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Business Insurance ● Feb 28, 2022

Business Continuity and the Risk of Disruption

Business Continuity and the Risk of Disruption

The disruption of normal operations is something every business would do better to avoid. Disruption leads to a myriad of issues, including lost revenue, potential risk exposure and the loss of customers. The aversion of disruption, in fact, is where the term “business continuity” originated. Business continuity falls under the auspices of risk management, and is defined by ISO 22301:2012 (the standard guiding business continuity) as the “capability of an organization to continue delivery of products or services at acceptable predefined levels following a disruptive incident”. In layman’s terms, business continuity is the practice of making sure a business can continue to function in the event of a disaster or other adverse incident.

The Risk of Disruption

Problems occurring are just a part of life. Even so, it is important to make sure that you are covered in case something occurs in your business. If you run your entire company off of a single server, and that server was to go down, you would be at a significant risk of loss. Disruptions like this can occur from the top to the bottom of an organization, and it is important to recognize both where they are and how to deal with them. Look for bottlenecks. If every order you give has to go through a single manager, for instance, what happens if that manager becomes ill for an extended period? Who deals with the employees?

Improving your Resiliency and Managing Risk

There are three primary elements which come into play with business continuity:

  • Recovery – These are the complete plans that a business has to restore and recover business functions should something go wrong.    
  • Resilience – This is the design of business functions and infrastructure in a way that they will be able to withstand disruption.
  • Contingency – These are plans to be ready and to cope effectively with incidents which have a chance of occurring. These are typically the last resort, should everything else fail.

Ultimately, you need to plan for bad things to happen, because they will. Taking an assessment of the risk that you face is the first step in the process. Identify bottlenecks in your organization. These would be any areas which, if they were to fail, would stop the entire flow of the system. Identify areas where your company may be at risk and determine how you want to manage that risk, either through insurance or risk management.  Fill those areas if you find them. The biggest thing to do, however, may be to focus on redundancy. While some companies believe that less redundancy is better, it is often the opposite idea which is true.

Business continuity is just a fancy way of saying “make sure you are covered”. Murphy’s Law states that “anything that can happen, will happen”. It is best, then, to be prepared for those eventualities, be they good or bad. Companies can’t afford to be caught unprepared in a disaster situation and then left putting out the fires with small cups of water. It is better to have a trained staff of firefighters with all the tools they need on hand. 

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