According to the Insurance Information Institute, 119 natural disasters occurred in the United States in 2014, totaling $25 billion in losses. But natural disasters represent just a portion of the crises that your business could face. Although you may not be located in an area prone to hurricanes, blizzards, tornadoes, floods, earthquakes, mudslides, and wildfires, you still need to consider the potential for power outages, civil unrest, terrorism (including cyberterrorism), fire, data breaches, and illness epidemics. What risks and hazards might your business face?
Approximately 40% to 60% of small businesses never recover from a disaster, reports preparemybusiness.org, a website created by the Small Business Administration (SBA) and Agility Recovery, an organization that helps businesses prepare for disasters and manage emergencies when they strike. For this reason, it is in the best interest of every business to identify potential risks and develop a plan to address them—before a crisis hits. Fortunately, many resources are available to assist business owners in developing a disaster preparedness program.
Where to Start
Following are five steps that will help you create a disaster preparedness program, as outlined by ready.gov, a national public service campaign designed to educate Americans about preparing for and responding to natural and man-made disasters.
Step 1: Program Management
Although there are often minimum regulations that govern how certain businesses manage risk, as a business owner you will need to determine whether the minimums are enough. As ready.gov states, “Many risks cannot be insured, so a preparedness program may be the only means of managing those risks.” Management commitment to a preparedness program, as well as a written preparedness policy and oversight committee, may be critical to ensuring your business’s longevity.
Step 2: Planning
This step should include the creation of a “risk assessment” that identifies all potential risks and hazards for your business, with ideas for mitigating their impacts. It should highlight threats and hazards that are considered “probable,” as well as any that could cause injury, property damage, business disruption, or environmental impact. Another critical document is the “business impact analysis,” which details sensitive or critical processes, as well as the financial and operational impacts that would occur due to disruption of those processes.
Step 3: Implementation
In this step, committee members identify and assess resources, draft written plans, develop a system to manage incidents, and train employees as needed. Several key documents contribute to successful program implementation, including crisis communications, emergency response, and business continuity plans.
Step 4: Testing & Exercises
In order to evaluate the program’s effectiveness, including the success of employee training, management should run tests and drills to see what works and note opportunities for improvement.
Step 5: Program Improvement
During testing or an actual incident, weaknesses in the program are likely to be revealed. They should be documented, along with lessons learned and strategies for addressing such problems in the future.
Other Resources
The Small Business Administration (sba.gov) offers a number of resources designed to help small businesses shore up their emergency preparedness, including links to templates and worksheets that will help you gather the data you need to put together the various written documents. At this website, you can also find links to information about the SBA’s own “Disaster Preparedness and Recovery Plan,” which provides details on assistance the SBA offers after a disaster strikes.
American Red Cross Ready Rating™ (readyrating.org) is a self-guided online program designed to help member businesses, organizations, and schools assess their level of emergency preparedness. The core of the program is a 123-point self-assessment that is used to gauge one’s level of preparedness. Members also have access to a variety of online tools and resources to help create and refine a disaster preparedness plan.
At preparemybusiness.org, the site mentioned at the beginning, business owners will find downloadable educational information, an archive of helpful webinars, and links to many of the other resources mentioned here.
Finally, the Insurance Institute for Business & Home Safety (disastersafety.org) offers a variety of resources, including research reports and an online tool that allows you to enter your Zip code and receive information about specific risks in your area.
If you have questions, contact the experts at Henssler Financial:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166
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