the importance of business continuity planning · 2019-04-30 · the basics of business continuity...

The Importance of Business Continuity Planning

Background• A total of 12,161 square kilometers had burned by the end of the

2017 fire season, the largest total area burnt in a fire season in recorded history at that time (1.3% of BC total area).

• This record was broken the following year, with five of BC's worst 10 fire seasons occurring since 2010.

• The 2017 fire season was also notable for the largest number of total evacuees in a fire season (65,000 people)

• The Plateau Complex fire covered a combined area of 545,151 hectares, making it the largest fire in B.C.'s recorded history (roughly the same size as Prince Edward Island).

Background

Background• O’Leary and Associates was hired

to the Economic Recovery Workplan for the TNRD

• Work from the ground-up: engaging businesses in community sessions, and online

• Estimated 457 businesses negatively impacted

Highlights From the Study

• Most businesses surveyed (~75%) typically have annual revenues below $250,000 per year and 85% of them have ten or fewer employees.

• Just over 40% of the businesses captured in this recovery initiative are owner/operators.


• Overwhelmingly the economic loss suffered by businesses in the TNRD due to the wildfires of 2017 was related to business interruption.

• Only 16% of businesses engaged in the initiative indicated that their business loss was attributed to direct fire damage.


• When businesses in the survey were asked if they were aware of business interruption insurance, 62% said yes.

• Of the respondents who said yes, only 14% of the businesses indicated that they had successfully made a claim

• This means that only 8.5% of businesses surveyed held business interruption insurance AND were able to successfully make a claim.


• Businesses and communities are interested in having assistance with disaster planning now, as a proactive measure, before the next disaster strikes.

• When asked if business owners would like to know more about programs and services that could help their business with economic recovery, there was an overwhelming response of “yes”.

• When businesses were asked if they had a Business Continuity Plan, nearly two thirds (61%) reported that they did not!

Business Continuity Planning

What is a Business Continuity Plan?

• A Business Continuity Plan is a plan that focuses on the ability of a business to prepare for and respond to unexpected disruptions.

• Well prepared businesses have been proven to fare much better through and after a disaster because they have already considered the possible impacts to their business and developed strategies ahead of time for dealing with them.

The Basics of Business Continuity Planning

• There are a series of activities which are fundamental to all business continuity planning guides, which help business owners to better understand their business and risk exposures:

• Identify possible hazards;

• Identify core functions and assets;

• Identify what impacts the loss of these core activities will have; and

• Identifying what hazards pose the most business risk to their business

• Identify steps to mitigate or prepare for these hazards.

Why is it important?

• Emergencies and disasters are unavoidable and are happening more and more frequently in British Columbia

• Although it is impossible to predict what will happen in the future, it is possible to take steps to help reduce any negative impacts

• The best time to strategize is when business owners are not in an emergency situation and instead have time to think

To the rescue!

Step 1: Collect Key Business Information

• The first step is to document all of the critical information that the business owner might need should an emergency arise.

• This way, in the event of a business disruption, they will not have to waste valuable time scanning through stacks of documents to obtain vital information (such as key contacts and insurance information).

• Furthermore, if they have been evacuated, they will have all the information you need to answer questions for aid groups and authorities as well as be able to stay connected with key contacts.


Business Specific

Information

• Registration numbers

• Business Continuity Leads

• Locations of important items

Insurance Specific

Information

• Contact information

• Agent Information

• Summary of coverage and policies

Important Contact

Lists

• Employee contact information

• Supplier contact information

• Major customer contact information

• Emergency contact information


• This page also summarizes all of the important “business specific” information which business owners may need available during an emergency.

• For example: If business owners had been evacuated and needed to contact Canada Revenue Agency to check and see when their next GST remittance is due, what information would they likely require?

• If business owners had their business registration number and GST account number business owners would likely be able to get an answer. Similarly, using their BCeID business owners might be able to login and check for theirselves.



Locations of Important ItemsEmergency Kit Storage room - top shelf of first rack

First Aid Kit Storage room - top shelf of first rackImportant Documents Tall Filing Cabinet in manager's office

Fire Extinguisher Behind front desk“Grab and Go” Bag Behind front desk

First Responder Package Behind front deskShut-down Procedures Posted on the bulletin board in staff room



Business Registration/AccountsIncorporation or Business # BN123456789

GST account # 123456789PST account # 123456789

Business license # 123456WorkSafeBC account # 123456789BW0001

Payroll account # 123456789BW0001BCeID flyingfeathers



• Staff contact information will be useful in an emergency. It is also a useful list to be able to give to support organizations such as Interior Health or Red Cross who might be trying to connect with people affected by an emergency.

• Supplier and customer lists should only include those which are deemed critical to the operation of the business.


Step 2: Risk Analysis


Identify Hazards in Your Location

Inventory Critical Business Assets and Functions

Analyze Impacts and Risks


Identify Hazards Specific to their Business and their Probability

• For the purpose of this workbook, hazards are defined by conditions which are exterior to their business operation and outside of their control.

• For example: Loss of electricity is a hazard because it is an outside influence and is out of their control.

• Loss of frozen food inventory because of a loss of power is a business function (cold storage) and critical asset (operating freezer), which are both internal to their business – Not hazards.


Pop Quiz: What are the top 4 hazards in the Interior of BC?


Brainstorming Exercise: Identify Hazards in and around your region


Inventory Critical Business Assets and Functions:

• Next, create an inventory of critical business assets and processes: what things are essential to keeping their business running and determine a Recovery Time Objective (RTO).

• This is not an exhaustive list Try to “deconstruct” their business down to the absolute core functions and pieces

• For example, if their business is a bakery, printing receipts for customers is not an absolute core function/asset, but having a working oven is!

Step 2: Risk AnalysisInventory Critical Business Assets and Functions:

BUSINESS

FUNCTION

STAFF

REQUIREMENTS

RESOURCE

REQUIREMENTS RTO Score

SalesSales Managers, Sales

Associates

Computer, landline, customer

contact list, printer, email 3

Delivery Delivery Driver Refrigerated van, fuel, GPS 1

Shipping and ReceivingShipping and Receiving

Manager

Computer, landline, sales and

delivery records, vacuum sealers 1

Food StorageShipping and Receiving

ManagerRefrigerators, electricity 5


Analyze Impacts and Risks of the Hazards on their Business:

• Next identify the potential impacts of being unable to resume the business function within the specified RTO.

• Potential impacts may be financial, organizational, operational, and/or social.

• Assign a score of severity —would they disrupt their operations for a few hours? A few days? Shut their business down completely?


Analyze Impacts and Risks of the Hazards on their Business:

Business Function/ Asset POTENTIAL IMPACTSSeverity

(1-5)

Computers

Backlog of sales and shipping transactions. 2

Operational difficulties. 4

Food Storage

All the inventory is perishable and will be lost

without refrigeration.4

Shipping and Receiving

Unable to package products. 1

Unable to send and receive products. 4Will damage business reputation and cause

financial repercussions.3

Step 3: Business Impact Assessment


• A business impact assessment takes a more detailed look at all of the information business owners have already identified, combines it all together and then prioritizes which Hazard Action Plans should be created first.

• It does so by assigning an overall impact score which represents the risk exposure for their business (the higher the number, the higher the risk exposure).


HazardProbability

(1 to 5)

Business Functions

Impacted

RTO

ScoreSeverity Subtotal

Overall

Impact

Score

Flooding 4Sales 3 5 60

80Delivery 1 3 12

Shipping and Receiving 1 2 8

Forest Fires 5Sales 3 5 75

100Delivery 1 3 15


Cyberattack 3Computers 3 5 45

54Internet 3 1 9

Owner injury 2Sales 3 3 18

18

Loss of electrical

service2

Computers 3 2 12

12Internet 1 1

Step 4: Risk Reduction - Mitigation & Preparedness

Step 4: Risk Reduction - Mitigation & Preparedness• After identifying the greatest risks to their business, it is time to start

thinking about how to reduce those risks.

• Mitigation and preparedness are two ways to do this:• Mitigating risk is an action which business owners undertake before a hazard

situation to reduce businesses’ vulnerabilities and risk exposure. By mitigating the risks, when a hazard occurs, it will have less of an impact.

• Preparedness means putting resources in place before an emergency, so that when a hazard occurs business owners are better equipped to deal with it. This will also lessen the impact.

Step 4: Risk Reduction - Mitigation & PreparednessFor example:

• A mitigation measure is implementing recommendations from the FireSmart Program to reduce their businesses wildfire risk, such as fuel management around the property or tree limb removal.

• A preparedness measure would be creating their emergency preparedness kit before a wildfire, so that if a wildfire happens business owners have the supplies needed to reduce their risk.

• Both are examples of ways to reduce the impact that a wildfire might have on their business.

Step 4: Risk Reduction - Mitigation & Preparedness• Alternative Suppliers

• Power Failure Strategy

• Power Generators

• Implement Redundancies

• Cloud Storage and Computing

• Back up Data Regularly

• Include their Staff in the planning process

• Cross-Training and Succession Planning

Pages 38 to 44 outline some suggested mitigation and preparedness strategies, but there are many more ideas out there.

Step 4: Risk Reduction - Mitigation & PreparednessInsurance:

• Having proper insurance coverage is one of the most important things businesses can do as far as risk reduction

• Only 8.5% of businesses in the 2017 TNRD wildfires held business interruption insurance and were able to successfully make a claim.

• This is especially important as businesses are not eligible to apply for government disaster financial assistance if insurance was available for a particular loss and the business chose not to obtain coverage


The Business Impact Assessment, business owners with the core information required to investigate insurance options:

• What are the most likely hazards which will have the biggest impact on their business and what were the key business functions/ assets impacted?

• Next, consider the amount of the coverage which business owners require.

• Review any exclusions or other considerations for a given policy: i.e. Does operating a welder on premises make a given fire insurance policy void?


HazardProbability

(1 to 5)

Business Functions

Impacted

RTO

ScoreSeverity Subtotal

Overall

Impact

Score

Flooding 4Sales 3 5 60

80Delivery 1 3 12


Forest Fires 5Sales 3 5 75

100Delivery 1 3 15


Cyberattack 3Computers 3 5 45

54Internet 3 1 9

Owner injury 2Sales 3 3 18

18

Loss of electrical

service2

Computers 3 2 12

12Internet 1 1

Step 4: Risk Reduction - Mitigation & PreparednessInsurance Questions to Ask:

• What perils or causes of loss does my policy cover?

• How will my property be valued?

• What does my policy require me to do in the event of a loss?

• For how long is coverage provided?

• How long is my coverage for lost income if my business is closed by order of a civil authority?

• To what extent am I covered for reduced income due to customers not all immediately coming back once the business reopens?

• What types of records and documentation will my insurance company want to see?

• How will my emergency management program affect my rates?


Insurance Company InformationName Inclusive Inclusions Ltd.

Street Address 209 Dutch Lake Road, your region, BC

Telephone Number (250) 555 – 5555

Fax Number (250) 555 – 5555

Website www.II.ca

Contact Emergency Telephone 1-888-555-5555

http://www.ii.ca/


Insurance Agent's InformationAgent's Name Billy Billings

Agent's Direct Line (250) 555 – 5555

Agent's [email protected]

Contact Emergency Telephone 1-888-555-5555

mailto:[email protected]


Insurance Policy InformationType of Insurance Provider

NamePolicy

NumberPolicy limits

Coverage (General Description)

Fire and Flood Impact Ltd. 123456 $1,000,000 Basic coverage from Fires and Floods

Business Interruption Intact Ltd. 123456 $ 250,000 Loss of income from

interruption

Liability Indeed Ltd. 123456 $3,000,000 General liability

Step 5: Hazard Action Plans


• Hazard Action Plans are single page “mini-plans” which are hazard specific and are designed to be a single go to source of information used before, during and after a hazard situation.

• Beforehand they represent a reference point for preparedness and mitigation strategies specific to each hazard

• During an emergency situation they can be easily referenced to review likely impacts and strategies already identified

• After a hazard situation they represent a reference point for recovery and response activities to help get their business back online as soon as possible.

FloodingRecovery Time Objective

2 Weeks

4 weeks

6 weeks

Inventory damage

financial impact

reputation damage

Landline or mobile phone

Sales and shipping records

Key customer contact list

Sales manager

Sales staff

Shipping and Receiving staff

Potential Impacts

Hazard:Business Functions Impacted

Sales

Shipping

Receiving

Resource Requirements

Staff Requirements


Develop a flooding strategy

Locate a temporary warehouse backup

Develop a communications plan

Ensure resources are available on the cloud

Contact the Business Continuity Manager

Implement communications plan

Move as much inventory as possible to backup

warehouse location

Implement startegies to mitigate flood damage

Do an inventory check for damage

Contact insurance company

Prioritize shipping and receiving

Continue with communications plan

Mitigatio

n an

d P

rep

aren

ess Strate

gies

BEFORE

DURING

AFTER


That’s it!Business owners have now created their own customized Basic Business Continuity Plan!Throughout this workbook, tables will be completed which are marked in the upper right hand corner with this special symbol:

• Take these specially marked pages and put them into a separate binder, This is now their finished Basic Business Continuity Plan.

• Additional components located in part 2, can also be added to this basic plan.

Feedback from Business Owners

Why is Business Continuity Planning so Important?

The top five ways a business continuity plan can

help minimize the effects of emergencies and

disasters*:

1) Maximize the chances that important business operations continue. A

business continuity plan helps identify even simple contingency plans,

such as installing generators at a hospital to ensure important

equipment continues to operate during power outages.

* Source: School of Public Safety and Security (2011) “Top Five Ways a Business Continuity Plan Can Help Your Organization”



disasters:

2) Allow for remote operation. A larger event, such as a fire or flood,

could prevent your staff from getting to your offices. A business

continuity plan could include processes that would, for example, enable

staff to work from a remote location via laptops or tablet computers.




disasters:

3) Protect your important assets, such as your customer and accounting

data. An important aspect of business continuity planning is identifying

your key assets and ensuring they are as protected as possible. In the

case of data, you may want to use cloud services which often have triple

redundant back-ups and exist in alternative locations.




disasters:

4) Reduce your downtime. Every hour your business is down costs you

money. With a business continuity plan in place, you will get back up and

running more quickly.




disasters:

5) Prevent you from going out of business. During larger events, your

business could be down for an extended period of time, resulting in

significant revenue losses. Ultimately, a business continuity plan could

prevent your business from going under.


Questions?

Colin O’[email protected]

250-299-3631

mailto:[email protected]

http://www.olearyandassociates.ca/