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What's a Business Continuity Plan and Why Do You Need One?

If something debilitating were to happen to you right now, could your senior management team keep your business running? This is the purpose of a business continuity plan (BCP) and why you need one. Your BCP will vary according to the specifics of your operations. But coming up with an effective BCP always means assessing your risks honestly. From there, you can obtain the types of business insurance you need to protect your finances.

What Risks Do You Face?

The first step toward developing your BCP is getting a handle on the types of risks you could encounter. Identifying them will make planning easier to accomplish. In addition to situations befalling your person, you should consider Acts of God such as fires, earthquakes, and floods. Other concerns (depending on the nature of your business) include power outages, system failures, cyber terrorism, and malicious actions.

Identify Key Personnel/Processes

Which people and processes must continue to perform unabated if your business is to survive? In addition to providing your goods and services, think about the regulatory requirements you must also meet. Which functions of your operations are essential to your business model? If certain critical operations were impaired, who would need to be in place to get them back on track? Is there a certain order in which functions would need to be restored if everything went awry simultaneously?

Keep in mind, resources might be in short supply, so plan to run with minimal support and materials. Other functions to plan for include emergency response, public relations, employee communications, and of course, supplier and resource management.

Prevention Beats Responding—Every Time

Putting a plan in place to head off disasters before they occur should be an intrinsic part of every BCP. After all, if you can prevent situations before they become issues, you'll be in much better shape. Plans should also include steps to prevent the exacerbation of damage should an incident occur. Consider how you'd evacuate key equipment to a secondary location, back up critical files, and assemble key personnel.

Test, Revise, and Adapt

The only factor in life that never changes is change itself. The worst thing you can do with your BCP is leave it filed in the cloud until a situation arises. Make sure your company reviews its plan on at least an annual or bi-annual basis. You should also modify it whenever significant changes alter the way you do business.

After developing a draft of your BCP, test it out. Employees should be trained, especially key personnel, so an undisputable chain of command is established before it is needed. Conduct drills, based on scenarios in the plan so "muscle memory" will take over in an emergency. You'll also want to host round-table discussions to gather suggestions for refining the plan over time.

What's a business continuity plan and why do you need one? The BCP is an essential tool for ensuring the longevity of your company. If you know the types of disruptions your business may face, you can plan accordingly. Invest in the right types of business insurance, including liability and property policies with business interruption coverage. This protection will tide you over during periods of abnormal functioning after covered events.

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