The Importance of Having a Disaster Recovery Plan
July 12, 2017
By Timothy O’Rourke CPA, CFP
You’ve heard the quote “failing to plan is planning to fail.” This certainly applies to disaster recovery. While thankfully not a daily occurrence, fire, flood, cyberattack, terrorism or epidemic can severely impact a business. In fact, statistics show that approximately 40% of businesses do not reopen following a major disaster. As such, developing a business continuity plan is essential.
Creating the Plan
A disaster recovery team, made up of key operational and support staff, should be charged with developing the plan. This detailed document should cover such things as:
- Getting people to safety
- Communicating internally as well as externally (customers, media, public officials, vendors).
- Where and how staff will be working remotely should physical access be unavailable.
- Backing up critical data and storing off-site, along with copies of important documents.
- Training staff on what to do and their responsibilities in the event of a disaster.
- Planning for various out-of-commission scenarios: a day, a week, a month.
- Determining emergency supplies needed: cash, power source, first aid.
Note: There are many disaster recovery plan templates available online that you can tweak to meet your company’s specific needs and situation.
The first thing post-disaster is to do a damage assessment. Who can get back into the office and when? What needs to be replaced and how fast? Next, review your insurance plan. You should have enough coverage to pay for damages to your facility, equipment, inventory and business disruption.
If necessary, low-interest loans are available through the Small Business Administration (SBA.gov). Loans of up to $2 million are available to qualified businesses to repair or replace property, machinery, equipment, fixtures, inventory and leasehold improvements as a result of a disaster.
Your disaster recovery plan should not be static. You need to update annually to account for significant changes in the business. Finally, employees should regularly practice the plan to stay sharp if and when an actual disaster strikes.