Why Businesses Need a Disaster Preparedness Program
By: Duane Silbernagel
According to the Insurance Information Institute, 119 natural disasters occurred in the United States in 2014, totaling $25 billion in losses. But natural disasters represent just a portion of the crises that your business could face. Although you may not be located in an area prone to hurricanes, blizzards, tornadoes, floods, earthquakes, mudslides, and wildfires, you still need to consider the potential for power outages, civil unrest, terrorism (including cyber-terrorism), fire, data breaches, and illness epidemics. What risks and hazards might your business face?
Approximately 40% to 60% of small businesses never recover from a disaster, reports preparemybusiness.org, a website created by the Small Business Administration (SBA) and Agility Recovery, an organization that helps businesses prepare for disasters and manage emergencies when they strike. For this reason, it is in the best interest of every business to identify potential risks and develop a plan to address them–before a crisis hits. Fortunately, many resources are available to assist business owners in developing a disaster preparedness program.
Where to start
Following are five steps that will help you create a disaster preparedness program, as outlined by ready.gov, a national public service campaign designed to educate Americans about preparing for and responding to natural and man-made disasters.
Step 1: Program Management. Although there are often minimum regulations that govern how certain businesses manage risk, as a business owner you will need to determine whether the minimums are enough. As ready.gov states, “Many risks cannot be insured, so a preparedness program may be the only means of managing those risks.” Management commitment to a preparedness program, as well as a written preparedness policy and oversight committee, may be critical to ensuring your business’s longevity.
Step 2: Planning. This step should include the creation of a “risk assessment” that identifies all potential risks and hazards for your business, with ideas for mitigating their impacts. It should highlight threats and hazards that are considered “probable,” as well as any that could cause injury, property damage, business disruption, or environmental impact. Another critical document is the “business impact analysis,” which details sensitive or critical processes, as well as the financial and operational impacts that would occur due to disruption of those processes.
Step 3: Implementation. In this step, committee members identify and assess resources, draft written plans, develop a system to manage incidents, and train employees as needed. Several key documents contribute to successful program implementation, including crisis communications, emergency response, and business continuity plans.
Step 4: Testing & Exercises. In order to evaluate the program’s effectiveness, including the success of employee training, management should run tests and drills to see what works and note opportunities for improvement.
Step 5: Program Improvement. During testing or an actual incident, weaknesses in the program are likely to be revealed. They should be documented, along with lessons learned and strategies for addressing such problems in the future.
The Small Business Administration (www.sba.gov) offers a number of resources designed to help small businesses shore up their emergency preparedness, including links to templates and worksheets that will help you gather the data you need to put together the various written documents. At this website, you can also find links to information about the SBA’s own “Disaster Preparedness and Recovery Plan,” which provides details on assistance the SBA offers after a disaster strikes.
American Red Cross Ready Rating™ (www.readyrating.org) is a self-guided online program designed to help member businesses, organizations, and schools assess their level of emergency preparedness. The core of the program is a 123-point self-assessment that is used to gauge one’s level of preparedness. Members also have access to a variety of online tools and resources to help create and refine a disaster preparedness plan.
At preparemybusiness.org, the site mentioned above, business owners will find downloadable educational information, an archive of helpful webinars, and links to many of the other resources mentioned here. Finally, the Insurance Institute for Business & Home Safety (www.disastersafety.org) offers a variety of resources, including research reports and an online tool that allows you to enter your Zip code and receive information about specific risks in your area.
I hope you found this beneficial and informational. For more information about me and my services, visit my website: www.duane.wrfa.com
Thank you for your interest.
This article is meant to be general in nature and should not be construed as investment or financial advice related to your personal situation. Waddell & Reed does not provide legal or tax advice. This information is prepared by an independent third party, Broadridge Investor Communication Solutions, Inc. and is provided for informational and educational purposes only. Waddell & Reed believes the information has been obtained from sources considered to be reliable, but does not guarantee the accuracy of the information provided. This information is not meant to be a complete summary or statement of all available data necessary for making financial or investment decisions and does not constitute a recommendation. Please consult with a tax professional regarding your personal situation prior to making any financial related decisions. Also note that the information provided may include references to concepts that have legal, accounting and tax implications. It is not to be construed as legal, accounting or tax advice, and is provided as general information to you to assist in understanding the issues discussed. Neither Waddell & Reed, Inc., nor its Financial Advisors give tax, legal, or accounting advice. Nothing contained herein is intended as a solicitation or an offer to buy or sell any product or service mentioned and they may not be suitable for all investors.
Duane Silbernagel is a Financial Advisor in Lincoln City, Oregon offering securities through Waddell & Reed, Inc., Member FINRA and SIPC. He can be reached at (541) 614-1322 or via email at DSilbernagel@wradvisors.com.
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