Have you thought about what your
business would do if it were wiped
out by a fire or flood? What if someone broke into the office and stole all your
computers? What if your entire sales
department was hit with the flu all at the
same time? Would your business be able to
survive any of these disasters?
“Organizations that have thought through
these scenarios and have created contingency plans are better able to cope with
these events than businesses that are not
prepared for the worst,” says Jim Parks,
chief operations officer and chief information officer for ViewPoint Bank of Plano,
Texas. “Insurance isn’t enough as it doesn’t
provide a method to deal with the disaster.”
Smart Business spoke with Parks about
how business owners and managers can
create contingency plans that prepare their
organization for disasters.
What are the risks of not having a contingency plan in place?
It’s expected that leaders in an organization would take charge in the event of a disaster. However, with no contingency plan,
they might make decisions in the heat of
the moment, which may not be in the best
interest of the company or provide for the
quickest recovery. Such quick decisions
could result in the loss of customers and
the company’s reputation because it can’t
deliver its products or services on time.
This loss of confidence could result in an
erosion of business over time that is hard
Don’t many businesses already have contingency plans in case of a fire or theft?
Yes, but these plans are often simplistic
and only exist on paper. The question is:
Has the business owner and staff done a
walk-through or drill of these scenarios?
Have owners also thought of other events
that would be disastrous to their particular
business? This is the step that many companies neglect to do. If you spend an hour
around the table talking about the consequences of a fire, theft or loss of electricity
for a day, you will discover that your on-paper contingency plans may have many
How can a business go through an existing
contingency plan and make it stronger?
There needs to be an initial risk assessment where the business owner and other
key personnel brainstorm all the potential
disasters. You can break down the potential disasters into three major categories: 1. Those that affect only the business,
such as fire, theft, break-ins, loss of power,
loss of phone service, loss of Internet
service, the loss of a major supplier, etc.
2. Disasters that affect employees, such
as an outbreak of an illness
3. Disasters to a community, such as a
flood, hurricane, earthquake or a threat to
The next step is to figure out the probability of these events occurring. For example, here in Texas, we are not likely to
experience an earthquake. But the likelihood that we could get hit by a tornado is
very real. More attention needs to be dedicated to the events that are more likely to
occur and would have the most negative
impact on the business.
Once you have a list and the probabilities
The most important part of this exercise
is to do a walk-through of the high-risk disasters for your particular company. This
should be done in a meeting with the business owner and other principals of the
company so as not to disrupt your day-today operations. For example, walk through
the scenario of what would happen if one
day your supplier could not provide you
with a critical raw component to make
The next step in this process is remediation. After walking through a scenario, you
need to make plans on what to do to lessen
the impact to your business. In the previous example, you’d probably want to have
more than one supplier for that critical
What scenario would be the most disruptive
to a company?
Anything that wipes out what your
employees are working on that day. The
most critical elements of what’s happening
in a business are also the most exposed
they’re generally found on top of an
employee’s desk at the end of the day.
Things that happened three months ago
are usually filed safely away. What an
employee is working on at the moment is
what needs to be protected from theft,
from fire, from disappearing. What would
you do tomorrow if all your current papers,
files, contacts, phone numbers and calendars disappeared? Or a fire wiped out
everything on your sales staff’s desks?
What’s your backup plan? That answer is
the heart of a good contingency plan.