Business Continuity in the Face of Natural Disasters: How to Be Prepared

The deadly floods in Southern California and earthquakes in Japan made some of the most devastating headlines we’ve seen barely less than two months into the first quarter of 2024. Scientists predict even more catastrophic events in the near future. For businesses that depend on uninterrupted operations, the message is clear. To protect data, systems, and people, and keep operations running the entire time, a sound business continuity plan must be in place long before the disaster.

A recent report found that 75% of small businesses lack a Disaster Recovery Plan. In the same report, 55% of organizations experienced catastrophic financial losses resulting from business continuity incidents. Reflecting on past disasters, only resilient businesses have been able to subdue the effects of unforeseen aftermaths while keeping mission-critical operations running throughout the ordeal.

In this article, we share key insights into how businesses can prepare for untimely natural disasters and protect people, data, and infrastructure from the disastrous fallout.

Key Takeaways

  • Natural disasters cost governments about $29 billion in disaster relief. Bigger losses can be felt to the tune of about $280 billion in economic losses, with small businesses taking a significant share of the hit.
  • Business continuity planning is the cornerstone for building organizational resilience. As the world plunges deeper into environmental decline, future disasters will warrant an urgent need for holistic preparation and strategic initiatives to avert the dire consequences hinted at by future environmental crises.
  • Disaster recovery is an indispensable component of business recovery planning. A synergistic union of disaster recovery and business continuity planning activities shields business operations from prolonged downtime by ensuring services are restored quickly and efficiently.

What Business Continuity Means for Small and Medium-Sized Businesses (SMBs)

In some industries, business continuity powers the continuous availability of mission-critical operations or exists as part of broader legal requirements – healthcare, government, and financial entities are required to have business continuity strategies proportional to the scale and scope of their operations.

Two broad areas of focus under continuity planning include:

  • Risk analysis and management – At any given moment, key stakeholders, customers, investors, and partners need reassured confidence in your ability to restore operations soon after a disruptive incident. With risk management, CIOs are able to calculate the potential financial, reputational, and operational risks and draw up appropriate response frameworks to mitigate their impact. 
  • Business reputation management – Business continuity planning reaffirms the organization’s commitment to building resilient solutions. Quick acts of restoration bolster widespread confidence in the company’s reputation specifically, for businesses in sensitive and highly-regulated industries.

While natural disasters are considered one of the biggest existential threats to small and medium-sized businesses (SMBs), they aren’t the only factors that sanction the need for holistic business continuity planning. Internal factors, such as insider threats (sabotage), cybersecurity gaps, power outages, and haphazard equipment failure also deserve recognition as a valid justification for business continuity and disaster recovery planning.

Natural Disasters and their Historical Impact on Business

Natural disasters have had a significant impact on business in the recent past. Throughout, experts have responded by continuously improving early warning systems for major tsunamis, earthquakes, and hurricanes. Still, some disasters slipped through the cracks and dealt immense blows to small businesses from several angles.

In 2017, damaged equipment, buildings, and other IT infrastructure wrought costly repairs in what is considered to be one of the most destructive wildfire years in California’s history. A total of 9,133 fires burned through 10,000 structures, with many of the destroyed buildings being commercial properties. VOIP communication lines, printers, end-point devices, network equipment, storage devices, and other IT equipment damaged in such fires are almost always unsalvageable.

What’s more, local businesses often receive a sudden blow as a result of the loss of local clientele in major floods and severe storms. Unfortunately, it’s nearly impossible to restore normalcy to the pre-disaster level, since people will divert their attention to recovering from the losses inflicted by the disaster.

Regrettably, some natural disasters may lead to the loss of valuable, trained, and experienced personnel, for instance, Hurricane Katrina, which claimed the lives of an estimated 1800 people – including staff at various companies. A loss of employees not only causes emotional dismay for the victim’s family and colleagues, it also means higher spending in hiring new recruits.

Business Continuity Planning Helps Maintain Smooth Operations

Beyond natural disasters, a swath of man-made and system-initiated factors also determine the company’s business continuity planning process. Disruptions are on the rise and cybersecurity threats remain at large despite the vast investments poured into more advanced cloud and network security solutions. 

As climate-initiated natural disasters make record headlines, informed business continuity planning can help maintain order in the following ways:

For starters, continuity planning helps CIOs shrink the restoration period after the disaster. On average, businesses face a litany of natural disasters that take weeks or months to recover from. Business continuity planning can help contain the risks from spreading. Consider a small business whose network equipment just got damaged in a major earthquake. By duplicating vital client files and business data on remote locations or in the cloud, operations can be restored in a matter of minutes, and not days.

Business continuity plans not only highlight the steps that need to be taken for quick restoration but also outline the key players and their duties throughout the process. Your response team’s collaborative abilities should be at their peak when faced with a disaster. Identify key activities for quick restoration and maintain clear communications between your team and other stakeholders.

Speaking of effective communication, customers, partners, and your IT support department value frequent updates. A communication breakdown during a disaster casts an ill-sided shadow of the company’s readiness, practices, and policies during a disaster. Seek alternative communication channels e.g. through instant messaging for internal departments and social media to facilitate frequent customer updates.

How to Develop a Comprehensive Business Continuity and Disaster Management Plan

Thankfully, creating a solid business continuity and disaster management plan isn’t written in stone. CIOs can embark on any set of steps after a deliberate and comprehensive analysis of the specific issues and potential disasters that they face. Nonetheless, BCDR planning seeks to highlight the resources needed before, during, and after a disaster, emergency contacts and locations, and the specific people responsible for restoring normal activity.

1. Select Your Emergency Response Team

It is standard practice to appoint a rapid response team that can be deployed quickly on short notice. As the Business Development Bank of Canada (BDC) puts it, appoint a competent leader for your emergency response team and bestow upon them the power to “get things done”.

Conventional wisdom further mandates appointing a team leader with a great understanding of the stakes and the company’s objectives. A competent team leader, in the discharge of their duties, will focus on creating solutions that fall in compliance with the company’s policies.

2. Separate Essential Services from the Non-Essentials

Dividing attention between pressing and trivial tasks amidst a disaster spells bad news for your business recovery plan. Essential services are easy to identify since these have the greatest impact on the business such as the closure of an entire division if not tended to in time.

Data availability, for instance, is critical to continuous service delivery at many levels. Production is yet another mission-critical activity; any disruptions that grind production to a halt should be addressed with the highest priority. Regardless, the nature of the solutions deployed must not lose sight of the company’s critical operations.

3. Prepare for Each Potential Disaster Separately

It’s highly likely that every disaster will have certain profound ramifications on your business operations. Wildfires may not offer much of a choice in salvaging equipment as some less severe floods and hurricanes would. As such, different response plans and policies will be necessary to address (and possibly avert damage) to the company’s IT assets at multiple levels. In essence, each potential disaster should have its own unique response strategy.

4. Establish Frameworks for Collaboration with Relevant Agencies and Emergency Responders

At the end of the day, systems, data, and more importantly, employees should be protected from the negative impact of any disaster. 

With the increasing adoption of IT devices and social media, it’s easier to access real-time updates and even make accurate predictions of imminent danger. Maintaining communication with local emergency responders averts the risks of loss of life during a disaster. Consult local agencies, insurance, and healthcare providers to understand their role in response to a natural disaster.

5. Regularly Review and Update Your Business Continuity Plan

There are several parts to a comprehensive business continuity plan, and the worst time to test its effectiveness is during a real disaster. 

Business continuity planning is an iterative process; with each passing disaster comes the need for improvement. Liaise with your disaster response team to create a well-coordinated response to future emergencies.

Business Continuity Planning Success Cases: BCDR Planning at its Finest

Throughout recent history, there have been several incidents where business continuity planning helped businesses withstand disaster.

In the summer of 2017, when Hurricane Harvey obliterated residential and commercial properties throughout South East Texas, Gaille Media – a small internet marketing company of then 12 workers – kept its operations running uninterrupted despite the destruction dealt to their office space. Gaille had taken the initiative to store vital files and documents in the cloud, and operations kept going uninterrupted during the three months that they were unable to get back to their office.

But despite the size and scope of a disaster, no one holds their ground like FedEx. The company’s exceptional continuity strategy is a remarkable example of how to run operations as disaster unfolds. From its own archives, the company recalls aiding with the transport of 60 tons of emergency supplies to emergency staging centers in its data relief efforts. Part of its success in thriving in the direst times owes to its dedicated meteorology team working in tandem with logistical teams to prepare for disaster in time.

But not all disaster stories have a happy ending. OVHcloud, a cloud computing and web hosting provider, experienced one of its darkest days when a huge fire consumed its data centers and destroyed vital backups, leading to a $10 million class-action lawsuit. Although the cause of the fire involved a faulty electrical inverter, the incident caused major disruptions to customer operations and irreparable damage to the hosting company’s reputation.

Similar stories underscore the value of a regularly tested and diversified disaster recovery and business continuity plan. 

Conclusion

Although natural disasters strike without warning and storms abate within hours, the economic impact left behind can be felt months into the future. Early preparation is the antidote for the disruption caused by disaster – and the time to develop and test your business continuity plan is now.

If business continuity is not one of your strong areas, consider getting in touch with a seasoned IT consultant at Shipshape IT and schedule a free consultation.

Frequently Asked Questions

What are the key components of a business continuity plan?

The key components of a business continuity plan include a comprehensive risk profile and assessment of the company’s operations, a detailed business impact analysis, an inventory of mission-critical activities, alternative communication protocols, and regular employee training and testing strategies. Combined, these elements ensure your business can withstand and recover from natural disasters.

How often should a business continuity plan be reviewed and updated?

You should review and update your business continuity plan annually or bi-annually to ensure it remains effective and relevant to emerging disasters. Recent changes will be covered more comprehensively if the plan’s relevance and effectiveness are reaffirmed regularly.

What are the common challenges faced in implementing a business continuity plan?

Several obstacles including a lack of the right tools and expertise, general resistance to change, lack of managerial support, and difficulty aligning with existing processes obscure the implementation of a successful business continuity plan. If these issues persist, consider contacting your local managed IT service provider.

What are the legal and regulatory requirements for business continuity planning?

Legal and regulatory requirements for business continuity planning may be stipulated by governing bodies such as the Federal Information Security Modernization Act (FISMA) for government contractors, the Financial Industry Regulatory Authority (FINRA) for financial sector vendors, and the Health Insurance Portability and Accountability Act (HIPAA) for healthcare providers.

How can businesses ensure employee safety during a natural disaster while maintaining business continuity?

To ensure employee safety during a natural disaster while maintaining business continuity, communicate emergency protocols with staff and external emergency response teams, conduct regular drills, and provide regular safety training.

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