Business interruptions can occur after an anticipated or unexpected event that delays or disrupts a business’s normal operations. Incidents such as natural disasters, fires, cyberattacks or the loss of a critical supplier can halt operations for an extended period of time, leading to a cash-flow imbalance that could ultimately force a business to close for good.
Considering the significant costs of business interruption, here are six steps to minimize your risk exposure:
- Determine the risk. Assess environmental and human risks to your specific business, industry and location, as well as which risks are preventable. After the risks have been identified, the elements involved—such as the hazard itself, the assets in danger and the potential impact of the incident—can be understood.
- Calculate the cost. Analyze the potential impact of each risk by considering the cost of lost sales or income, increased expenses, regulatory fines or contractual penalties.
- Understand the insurance coverage. Review your organization’s insurance coverage to understand the policy terms, exclusions and coverage limits, as these can help inform risk mitigation strategies.
- Implement steps for prevention and mitigation. Once potential risks are understood, begin implementing risk-control measures.
- Create a crisis communication plan. Creating a crisis communication plan can help with internal and external messaging when a crisis strikes. In the plan, outline the chain of command and any specific duties, write key messages and scripted responses, and establish bidirectional communication networks.
- Prepare an emergency plan. Practise and review emergency procedures to ensure the plan’s effectiveness. Include IT and data recovery, contracts and resources in the plan.
By taking these precautions, business leaders can prepare and strategize for interruptions. For more information on business insurance, or to find out how to reduce your insurance costs call CMB at 780.424.2727 or click here to get a quote.