Business continuity - products and solutions
Most companies are insured against fire or loss of property. Most have evacuation plans, smoke detection systems and fire extinguishers in place. Yet for many small and mid-sized companies, this is as far as their planning goes.
There may be some managers who have never thought about what would happen in the event of business interruption. Others might not consider their business vulnerable, overlooking the number of factors beyond their influence.
When disaster strikes, however, a business continuity concept not only helps to minimize disruption time but also has several positive side-effects. The risk assessment process often helps to detect and eliminate duplications, thus resulting in efficiency gains. Adequate business continuity management also reduces risk financing costs, as only relevant risks are addressed. Last but not least, it inspires confidence among customers, shareholders, employees and other stakeholders.
What is a business continuity plan?
A business continuity plan (also called business interruption plan or disaster recovery plan) documents how a company will respond in the event of a major incident. A detailed plan includes immediate response activities that help minimize damages, plus short and long-term activities that see the company, its employees and its customers through the disruption until normal business activity is resumed.
Only total commitment of top management from the very beginning ensures that a business continuity plan can be set up and implemented appropriately. Although external sources can be most helpful, project responsibility needs to remain internally and supported by senior management. Having such support is a key success factor. Without it, the plan will not work.
How to prepare a business continuity plan
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Set up a survival team
A team leader needs to be appointed and his or her responsibilities outlined. The ideal candidate should have a good knowledge of the organization and operations as well as excellent communications skills. Team members should be selected from various departments, including key areas such as finance, production, engineering, maintenance, quality assurance, security, marketing, legal affairs, human resources and communications.
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Identify and assess hazards
The survival team should establish which buildings, equipment, processes, functions and/or documents are critical to the organization. They determine what types of events constitute a threat to these elements and the potential consequences for the organization. Events can be divided into three groups of perils:
natural, man-made and economic. Loss scenarios can then be developed for these events. Each scenario should give details of the possible event, the most likely consequences and the overall impact on the organization. One extremely efficient method for developing such scenarios is the
Zurich Hazard Analysis.
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Implementing the plan
The plan should ideally be a written document that is also stored electronically. It is important that the survival team has access to it at any time. A thorough business continuity plan includes:
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Policy statement
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Goal and scope
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Instructions on how to use the plan
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Potential loss scenarios
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Actions to be taken
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List of names and duties
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Flowcharts defining responsibilities
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Details on post-disaster resources
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Building/equipment/systems specifications and plans
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Inventories - by department
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Testing the plan
To evaluate whether the steps described in the plan are appropriate, it is essential to run a simulation. Only after such testing is a plan really finished - at least for the moment.
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Updating the plan
Conditions change and therefore a regular update of the plan is essential. Different parts of it may need different updating frequencies.
Source: Risktopics Business Continuity Planning
Business continuity products and solutions by Zurich
Zurich Business Continuity Management
The new Zurich Business Continuity Management (BCM) methodology is aimed at mid-sized companies and takes a fresh approach by focusing on customer needs. The process starts by asking how long it will take until customers leave, and ends with solutions to prevent them from doing so. To learn more about this methodology, read our article Zurich takes a new approach to business continuity.
Business Interruption Coverage Calculator
In 2002, Zurich North America introduced the Business Interruption Coverage Calculator, a tool to better evaluate business interruption exposure and calculate coverage needs. It improves the worksheet completion process to the mutual benefit of the insurance-buying customer, the producer, and the insurance provider. A properly completed worksheet sets proper business interruption evaluation. The Excel-based tool has been customized for use with six industry segments, namely manufacturing, hotel, casino, telecommunications, hospital and retail. It can be downloaded free of charge under this link.
The Crisis Tool
Zurich Risk Engineering has developed a number of software applications that support companies in organizing risk management data. For further information please click on this link. One of these applications is "The Crisis Tool", which customers can use to develop a business interruption recovery plan. It helps to:
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create the team that will respond in an emergency
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identify the tasks they will focus on
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work out the details of what they will do
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create emergency call lists, worksheets, forms, and checklists that will help to assess damage and effect the recovery.
The software is suitable for all organizations, particularly for manufacturing plants with complex equipment or operations, companies with a large number of people at one location, or single locations of large multinational companies.
Hazard Analyses
Zurich Hazard Analysis
The Zurich Hazard Analysis (ZHA) is an easy but very powerful method to help a company identify and manage risks. It has been successfully applied for over 20 years in various industrial sectors, ranging from heavy engineering and electronics to the chemical/pharmaceutical and food and beverage industries as well as service industries such as banking and insurance, and the public sector. It can be applied in a variety of contexts including product design, plant operations, and business continuity. Learn more about the process in our article Seeing Risks More Clearly.
Hazard analysis methodologies - a selection guide
Besides the Zurich Hazard Analysis, Zurich offers further hazard analysis methods. To learn more about them read our Risktopic Which Hazard Analysis?
Further useful links
UK - Property Insurance - Material damage and business interruption For large businesses »
For medium-sized businesses »
Germany - Betriebsunterbrechungs-Versicherung »
Flood Planning Guide »
Hurricane Emergency Action Plans »
Potential perils
Events can be divided into three groups of perils:
Natural: flood, hail, water damage, earthquake, tornado, drought, structural collapse, windstorm, erosion, subsidence, extreme cold weather, blizzard, lightning, landslide, etc.
Economic: strikes, embargoes, inflation, war, recession, lawsuits, changes in consumer taste, loss of key suppliers, loss of key customers, raw material shortage, loss of key employees, technological advances, price fluctuations, obsolescence, change in regulations, expropriation, currency fluctuations, interest rate fluctuations, etc.
Man-made: arson, human error, defective product, fire, contamination, product tamper, explosion, theft, libel/slander, smoke, fraud, restricted access, dust, forgery, car/truck accident, gas leak, embezzlement, vehicle impact, power outage, hold-up, loss of cargo, electrical overload, derailment, loss of valuable papers, machinery breakdown, sabotage, negligence, vandalism, telephone breakdown, leak, unsafe behavior, extortion, equipment failure, pollution, bodily injury/death, kidnapping, industrial espionage, spill, bomb threat, riot, loss of computer data, terrorism, etc./DIV>
Source: Risktopics, Business Continuity Planning
