19 April 2021

How to create a business continuity plan and improve your business risks

Having a contingency or business continuity plan can make the difference between survival or going under in the face of major disruptions. On the flip side it can also help to unlock growth. To help you manage business risks find out how to formulate your own plan using a business continuity template developed with our insurance partner Vero.

A contingency or business continuity plan provides a ‘what if’ road map that equips you to respond to disruptions and can also provide insight into areas of your operations that need development and those that provide strength and resources to draw on.

Benefits of establishing a business continuity plan

  • Helps identify critical processes or activities and potential sources of disruption that may threaten them
  • Enables you to develop working plans to enable your operations to continue after sustaining a major loss
  • Instigates an opportunity to review your key business goals, the robustness of your operations and where your major dependencies lie. Other benefits can include ensuring compliance with (updated or changing) regulations and sharpening your business’s competitive edge through more effective operations.
  • Helps identify needs and plans for additional contingent capabilities such as providing back-up facilities, built-in redundancy, alternative supply arrangements or additional resources (such as appointing a crisis management team).

Business continuity management established by completing a contingency planning process helps to provide a clear definition of your core functions, what might impact them and what you could do before, during and after a disruptive event to minimise your risks and enable business continuity.

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How to develop a business continuity plan

The key areas involved in assessing your business to determine contingency risks and business continuity protection needs follows, plus a link to a downloadable template.

Conduct a preliminary risk analysis of your business

  • Outline your business’s essential functions and processes in terms of their contribution to your overall goals.
  • Identify where your key infrastructure and resources are located.
  • Consider the vulnerabilities of your business activities and systems to external factors, taking into account measures you have in place.
  • List internal and external dependencies, which could include infrastructure, utilities, expertise, supplier and clients or customers.

Consider potential impacts to your business and operations

Approach the impact of disruptions in a systematic way using your risk analysis information and these 5 steps.

    1. List essential business functions
    2. Processes involved
    3. Any existing risk controls
    4. Identify potential impacts and the length of down time these disruptions could involve
    5. Assess the effectiveness of the controls already in place.

The information collected in these initial steps form the basis of creating a contingency plan. There is no set formula but there are some principle areas to cover, as follows. You can also download the template as a guide to follow, filling in the relevant fields as they apply to your business.

The key areas to cover in your business contingency plan

    1. Company profile information including critical business functions, processes and triggers for activating the contingency plan.
    2. Operational requirements including minimal functionality levels, contractual and regulatory requirements, interdependencies and critical time periods for outages and recovery.
    3. Critical personnel including a management structure and reporting plan, roles and responsibility summaries, and complete contact details.
    4. Continuity plans including back-up arrangements and coordination across all locations, identified resources to support the contingency plan, tasks that can be continued without interruption and actions required to enable continuity.
    5. Communications required to support activating the contingency plan.
    6. Appendices including plans, access information, checklists, maps and diagrams.

Download business continuity and contingency planning template, provided by our insurance partner Vero.

Check your contingency plan against your business’s objectives

Before finalising your plan make sure that it fulfils its purpose by checking the content against the aims it’s intended to achieve, with input from the stakeholders and knowledge experts from the applicable areas of your business.

Key questions to test the adequacy of your business continuity plan

  • Will it enable the business to quickly stabilise after the effects of a disruption?
  • Does it support continuity of business critical functions?
  • Will it enable resumption of normal operations as soon as possible?
  • Does it put controls in place that reduce the potential for disruption?
  • Does it equip the business to avoid taking on additional risks or pivot or to take advantage new opportunities?

A contingency plan is a risk management tool that provides documentation of how your business will prevent, address and remediate disruptions to operations. This can be taken into consideration by your broker and insurer’s underwriters when assessing your business’s approach to risk management. Your broker may also assist to make recommendations in developing your plan.

 

Connect with an expert

 

Further reading

Insurance, risk management & consulting

Major business risk management priorities refocus on continuity and supply chains

 


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