By Tara Kneafsey, RSA’s SME Director
The economic downturn has heightened awareness of the risks that businesses face — regardless of the industry they operate in, their size and location. More than any other, though, the importance of actively managing risks in a small business and being able to respond to them efficiently and effectively should not be underestimated.
As a leading SME insurer, we know that small business owners face a raft of business interruption threats; from fire and theft to loss of intellectual property or crucial members of staff. However, another important risk to consider is a lack of business continuity planning. For businesses of all shapes and sizes, but specifically SMEs where there is often a pronounced reliance on a few key members of staff — it is a robust business continuity plan that will keep them going in times of trouble.
Developing a business continuity plan is often viewed with scepticism and presumed to be something that only larger companies need to undertake but, for any company, even with the best risk reduction measures in place there will always remain a residual risk. Understanding that risk and planning for the fall-out from a likely incident can greatly reduce its impact.
A business continuity plan doesn’t need to be complex and should match the needs of the business. These six simple steps can help ensure you have a workable ‘plan B’ should the worst happen:
- Identify the key elements of the business. What are the critical processes and functions? Who are your key suppliers, customers, personnel? Do you have specific equipment or machinery that you can’t function without? What are your most profitable products or services?
- Develop an impact analysis to determine how critical some of these core elements of your business are. For example, could you manage for a day, a week or even a month without a critical piece of machinery or any computer access?
- Use this insight to develop your own business continuity plan. This should be divided into two parts: crisis management planning and recovery planning.
- Your crisis management plan should include evacuation procedures, crucial information for the emergency services (e.g. site layout, location of hazardous substances), a list of essential contacts (e.g. suppliers, utility companies) and a pre-agreed communications path for keeping key stakeholders updated (e.g. staff, suppliers, financiers).
- Your recovery plan should cover pre-planning of the resources available to your company in case of business interruption. This might include holding lists of temporary office or manufacturing space, a reciprocal agreement with another business to use their premises in case of emergency, or details of a third party supplier who can meet the needs of your customers on your behalf.
- Once a business continuity plan is in place, make sure you keep it up to date. Review it regularly — for example, are the emergency contact details listed still accurate, do you still work with the tradesmen you have on your list, or are there new ones to be added?