Business continuity planning for 2017
In Canada, a small business is typically defined as a business with 1 to 99 employees. According to the Government of Canada, small businesses account for almost 98% of the total businesses throughout the country and a new study found that by 2020, 45% of the Canadian population would be self-employed. Entrepreneurs, small business owners and start-ups are becoming more and more prevalent in the Canadian business world—it’s important that these companies know how to properly protect themselves from risks they may be facing. Risk management and strong business continuity planning are very important to a small business owner.
What is business continuity?
Business continuity planning is essentially preparing your business for the worst. It’s implementing a step-by-step plan for the future should an emergency situation occur, and it’s something that some small business owners overlook. What would you do if there was a power outage? How would you recover from a cyber attack? Are you properly prepared for natural disasters? These are just a few of the questions you need to begin asking yourself to develop a business continuity plan.
“After a crisis, 1 in 4 businesses will never re-open. Proper business continuity and disaster planning can help other small businesses avoid the same fate,” explains Fred Muldowney-Brooks, Director of Risk Services & Solutions for Northbridge Financial Corporation. “It begins with asking yourself: ‘if I were to experience a loss tomorrow, what would I do?’ You need to determine the specific steps you’ll have to take in order to keep your business running,” Fred continued.
Business continuity requires you to look at your business through 3 lenses: financial, operational and marketing. You’ll need to determine just how much the loss will cost your business. If you’re not properly insured, you may be on the hook for the entire amount. “Insurance is often placed on low priority for small business owners due to time, resources and money. Unfortunately, companies without a plan are left unprepared in emergency situations, which can cost them both time and money. Having insurance coverage is a central part of an effective business continuity strategy,” Fred explains.
You’ll also need to figure out how to keep your operations going to avoid any further financial loss. Business interruption insurance is especially important in these types of situations as it’s designed to help you continue to operate following a crisis. Finally, you’ll need to develop a proactive marketing plan that ensures your reputation isn’t damaged to avoid losing the trust and loyalty of your customers. “Business owners should always have a draft communication statement ready for customers in case they’re unable to meet commitments,” Fred suggests.
Top risks for small businesses
2016 has been deemed Canada’s most costly year in insurable damage. Disasters can happen anywhere and without warning. Don’t let 2017 be the most costly year for your small business—make sure you’re both aware and prepared for the top risks you may be facing. Below are just a few of the risks that your business may be facing:
One of the reasons that 2016 was such an expensive year for insurable damage was due to the Alberta wildfires. Many individuals and businesses suffered major losses from this devastating disaster and are still recovering from its effects. To get on top of the risk of fire, start by asking yourself:
- Are your employees properly trained on handling and operating equipment and fuel that may cause fires, property damage or serious injury?
- Do you have fire protection equipment, such as fire extinguishers and smoke alarms, installed on your property?
“I often put natural disasters near the top of the list because they’re seen as the least likely to happen, but that’s not always the case and they need to be on business owners’ radar,” says Fred. Fire is not the only natural disaster that can cause significant damage to your business. Others include:
Each of these possible disasters will depend on your proximity to the elements that cause them. Make sure you have a plan in place for the ones that could cause a loss to your business. If you do have insurance coverage for your small business, check if the relevant items on this list are covered through your current policy. If not, it may be time to update your coverage. Some other key points to consider include:
- If you can’t return to your business facility, where could you temporarily set up?
- Is your staff trained on the proper protocol for a natural disaster?
- Do you have employee information stored in a safe place to retrieve after a natural disaster?
- Do you have a communications statement ready for your customers if you’re unable to fulfil commitments?
Electrical power outages
This is one of the more common risks that small businesses face. A really bad storm could knock out the power for a few hours. In more severe cases, you could be without electricity for a few days. Earlier this year, the Greater Toronto Area was hit by a harsh wind storm that left many homes and businesses without power for quite a while. This can cause a few problems, including:
- Loss of heating or central air conditioning
- Issues with electrical panel or meter
- Breakdown of all electronics, including machinery, cash registers, elevators, diagnostic systems, boilers, compressors, freezers, ovens and other important devices
If your business depends on electricity—as many do—investing in a back-up generator could be wise as part of your business continuity plan. “Always keep your staff trained on the proper procedures during a power outage and ensure you have the contact information for a designated electrician on hand,” Fred recommends.
Cyber attacks on small businesses are continuing to rise as hackers get savvier than ever in their techniques. It’s becoming increasingly difficult to combat these attempts, so it’s even more important to make sure you’re prepared in case you’re the victim of a cyber breach. Cyber losses can be caused by a number of factors, including:
- Virus or malware attacks
- Hardware theft
- IT system or communication system failures
- Server room issues
- Unexpected patches and updates
With the increasing popularity of mobile devices in the workplace, Fred warns that this is another area of cyber concern. “We often think about phishing, viruses and malware and how they affect our laptops and desktop computers, but mobile devices are a threat for cyber security now as well. Employees often connect to their company’s internal servers and networks from their phones or tablets, turning them into outlets hackers may use to infiltrate your small business,” Fred explains.
Should you suffer a data breach or hack of any kind, there are steps you can take to recover. While developing your business continuity and disaster recovery plan, Fred recommends asking the following questions:
- Do you have malware and anti-virus software installed on your computer(s) or point of sale equipment?
- Do you know what your warranty or insurance covers regarding broken or stolen equipment?
- Do you know what kind of cyber insurance coverage you have?
- Do you have a list of specific models and brands of the equipment and technology your business needs?
- Have you backed up all important information and data (billing, accounting, contracts, etc.) on a company server, share drive, cloud or external hard drive?
This may seem like an obvious risk for business owners, but it’s still very important to consider while planning for business continuity in 2017. Crime can take many forms and affect businesses in different ways. Theft is a major one. If the equipment you rely on is stolen, how would you continue operations? How quickly could it be replaced? Are replacement costs covered in your insurance policy? Some other items to consider include:
- Is your staff trained on how to deal with and protect themselves from unauthorized personnel?
- Do you have a security system in place, such as surveillance cameras, alarms, locked areas and security guards?
- If a computer is stolen, are you able to remotely shut down/erase sensitive information?
These are only a few of the risks that small business owners may face in 2017. Every small business is different and faces its own unique set of risks. Ensuring you’ve developed a detailed and comprehensive business continuity and disaster recovery plan will help you get back on your feet if you suffer a loss this year. Proper insurance coverage including business interruption insurance can also be an asset in the face of a loss.
If you’re a Northbridge Insurance customer, you also have access to Risk Management Assist* services. This resource allows you to talk to our team of dedicated Risk Services Specialists who, like Fred, have a great deal of experience, knowledge and insight to share to help protect your business from risk.
“One of the risks that I see for small business owners is that they’re often wearing multiple hats. They’re the accountant, the salesperson, the inventory control manager, and so on. They don’t have a lot of time to sit down and plan for risks and business continuity. Risk Management Assist services can help answer the questions they have and guide them through this process,” explains Fred.
This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.
*Services provided by our Risk Services specialists and are intended to augment your internal safety, compliance and risk management practices, and are not a substitute for professional advice. Services are not an insurance policy or legal advice. Not all policies are eligible, contact us for details.