Protecting your business with a good disaster plan

How can you safeguard your business against unexpected business interruptions, such as floods, fires or supply chain disruptions? We understand it’s challenging to prepare for every eventuality. As a business owner, the first step is to develop a disaster management plan to help ensure your business can continue operating, even when suddenly happens.

A well-crafted plan can mean the difference between a quick recovery and long-term financial trouble. Your financial adviser or insurer can assist with the insurance portion of this plan. Additionally consider the tips outlined in this document.

What is BI cover?

The starting point to protect your business against unforeseen disasters is securing business interruption (BI). BI cover protects your business from losing income due to direct physical damage to its property by a covered event as stipulated in your policy.

Key elements to consider

1.      Understand your policy wording: make sure you know what is covered and what isn’t. Consult your financial adviser or insurer for clarification.

2.     Guard against underinsurance: BI cover pays for income loss, but only up to the policy limit. Ensure you are adequately insured to avoid being out of pocket. On average, 43% of BI insurance is underinsured by 53%, in South Africa. Keep up-to-date valuations of assets and if there are changes to these or for instance the primary driver of vehicles or changes to property usage, you need to inform your insurer immediately.

3.     Maintain property: Adhere to insurance guidelines and maintenance schedules to prevent unnecessary damage to your property. Ensure security systems, fire alarms, and surveillance cameras are working and properly activated.

Tips for submitting a claim

It’s important to adhere to certain specifications should you need to claim:

1.      Prompt communication: Notify your insurer of any claims as soon as possible, meet policy deadlines, and provide needed documents promptly.

2.    Accurate information: Provide detailed and accurate information about incidents and claimed items to speed up the claims process and avoid disputes.

Essentials of a Disaster Recovery Plan

A comprehensive disaster recovery plan should minimise losses and that’s why it needs to include not only insurance coverage, but also safety protocols and security measures.

Additional strategies for your disaster recovery plan:

1.      Business continuity planning (BCP): Outline how your business will continue operating during disruptions. Identify key functions, personnel, and alternative work arrangements. Regularly review and update this plan.

2.     Risk assessment: Identify your business’s vulnerabilities. Assess potential risks (natural disasters, supply chain disruptions, cyberattacks), prioritise these based on impact and likelihood, and implement preventive measures.

3.     Supply chain diversification: Don’t rely on a single supplier.  Diversify to build redundancy and maintain good relationships with multiple vendors.

4.     Remote work capabilities: Many businesses are currently running hybrid working conditions, but if you do not, you need to plan for remote work with cloud-based tools and secure VPNs.

5.     Data backup and recovery: Regularly back up critical data and test data recovery procedures to ensure they work.

6.     Emergency communication plan: Establish clear communication channels to keep employees, customers, and stakeholders informed during disruptions.

7.      Financial reserves: Maintain enough cash reserves to cover operational costs during interruptions. Consider lines of credit or emergency funds.

8.     Employee training and awareness: Train employees about their roles during disruptions and conducts drills if necessary.

Proactive planning and adaptability are key to minimising the impact of interruptions in your business. With robust BI cover, and a comprehensive disaster management plan, a well-prepared business will not just survive disasters, but emerge stronger and more resilient.

The information in this blog is for informational purposes only and does not constitute financial advice.