When it comes to a commercial business’ loss prevention strategy, the importance of having well-crafted tools designed to respond swiftly and effectively to unforeseen incidents cannot be overstated. One resource that may not get as much attention as it needs is a business interruption plan. Any loss, regardless of the severity or the cause, can potentially interrupt a commercial business. The scale and length of these interruptions can range from a full to partial shutdown, depending on the extent of the loss event.
As an integral part of an organization’s loss prevention strategy, a business continuity plan helps limit or mitigate downtime and the economic impact of disruptions after a loss. Whether fires, natural disasters, cyberattacks, or the breakdown of essential equipment, a well-structured business continuity plan ensures that a business can maintain essential functions during an unexpected event.
Not sure where to start? Whether you’re a broker looking to support your customer’s loss prevention journey, or a business owner interested in updating your existing continuity plan, consider the following key factors that contribute to building an effective business continuity plan:
- In determining the plan’s scope, create a formalized outline of key management personnel and their roles and responsibilities when a loss occurs, as well as the areas that can be impacted.
Consult with third parties, such as an insurer’s loss prevention experts, as needed to fully understand an organization’s exposure.
- Business continuity plans should be tested at regular intervals to ensure individuals know how to respond appropriately in their roles.
Practising a plan multiple times will make it more seamless and efficient should you suffer an actual loss.
- Outline upstream and downstream exposures and ensure the business has secondary suppliers for critical raw materials.
- Consider diversifying the business’ customer base. Business interruptions may cause some customers to look for alternative providers; broadening the customer base can help limit the loss.
- Equipment that is critical to operations may produce a bottleneck in the event of a loss. Ensure there is an appropriate amount of critical spare parts available and assess alternative manufacturing options if possible.
- Implement a regular backup process to protect electronic proprietary data and intellectual property. Ensuring your data is safe and redundant will help you resume operations quickly.
- Organize pre-arranged service contracts to allow for a prompt response in the event of utility failure (e.g., electrical, heating/cooling, etc.).
For more information and additional loss prevention resources, visit echeloninsurance.ca.
