Updated: Sep 20, 2019
In the wake of so many natural disasters in the past few years, the 2018 Atlantic hurricane season was the third in a consecutive series of above-average hurricanes. It included 15 named storms, 8 hurricanes and 2 major hurricanes.
The Wall Street Journal estimated losses from these hurricanes at upwards of $50 billion, and many businesses will never recover. In fact, according to estimates by the Federal Emergency Management Agency (FEMA), between 40 and 60 percent of small businesses are forced to close following a disaster of this magnitude.
No matter the cause of the disaster—whether natural or man-made—businesses can (and should) prepare to get operations running again as quickly as possible. The bottom line is that the more prepared a business is, the more likely it can bounce back following a catastrophe rather than go out of business entirely. Even small businesses should develop disaster recovery plans, working with their insurance agent and perhaps even a consultant specializing in disaster preparation.
If you prefer to get started on your own, there are several steps you can take to get the process going. Many of the tasks in disaster preparedness will rely on the close collaboration of various employees or teams within your organization, so it’s best to get their buy-in on the importance of this type of business planning beforehand.
Any qualified insurance agent will tell you that the first step in recovery is having the proper insurance in place to handle the majority of disasters. If you haven’t already, start a conversation with your agent about your company’s susceptibility to both natural and man-made disasters and whether you have the right policies in place to help protect you.
A large part of your disaster preparedness plan will center around protecting your company’s data, including customer information, employee files, and financial records. Many small businesses have not taken adequate steps to protect their sensitive information, and at the very least, need to cover the basics. These data protection steps include the following:
1) Cyber insurance. Cyber insurance is absolutely mandatory in today’s business climate, with companies collecting highly confidential data from customers, employees, and vendors.
2) Digitizing records. Plan to convert essentially all your information to electronic form, including financial and accounting data, documentation, customer orders, inventory levels, and employee and vendor contact information.
3) Using the cloud. Cloud services are generally much less expensive than purchasing your own storage hardware, so using the cloud is usually a win-win situation.
4) Incorporating remote options. It is usually worthwhile to give key employees the ability to work from home or otherwise off-site.
5) Training and testing. Train designated employees, for example, on how to respond to crises such as a power outage, a burst pipe, or a fire, and then test them periodically to be sure they are up-to-speed.
Your insurance professional is a valuable resource and should be an important part of the conversation when it comes to disaster preparedness.