From severe flooding to cyber-attacks to product liability lawsuits and beyond – it can feel as though there are endless risk exposures associated with doing business. Many owners and executives purchase a Business Owners Policy (BOP) or Commercial Package Policy (CPP) and mistakenly believe they’re prepared to survive the worst-case-scenario. But that’s just one aspect of comprehensive business continuity planning.
Business continuity planning is essential to an organization’s larger risk management strategy, and it involves making a plan for the prevention of and recovery from the potential threats that your organization faces. However, it’s often a process that’s misunderstood.
How to Avoid the Common Misconceptions of Business Continuity Planning
From minor incidents to catastrophic scenarios, the more you prepare for threats and disruptions, the less impactful they’ll be on your business’s ability to thrive in the future. Here are some common misconceptions to consider and ways to avoid falling into the trap they create.
Misconception: My team will know what to do in a crisis.
Truth: When a crisis hits, it’s chaotic. Even the most seasoned teams can drop balls, speak out of turn, fail to act, and/or act inappropriately if there’s no plan in place. So, now is the time to create a crisis plan, including what needs to happen (and in what order), who is responsible for speaking to which stakeholders (including the media), and the temporary line of succession (in case the top leaders aren’t available to lead).
Misconception: Insurance will cover our losses.
Truth: Insurance is an essential element of business continuity planning, but it is not a plan in-and-of-itself. On one hand, your standard general liability and commercial property insurance policies may not cover all of your most significant risks (such as floods or data breaches – like we mentioned above), so you may need to add specific commercial policies to cover your range of exposures. On the other hand, there are less-tangible losses that simply won’t be covered by insurance, such as the impact of lost customers or market share over the long-term. Consult with an insurance expert to ensure you’re as protected as possible and to be aware of the exposures that remain.
Misconception: It’s too time-intensive to create a business continuity strategy.
Truth: By investing time in proactive planning, you save exponentially in time and resources down the road. For example, many of your fixed costs continue even if you’re non-operational, and some of that burden could be lifted by purchasing a business income insurance policy ahead of time (but it requires that proactive mentality). Keep in mind, every day that you’re unable to fulfill orders or deliver services, more of your customers turn to your competition – but a business continuity plan could significantly reduce the amount of downtime you’d experience. So, the question becomes: can you afford to not invest in a plan for the future?
Let’s Talk About Your Risk Exposures and Which Commercial Insurance Policies Are Best for You
At Swarts, Manning & Associates, we provide a unique perspective on all of your commercial coverage options, and we help to determine which carrier best fits your business needs. We strive to find you the broadest coverage at the best available rate. Give us a call to get started: (833) 878-2820.
Each week, Swarts, Manning & Associates covers relevant topics for your business. Stay tuned to hear more discussions about managing your insurance and industry-specific tips.
