Business continuity planning should be part of risk management. But how well could your business weather a flood, power disruption or the absence of key staff?

Australia and New Zealand have experienced their fair share of natural disasters over the past few years. But as communities and towns recover, it has also been the ultimate test for many businesses across the region. In many cases, the loss of staff, business premises and customers has forced organisations out of business.

According to risk-management consultant Robert Lengyel, business continuity planning should be part of every organisation’s risk management, but few do it and those that do, often don’t do it well.

“Businesses pay a premium in terms of the money, time and effort that must go into continuity planning. It takes business owners and staff away from the core business,” he explains.

Continuity planning is also not a one-off task; a business owner or employee cannot quickly acquire the skills and develop continuity plans. “A very good understanding of business processes and IT is required, so it’s a good idea to get someone in, ideally someone with a significant amount of business experience of their own,” says Lengyel.

To get started, business owners should imagine some of the business disruptions that could occur. It’s then important to consider how likely they are to occur and what kind of negative business impact they might have.

Robert Lengyel from Brains for Business.

“For instance, a Christchurch business might weigh up the chances of another earthquake and consider it a possibility. The consequences are great, which means such a scenario would carry a major risk rating,” explains Lengyel. “If your business premises are on a flood plain, the potentially catastrophic consequences of a flood would give this scenario an extreme
risk rating.”

Crises like natural disasters account for only 5–6 per cent of business disruptions. Instead, it is more mundane events that carry a significant risk for your business. “Recently, scheduled road works meant that there was no customer parking for businesses in a particular road for more than three months. You can imagine the impact that had on these stores,” says Lengyel.

To manage the risk, businesses need to put steps in place that can lower the chances of a particular business disruption. For instance, if you run a supermarket, a supply of fresh produce might be essential for your business. This means that a transport strike could have serious consequences. “In this instance, you might decide to split your produce contract and have two independent suppliers instead of one, to lessen the risk,”
says Lengyel.

Because disruptions can have a knock-on effect up the supply chain, you might also want to ask your own suppliers what continuity plans they have in place to ensure they can meet their obligations to your business.

If the steps you’ve taken to avoid a business disruption fail, then your continuity plans should kick in.

“There’s no such thing as a single continuity plan, because the same disruption will affect business processes or departments in different ways,” says Lengyel. “For example, if the power goes out, you’ll
require different plans to make sure payroll can pay employees on
time and that a newsletter goes to print as planned.”

Multiple staff members need to be trained and to have copies of
the continuity plans that apply to their roles or departments. Your continuity plans should be updated if there are new staff or company changes like amalgamations, and the plans should be exercised at least twice a year.

“Have multiple copies – physical copies, digital copies in an online storage system that you can access remotely, a copy with your accountant, a copy at home and even a PDF version on your mobile,” says Lengyel.

He adds that it’s a common mistake for businesses to assume that the disruption will only last for a day at most.

“Businesses need to plan what they would do during longer disruptions. For instance, if you have a generator, will it power the whole building or just one floor? Do multiple staff members know how to work it? How long will the fuel last and do you have additional fuel stores or an arrangement with a fuel supplier? Remember, in an emergency situation, suppliers may have priorities that reroute services to other businesses first,” says Lengyel.

There are Australian national standards for continuity planning, and state and government tools to help businesses research their risks and responses.

“Risk management and continuity planning are advanced common sense,” says Lengyel, “but common sense ain’t that common.”

The views expressed in this article are those of the author and the interviewees, and not of Australia Post.

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