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Are You Prepared For A Crisis? by Charles T. Wilson With all the devastating news about hurricanes, tornados, snowstorms and floods, why are we so negligent in planning for catastrophes of any kind? Every day businesses are forced into crisis mode by natural disasters, business surprises and legal difficulties. Despite the news stories, we still believe "it won't happen to me." Hurricane Katrina recently showed the staggering difference between firms that were prepared and those that were not. Business owners with careful contingency plans had a significantly better chance of survival than those without. Are you prepared? Here are three steps to mitigate business interruptions. The first step is to identify what can go wrong and estimate the costs. Several Louisiana companies understood the flood danger from old levees and knew their customers couldn't wait for ongoing service. Shrewd owners moved offices and documents to higher floors and created data backups accessible from well outside the city. Employees were trained to work with customers from remote locations and jump in for colleagues who might not be immediately available. These precautions were far less costly than having to recreate everything from scratch. And the process of rethinking their operations created more streamlined processes, saving money up front. The second step is to write up simple business continuity plans - how to restore operations quickly - for your more likely scenarios. Assign tasks to a small crisis management team to detail the steps to take during and after a crisis and to catalog what you'll need in advance. Recently a manufacturer said that to survive a major loss he needed to be able to serve customers within a month. We listed his major factory equipment and researched the delay times to get replacements. He was surprised to find it would take close to 4 months to replace most machines! A contingency plan was clearly needed, and he began contacting several of his best competitors to offer a mutual aid program. If any one of them suffered a crippling loss the other(s) would offer their facilities during off days or second shifts. This was a perfect example of where insurance can't help your business to survive. The final step is testing and supporting your plans. A property developer's contingency plan was designed to include these steps:
Then, as Murphy's Law suggests, keep your fingers crossed. My father likes to say, "I expect to be lucky, and the harder I work at it, the luckier I get." A version of this article first appeared in The Journal of Practical Business Ideas, volume VII, no. 1 © RiskSmart Solutions® 2006 |
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