Why Your Business Needs a Business Continuity Plan—And What It Means for Your Insurance
If you’re responsible for a business, planning for the unexpected is one of your primary duties. You have commercial or business insurance policies to protect you in the event of an accident or an emergency, but standard policies may not protect you against every contingency.
What’s more, an unexpected emergency can impact your day-to-day business operations; some events or threats may even require you to close your doors temporarily. While you hope such incidents never occur, you should be prepared for them.
What is a Business Continuity Plan?
A business continuity plan, or BCP, outlines the steps you (and those you work with) need to take to keep your business operating if circumstances force you to operate outside the norm. A BCP prepares you to act quickly after a major problem occurs and prevents you from merely reacting to the situation and its stressors. A BCP often allows you to provide your products and services without interruption and can minimize the financial impact.
Whether you need to create a brand new BCP or update an existing one, consult the resources available from Public Safety Canada and the Alberta Emergency Management Agency. Their resources can help you create a complete BCP or identify gaps in your current plan.
Public Safety Canada provides a thorough overview of what a BCP should cover, including:
- What disasters/emergencies your business might face
- Who will perform what tasks during and after a disaster
- How each type of emergency could impact your business
- How you plan to minimize that impact
- How you put your plan into action
- When you will train your employees on the plan
- When you will review the plan
It’s easy to be overwhelmed by the many considerations covered in a BCP. The templates and guides from Alberta Emergency Management Agency make it so you don’t have to start from scratch. The site includes resources for:
- Business impact analysis
- Post-incident staff accountability plan
- IT continuity guide
- Communications plan
- Human resources plan
Many of the documents are designed for Ministry-level government agencies, but you can adapt them as needed to fit your business.
How to Conduct a Business Impact Analysis (BIA)
One of the most important parts of a BCP is the business impact analysis (BIA). In a BIA, you determine the most vital components of your business so you can make plans for them to stay in place during and after a disruption.
A complete BIA includes a risk assessment. A risk assessment helps business owners anticipate the needs of their business during and after an emergency. Conducting a risk assessment allows them to determine:
- The risks most likely to threaten their business
- The possible consequences if those threats took place
- A plan for preserving the business despite those threats
The risk assessment template provided by the Alberta Emergency Management Agency covers many risks that could threaten your business. These risks include:
- Natural disasters (floods, earthquakes, etc.)
- IT issues (hacking, computer viruses, etc.)
- Criminal threats (theft, vandalism, etc.)
- Local or national emergencies (terrorism, bomb threats, etc.)
You can modify this template as needed and use it to determine where your business is most vulnerable. During your BIA, it’s important to review your insurance policies to make sure they cover all the expenses you’re likely to incur in each type of emergency.
When to Supplement Your Insurance to Improve Your BCP
After you complete a BIA, you may have identified areas where your current business insurance is insufficient. For example, a business impact analysis could help a laundromat owner realize that the property insurance policy on his building does not cover his washers or dryers after a fire. Since that equipment is vital to the success of his business, he should ask his Edmonton insurance broker to write up a supplemental property insurance policy for the machines.
After completing a BIA, you might also realize your business is more vulnerable to a type of threat you hadn’t seriously considered before. In that case, consult your Edmonton insurance broker about insurance solutions to decrease your exposure. You may benefit from insurance policies that protect you from crime, equipment malfunction, or additional liability issues.
Finally, when you finish your BCP, you may want to supplement your insurance with business interruption insurance. Even a well-crafted, perfectly executed business continuity plan cannot always prevent you from unexpected shutdowns. Business interruption insurance pays out funds to cover lost income, ongoing business expenses, relocation or temporary location costs, and other expenses associated with a temporary shutdown.
Start creating a business continuity plan for your business today. Consult your insurance broker in Edmonton with any questions you have about the potential risks facing your business and whether you should supplement your current insurance.