Handling Business Interruption Risk in 4 Simple Steps
While COVID-19 has made risk management a priority for organizations around the world, it’s not the only threat to your business operations in 2020 and beyond.
The hard truth is that there is a wide range of risk factors that can interrupt your business operations. From major natural disasters to disruptions to your third-party suppliers, you need to be prepared for – and protected against – anything that could throw off into your carefully-planned workflows.
1. Identify the risks
The key first step in any risk management plan is to identify and rank the threats that are most likely to interrupt normal business operations at your organization. The relevant threats will vary between sectors, so there’s no real one-size-fits-all approach.
For example, manufacturers may need to be most wary of equipment failure, while the threat of fire or flood may be much greater for retailers that warehouse large quantities of inventory. Corporate and professional services firms, on the other hand, may need to think more deeply about the threat of a cyber attack.
2. Minimize the risks
Now you know the risks that are most relevant to your business, you can implement a risk minimization plan. While it’s unlikely you’ll be able to eliminate these risks, there are measures you can put in place to significantly reduce your exposure to them.
For example, a predictive maintenance plan can help prevent equipment downtime, and installing a warehouse sprinkler system may significantly reduce the risk of fire damage to inventory. Likewise, implementing appropriate cybersecurity software and data protection protocols will help protect your organization against hacker attacks.
3. Plan for action
When a threat materializes, fast and effective action is required to minimize the damage to your business operations. You should have a contingency plan in place for each of the business threats you’ve identified. Each plan should set out clear roles and specific action points for relevant employees, and the plan should be widely communicated and easily accessible across your organization. Consider developing both an internal and external communications plan in order to begin your action steps.
You also need contingency plans for each identified threat. Think of these as blueprints for building bridges over the threat in order to continue business operations during the recovery process.
4. Protect your bottom line
When a threat strikes, even the best-laid plans may not be able to completely protect your organization against financial loss. That’s why you need a good business interruption insurance policy. These are designed to cover – at least in part – revenue lost due to an interruption in your normal business operations. While business interruption insurance doesn’t remove the threat, it may enable you to keep your doors open while you address it.
Whether you’re dealing with a global pandemic or a much more localized risk, the right planning, preparation and protection will help to keep your business afloat through the storm – and give you peace of mind beforehand.