Without a plan, your business may never recover from a natural disaster

Business information, whether stored on paper files or in electronic form, must be safeguarded against natural disasters. Fire, floods, earthquakes and hurricanes could destroy or render information unavailable for a period, creating a time gap during which a business cannot access its data. The more time that goes by without access to that information, the higher the likelihood the business never recovers.

To a lesser degree, businesses are subject to accidents, such as a burst pipe, that can drown servers and soak critical documents. In either case, a disaster recovery plan is critical.

Smart Business spoke with Douglas C. Williams, CEO of Williams Data Management, to learn more about the risks natural disasters pose to companies and how to recover if one strikes your business.

What assumptions do companies make regarding the safety of their business information?

CEOs falsely assume disasters or accidents will never happen to their businesses or that they’ll somehow be able to persevere without a plan. It’s a costly assumption businesses of many sizes hold to.

Natural disasters are common. They can cause loss of property and prevent the workforce from tending to business operations.

If employees can’t get to work and have no access to data, the result is a complete and total breakdown of business infrastructure. This could mean an inability to access capital or credit lines, an inability to fulfill accounts payable or collect receivables, and can compromise the business’s ability to file an insurance claim.

The cascading effect of the disaster could result in the inability of that business’s ecosystem to function, and a catastrophic loss of infrastructure, leaving a business no way to recover.

What is the financial impact to an enterprise due to a natural disaster?

There is a common assumption that a business with $15 million in annual revenue can lose $60,000 each day that it is unable to perform its business functions.

While many companies have insurance that covers reconstitution, not everything can be recouped from an extended period in which operations are shut down.

How can companies ensure their business information is protected from loss?

Primarily, a company needs to form a disaster recovery plan.

Sit with your stakeholders and determine where you’re vulnerable and determine how to address it. Talk with strategic advisers in risk management, at your financial institutions, your insurance agents, your largest suppliers and clients, and any equity holders and put together a plan that ensures everyone can stay connected and share information in the event of a disaster.

Another aspect of that plan should include data encryption and off-site back up. Business information should be held or available somewhere that a team member can safely go to recover the data necessary to continue essential business operations. A recovery site could be a co-location, or even the owner’s home if he or she has the necessary equipment to sustain operations.

Another option is to take advantage of an outsource partner who has systems in place that would allow you to execute your backup strategy. The partner should be outside of the impact zone of most disaster occurrences that could hit your business.

How can companies determine the right amount of protection and not overspend?

Determining the right amount of money to spend on disaster recovery is a matter of deciding what you must cover and how much time you can afford to give yourself to reach full recovery.

If you fall short of that goal then you’ve underspent, which would be an unfortunate fact to learn while in the midst of disaster recovery. It’s better to come in at a penny overspent instead of a penny underspent, because the latter can mean you don’t have a viable recovery mechanism.

Ultimately you need a disaster recovery plan in place that’s available and preserved somewhere it can be accessed regardless of the situation. It’s a good idea to have a strategic partner on the data side and in the insurance world that can help your enterprise think through potential disaster scenarios.

They can help formulate a plan and method of risk transfer to keep your business running through any disaster. ●

Insights Technology brought to you by Williams Data Management