Why Every Business Needs a Recovery Plan

By Steven Harris, CPA, special to Overdrive and partner-in-charge of the RubinBrown Entrepreneurial Services Group

As the summer months continue, areas of the nation are facing different natural disaster threats: wildfires, floods, tornadoes and hurricanes. While these disasters have wide-ranging consequences for all, businesses also see the effects of natural disasters, and, often times, are not prepared for the aftermath.

In fact, according to a study by the Institute for Business and Home Safety, an estimated 25% of businesses do not reopen following a major disaster, stacking the odds against them. So, what should a business owner or organizational leadership do to prepare?

The ultimate goal of a disaster recovery plan is to get an organization back up and running in the event of an interruption, preserving the organization so that it can continue to offer its services. In order to be successful, the plan must be created before the interruption, and should be reviewed and updated on a continual basis.

Creating the plan should not be left up to any one member of the team. The project requires a team leader, representatives from each department, a list of individual responsibilities and fixed due dates. In the event of an emergency or disaster, an effective recovery plan documents what will be done, by whom and in what order. The plan should clearly define who is in charge of the disaster recovery before the disaster strikes.

Understanding and differentiating the organization’s services can put contingency plans in place in order for services to continue with as minimal downtime as possible. For example, should there be a secondary phone service provider decided upon should the phone system go down? Is there an alternative work site selected should offices be damaged? The team should determine in advance what additional resources are needed ahead of time to eliminate unnecessary downtime, such as a generator or back-up computers.

The plan should include all documentation needed by the disaster team in the event of an emergency. Documentation must be updated on a regular basis to ensure that the correct information is available from an off-site location during a disaster. Useful documents and information to help create a disaster recovery plan could include the following:

  • Organization chart showing names and positions
  • Staff emergency contact information
  • List of suppliers and contact numbers
  • Addresses and maps for office or business locations
  • Operations and administrative procedures
  • Asset inventories
  • IT inventories and system specification
  • Communication procedures
  • Copies of maintenance agreements/service level agreements
  • Off-site storage procedures
  • Relevant industry regulations and guidelines
  • Insurance information

Preparing and training staff for a disaster is also a key step in business continuity. In the event of a disaster, employees should already have knowledge of the plan and know what their roles are. Staff should be informed ahead of time on matters such as:

  • Individual responsibilities
  • Notification and communications procedures
  • How or where to find important contacts and numbers, i.e. personnel, suppliers, customers
  • Emergency response
  • Evacuation and shelter procedures

Additionally, it is important to know how a disaster or interruption in business will impact clients or customers, not just employees. Develop a step-by-step guide or instructions for employees to review of how the organization will continue to provide its services or inform clients of a temporary shutdown of its facilities/services.

Finally, it is imperative for an organization to commit to the business recovery plan. This includes testing and revising the plan to ensure that all resources, procedures and information are up-to-date in order to protect the organizations, its employees and its services.

Practice activating the plan under different circumstances. This will build staff’s confidence to deal effectively with a disaster and also reveal where the plan may need enhancements. A crisis team which is able to function well under duress will go a long way toward preserving and strengthening the organization.

Steven Harris is a partner in RubinBrown’s Entrepreneurial Services Group, focusing on business advisory, assurance and tax services for clients. In addition to serving on the steering committee for the Missouri Strategic Initiative for Economic Growth, Steve is a member of the American Institute of Certified Public Accountants, Missouri Society of Certified Public Accountants, and National Association of Black Accountants.

Categories: Management

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