Coronavirus is shaking up business and consumer behavior on a massive scale. Both the public and private sectors are scrambling to slow the spread of the illness and contain COVID-19 infections. While the full economic consequences of this pandemic are still unclear, we know that the effects of the virus and the drastic measures being taken to contain it are already precipitating change across industries. Disrupted supply chains, retail closures, remote workforces, and a staggering health crisis are just the tip of the iceberg.
Job losses in the past four weeks have reached unprecedented levels up to 10 times higher than any previous peak in history, with more than 22 million workers (6.7% of the U.S. population) losing their jobs.
What Could Companies Have Done to Prepare?
Did your company have a business continuity plan (BCP)?
Companies today face an unprecedented number of exposures. Notwithstanding COVID-19, the frequency and severity of weather-related events seem to be increasing and reliance on a complex network of technology and supply chains is expanding. Both trends leave businesses susceptible to a variety of existing and emerging risks. Managing these risks by developing a business continuity strategy is key to the survival of any organization.
Steps to a Business Continuity Plan
This article provides easy-to-follow steps for organizations to develop while implementing a robust BCP. These plans should limit exposure, risk and downtime for the organization. The quicker a business can get up and running after a disaster, including supply chains, distribution and manufacturing facilities, stores and corporate offices, the less time and revenue it will risk losing. Let’s take a look at a simple four-step process to building a BCP:
Step 1: Risk Assessment
Start by conducting a risk assessment and determine the risks and exposures you’re trying to mitigate. A SWOT (strengths, weaknesses, opportunities and threats) analysis is a great start. Once the risk assessment is completed, you’ll have a great roadmap to begin the next steps of a business impact analysis. In a risk assessment, you’ll:
- Evaluate your company’s risks and exposures
- Assess the potential impact of various business disruption scenarios
- Determine the most likely threat scenarios
- Prioritize findings and development of a roadmap
Step 2: Business Impact Analysis (BIA)
The next step in the BCP process is to conduct internal BIAs with all divisions of your company through workshops with simple templates that each division leader can complete. These templates will:
- Determine the maximum amount of downtime business processes can withstand
- Develop recovery point objectives and recovery time objectives for critical functions (e.g., applications, systems, etc.)
- Identify critical business processes and workflows and the supporting applications
- Outline internal and external dependencies
- Determine critical staff members and backups with similar skill sets
Step 3: Strategy & Plan Development
Once the BIAs are completed and entered into a system, your company needs to conduct a calibration effort to ensure all groups have participated. Once prepared, actual business continuity plans should be developed for each group to address the risks noted in Steps 1 and 2 above. Next steps include:
- Reviewing plans with key stakeholders to obtain executive sign-off on overall plan
- Creating an offsite, secure repository where the company’s BCP is stored for easy access from virtually anywhere during an outage or disaster
Step 4: Test, Train, Maintain
Once the BCP is completed, it needs to be tested. Common tests include tabletop exercises, structured walk-throughs and simulations. A tabletop exercise usually occurs in a conference room with teams reviewing the plan, looking for gaps and ensuring that all business units are represented. In a structured walk-through, each team member walks through his or her components of the plan in detail to identify weaknesses, with a specific disaster in mind. It’s a good idea to conduct a full evacuation drill at least once per year and disaster simulation testing annually. For this test, create an environment that simulates an actual disaster to determine if you can carry out critical business functions during the event.
Start Your Business Continuity Planning
Planning for a disruption, or even a catastrophic event or pandemic, should happen when business is going well, not when disaster strikes. Having a pre-defined, well-documented business continuity plan that clearly communicates how your business will respond during an event can help mitigate risk — and is one of the best investments your company can make.
Managing Principal, Impact Risk Partners