Developing A Business Continuation Plan

DEVELOPING A BUSINESS CONTINUATION PLAN

by Douglas Henderson

Offer your expertise to help keep your clients in business when disaster strikes.

More and more companies are thinking about creating a business continuation plan — and can benefit from the advice of their insurance agent. Here are some guidelines on developing business continuation plans for your clients (and, of course, for your agency):

THE BENEFITS

The goals of a business continuation plan including increase the probability of a firm’s survival after a disaster, mitigating damages, and restoring business operations more rapidly.

Some auditors and insurance companies encourage firms to develop a continuation plan. Some businesses are required by law to have plans; others prepare plans in order to reduce their legal exposure. Larger businesses might require their critical suppliers to develop plans.

Once they have implemented their plan, every business should try to negotiate insurance premium discounts.

THE LEVEL OF EXPERTISE

Professional advice will almost always result in a superior final product. The larger and more complex the business, the greater its need for professional services. Companies with a large data center, complex manufacturing equipment, or hazardous materials should definitely bring in a professional consultant.

Although a small business in a service industry might not need a professional to create an effective plan, it should hire one to review it. These reviews are inexpensive and can easily correct serious flaws before disaster strikes.

THE PLAN DEVELOPMENT PROCESS

The process involves these steps:

1. Assemble all information relevant to the company.
2. Identify important risks to which the business is exposed.
3. For each critical business activity, establish minimum acceptable periods of downtime and levels of service degradation.
4. Create a disaster-management team.
5. Have the team draft a plan with the cooperation of managers from each department.

USING A PLANNING TEMPLATE

Use a planning template to help identify all the necessary aspects of the plan and develop it. Some templates are complex and rather expensive, with five-digit price tags not uncommon. These templates include sophisticated programming, data-import capabilities, and technical telephone support. Very large businesses with complex needs might require this level of financial commitment, plus consulting services.

However, most businesses can develop effective plans from less sophisticated (and less costly) templates that use word-processing software. It’s important to determine whether these software packages contain planning for the entire business; some focus almost entirely on the information technology area at the expense of other business-planning needs.

THE ROLES OF THE CLIENT, AGENT, AND PROFESSIONAL CONSULTANT

Plan development must involve three parties: the client, professional consultant, and insurance agent:

• Clients have the best knowledge of their business but probably the least knowledge of business-continuation planning. They need to be involved with collecting the necessary information. Since clients often finance the engagement, they’ll want to balance the time requirements of their staff with the dollar commitment of outside services.
• The professional consultant will have the best knowledge of business-continuation planning and can contribute the needed technical expertise. If the template being used is a product of the professional consultant’s company, the consultant can probably complete the template far more efficiently than a third party.
• Most agents will take an active role in developing their client’s plan. They will usually have a good knowledge of the client’s business and at least some familiarity with business-continuation planning. Agents will also know the client’s management personnel and will be located in the same general area. I’d advise agents to take an active role in collecting the data, interfacing with the client, controlling the engagement, and completing and implementing the plan. And of course, they should always take an active role in securing the right business continuity insurance.

THE FINAL STEPS

Once the business continuation plan is implemented, it’s never really “finalized.” Plans will always require periodic reviewing and updating. It’s also wise to test at least certain aspects of the plan. These tests will often uncover the need for additional details and adjustments. As a professional insurance agent, you should take an active role in helping your clients keep their business-continuity plans up to date.

Douglas M. Henderson, CDRP, is president of Disaster Management, Inc., a company completely dedicated to developing business continuation plans. He can be reached at (772) 335-9750, fax (772) 335-9739, Web site www.disastermgt.com, or e-mail [email protected].