It’s not a matter of if, but when….

Audit and AssuranceBusiness Advisory

An article in the NZ Herald after the recent storms in the Auckland region referred to research which showed that almost a quarter of small and medium sized businesses had no recovery plan in place if a major negative event occurred. It also stated that almost one-third of businesses thought their business might shut down.

Not planning for the impact of major events exposes your business to a significant level of risk. Carrying appropriate business interruption insurance is important, but businesses can significantly decrease the likelihood and impact of negative events impacting their business by undertaking robust Business Continuity Management (BCM).

As reported in a previous newsletter, BCM is about identifying those parts of your organisation that you can’t afford to lose – such as information, stock, premises, staff – and planning how to maintain these, if an incident occurs. Any incident, large or small, whether it is natural, accidental or deliberate, can cause major disruption to your organisation. But if you plan now, rather than waiting for it to happen, you will be able to get back to business as quickly as possible. Delays could mean you lose valuable business to your competitors, or that your customers lose confidence in you.

BCM is simpler than you might think. To implement BCM you will need to consider the following questions:

  • What are your organisation’s key products and services?

  • What are the critical activities and resources required to deliver these?

  • What are the risks to these critical activities?

  • How will you maintain these critical activities in the event of an incident?

The types of incidents that need to be considered and addressed include the following:

  • People – incidents that result in significant unavailability of staff or loss of access to workplaces.

  • Facilities and equipment – Incidents that result in the destruction of or severe damage to operating facilities, manufacturing plants, offices and other critical business sites.

  • Communication infrastructure – Incidents that result in loss of communication with employees, subcontractors, suppliers and customers.

  • Supplies– Incidents that may result in loss of key supplies/suppliers (including utilities).

  • Information and IT systems – Incidents that result in the loss of functionality of critical business applications.

If you would like more advice on effective continuity planning, please contact your Findex adviser.