Crisis management and business continuity planning

12 May 2009

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Nobody likes to think that the worst might happen to their business, but when it does it can have devastating consequences. A reported one in five companies suffers a major disruption every five years and 92% of those affected by fire or flood never recover. The best thing you can do to protect your business is be prepared.

What is a crisis?

A crisis is a situation beyond the scope of everyday business, which threatens the operation, safety and reputation of your company. The exact nature may depend on your business' circumstances, but could include:

Natural disasters – i.e. flooding or storm damage
Theft or vandalism
Fire
Power cuts
Fuel shortages
IT failure
Restricted access to premises
Loss of key staff
Outbreak of disease or infection
Industrial action

You should assess the likelihood of a particular crisis occurring to your business and its possible frequency. You can do this by grading the probability of a crisis occurring on a scale, i.e. one to five or high to low.

You should also determine each risk's possible impact on your business to decide how you deal with it. For example, you may decide to do nothing about a low-probability crisis, but that doesn't mean it will have a low impact on your business if it occurred.

Also consider how your customers would be affected by a crisis. Would they be likely to look for alternative suppliers? If you have service level agreements, would you be able to keep to them and what would happen if you couldn't?

Why you need to plan

Failure to plan could be disastrous for your business, resulting in a significant loss in customers, income or going out of business altogether.

A crisis management plan sets out what your immediate response will be. It should be clear and easy-to-understand and include the following:

The people involved and what their role is
Methods for identifying crises
Methods for involving management
Lines of communication
Mechanisms for reporting
Process for decision making
Equipment, facilities and occupation of crisis management centre
Levels of control and authority

Business continuity planning

A good business continuity plan should set out how you are going to recover and help to minimise disruption to your business, suppliers and customers.

The plan should include:

The key business functions you need to get operating as quickly as possible and the resources you'll need.
The roles of individuals - ensure all employees are aware of what they have to do and provide training if necessary.
Details of those you'll need to notify in an emergency such as the emergency services, insurers, customers, suppliers, utility companies, etc.
Details of companies you may require such as glaziers, locksmiths, plumbers, electricians, and IT specialists.
Maps of your premises' layout to help emergency services, showing fire escapes and safety equipment.
An appointed spokesperson to handle questions from customers, suppliers and the media.

Arrange the plan in checklist form to ensure that key steps are followed and make sure hard copies of the plan are kept safe at your home, at your bank and at the homes of other staff.

Test your plans

Although crises are hard to simulate, you can assess your plan against a number of possible scenarios.

Think about the things that would cause most disruption and that are most likely to happen to your business. Then make sure that your plan covers each of the risks. Ask yourself the following questions:

Does it set out each employee's role?
Have you set out the right steps to take?
Is the order of the plan correct so that priority actions will take place immediately after the incident?

Remember to update your plan regularly to reflect your business' changing circumstances, such as new premises or changes in staff. Ensure that all contact details are also correct.

Minimise the impact

Once you've identified the key risks your business faces, you need to take steps to protect your business against them and prevent them from happening in the first place.

Practice good electrical and gas safety, and install fire and burglar alarms. This helps to protect premises against fire, vandalism and theft.
If you use vital pieces of equipment, you may want to take out cover that includes maintenance and emergency call-out.
Install anti-virus software, back up data and ensure that maintenance agreements are in place for your IT systems.
Try not to be dependent on a few staff for key skills by getting them to train other people.
Know how each member of staff gets to work and how this might be affected by a fuel shortage.
Establish home working systems so that employees can work from home if they cannot get to work.
Ensure that you have sufficient cover as this forms a central part of your risk-management strategy.

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