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Knowledge Center Items Business Interruption Tops Weather-Related Risk Among Company Leaders

Business Interruption Tops Weather-Related Risk Among Company Leaders

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A recent survey of 1,200 business leaders conducted by The Travelers Companies shows that 43% consider business interruption losses as their biggest weather-related risk. Interestingly enough, however, nearly 40% of respondents don’t have a business continuity plan in place and 10% didn’t know if their firm indeed had one.

The natural disasters of 2017, including Hurricanes Harvey and Irma, illustrate the need for businesses, regardless of size, to implement risk management that includes disaster planning and business continuity plans to protect employees, property, and assets from the impact of severe weather. 

In addition to having up-to-date and nimble business continuity plans, it’s important for businesses to be carrying the right insurance coverage. According to building-cost provider Marshall & Swift, 75% of commercial businesses are currently underinsured by 40% or more. This is in sync with Travelers’ survey, which found that seven in 10 business leaders are not very confident that they are properly insured and 63% do not conduct periodic reviews of their insurance coverage with their agent or broker.

Business continuity plans allow a company to continue providing essential products, services, and customer support in the aftermath of a fire, storm, blizzard, earthquake, tornado, etc. In some industries, these tasks are critical for the company’s short-term viability, customer safety or meeting of legal requirements. Disaster recovery plans – a subset of business continuity – often focus on recovering IT assets.

In reviewing or developing a business continuity plan, be sure to undertake the following steps:

  • Develop a risk assessment. Make sure the staff has a good idea of the likely and unlikely risks the business faces to know which risks to address with a specific plan. For example, what natural disasters are likely to occur in the area? What cyber attacks or events would have a significant effect on the business? How long will it take to get back up and running in the event of a breach?
  • Detail the impact. Once a threat is identified, look at the potential impact of each scenario. How will customers be affected?  Employees?  Would inventories, documents, systems, services be impacted?  What are the long-term risks to the firm’s customer base and to the business itself?
  • Develop the continuity plan. For each identified threat, establish a plan, including the systems, data, people, and communications necessary.  While some of these contingencies may be the same for multiple threats, each one should have a clearly defined plan.
  • Prepare staff and technology. If key personnel is expected to be available, even during a disaster, they need to be notified and trained about how they will be notified, where they need to report and what tools they will have.  Employees should also be aware of how to exit buildings safely in an emergency and have access to emergency stores of water, food, radios, chargers, and flashlights.  Services and data should be migrated to cloud solutions, backup facilities and alternate media well in advance of a disaster.
  • Protect the business. Ensure that the right coverage and protection is in place to keep the company whole when disaster strikes. This includes having Cyber Liability, Business Interruption, Flood, Earthquake (depending on the area), and other key coverages in addition to carrying proper Property Insurance amounts.

RPS can assist you in providing your clients with a portfolio of insurance solutions for solid protection in the event of a disaster. Give us a call to discuss our products.

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