plan- 10-Step Checklist
To avoid going out of business or to reduce the recovery time following an event, business owners should create and regularly update a disaster recovery plan. The following ten steps outline the general process of establishing a comprehensive plan.
1. Risk Evaluation
Before any plans are made and actions are taken, the company should evaluate the potential disasters that could arise. Some events may be industry-specific, such as data-hacking of consumer banking details in financial institutions. There could also be an increased risk of natural disasters for businesses operating in earthquake-prone regions, for example.
Once a list of potential hazards to business functions has been compiled, the recovery team can create an emergency response plan.
2. Emergency Response Plan Creation
This outlines the actions to take as soon as a disaster or disruption occurs. It will explain the steps managers and employees should take to stay safe and prevent property, inventory, and asset losses. There will also be strict protocols for who to contact for specific scenarios. The last step is to assign the people who will be responsible for evaluating and enacting the plan. Regular training sessions should be held so that the entire team understands how to follow the emergency response plan.
3. Business Continuity Plan Development
Coming after the emergency response plan, a business continuity plan outlines how to resume operations after or during the disruption. This plan should include the following information-
- Impact Analysis - The business impact analysis is conducted before a disaster occurs to understand its potential consequences. How would disruptions impact sales, communications, etc.? This also looks at the different times of the year when a disruption could occur and how the impact will vary based on timing.
- Strategies for Recovery - The next step is to document the resources necessary to reduce the negative impact (backing up data, duplicate records, insurance, etc.). The company should then determine what is currently accessible and what it needs to enact the strategies in a gap analysis.
- Plan Development - A planning framework is then developed. This includes role assignments for team members and specific recovery procedures.
- Training and Testing - Finally, regular training and testing of the plan will reveal any weaknesses and subsequent changes that need to be made for the plan to be effective.
4. Insurance Coverage Review
Companies should review their insurance plans to determine which disasters are covered and reveal any gaps in coverage for unique circumstances. Additional insurance plans and add-ons to the current agreement can be purchased to cover specific risks, such as natural disasters and accidents.
5. Essential Supplies
Emergency supply kits will be beneficial in the moments following an emergency. These are made up of First Aid supplies, water, cash, device chargers, and more. A company should also consider investing in backup systems like additional power sources or systems of communications.
6. Compile Contact Information
Companies will need to create a list of emergency contacts, including authorities, emergency agencies, clients and customers, vendors, insurance agencies, lenders, and more.
7. Communication Strategy Creation
After the disruption, communicate with clients and customers to keep them informed on what's happening with your business. Organizations can do this on their social media platforms and website, or by email. It's also beneficial to create physical notices such as posters or directly contact affected consumers by phone.
8. Report Losses
The Small Business Administration (SBA) can offer access to resources, advice, and aid to small businesses in the U.S. This organization provides disaster relief efforts and funding to help companies get back up and running.
9. Supplier and Client Logistics
If a business is affected by a disaster, it's likely that the vendors and suppliers have been at least indirectly affected as well. Communicate with the supply chain in all directions, especially if it is a B2B business, which can affect clients and their customers down the line. Identify options to deal with potential negative events before they occur, and stay in regular communication as the recovery procedures continue.
10. Backup Records and Data
Duplicate all important records, documents, data, and contracts, keeping them stored virtually in the cloud and physically in a file. Businesses can utilize cloud-based technology to prevent data loss following disruptions.