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Top 10 ways to prepare your business for disasters

Friday, 11 February 2011 | By Michelle Hammond

Even by Australia’s standards for extreme weather, the start of 2011 has been extraordinary. In the space of just a few weeks, Brisbane’s CBD was submerged, regional Queensland was lashed by cyclonic activity, rural Victoria was drenched and Perth was hit by bushfires.


The federal government has announced that there will be a levy to pay for the damage to infrastructure and a Gold Coast funds manager has pledged to raise $500 million for cyclone-hit small businesses in Queensland.


However, many small firms will fail to recover from the damage and its knock-on effects. Those that survive will have to make sure they properly plan to ensure a future disaster doesn’t wipe them out.


With this in mind, StartupSmart spoke to the experts to give you the top 10 tips for business disaster preparedness.


1. Get properly insured

    Being uninsured, underinsured or having the wrong kind of insurance could force your business to close or even collapse in the event of a disaster. However, the right insurance can keep your losses to a manageable level, so it is vitally important you protect your business as best you can.


    A professional insurance broker can help you make the right insurance choices by compiling a comprehensive and cost-effective package of insurance policies for your business. Many firms hit by the floods were insured, but, critically, didn’t have cover for loss of earnings.


    If your business is classed as a high insurance risk, as is the case for those in flood and cyclone-prone areas, you should seek specialised advice. You can contact the National Insurance Brokers Association to find a broker.


    2. Back up your systems

      Businesses need to prioritise their internal data recovery and backup systems in case of an emergency, which can wipe out an organisation’s entire operation in one hit.


      Simon Howe of IT firm Acronis says the Queensland floods highlighted how serious a data disruption can be for a business or website, particularly one that relies on eCommerce.


      Howe says local recovery options are critical but businesses must also have some kind of backup measure located offsite.


      “Often, devices with replication capabilities allow you to replicate IT systems or data on an identical box at home or offsite,” he says.


      Howe says implementing disaster recovery strategies is potentially a one-day project, although businesses need to first assess their IT environment. He also encourages businesses to have an expert on hand to help out.


      3. Think of your staff

        In the wake of a disaster, business owners are often in doubt over their legal obligations towards staff who cannot come to work or whose jobs have been lost as a result of a natural event.


        Kristin Duff, senior associate at Harmers Workplace Lawyers, says many employers don’t consider their legal obligations until it is too late. At this point, employees often become disgruntled over a sudden termination and make a claim.


        “The claims that you’re looking at are typically around unfair dismissal because employers tend to seek advice after the fact. They should seek advice beforehand,” she says.


        4. Have a risk management plan

          When putting in place a risk management plan, it is important to take into account as many potential scenarios as possible. The plan also needs to be fully understood by all staff members.


          Have a risk management expert review the premises, your financial procedures, any equipment and your client operations to identify any risks, risky behaviour or practices.


          It’s also important to get staff involved to discuss any possible flaws in your practices and procedures.


          Risks come in two forms – those that apply to every workplace or organisation, and risks that come from doing the particular work you do. All too often, risk management discussions are limited to financial risk, information security risk or reputational risk.


          Any comprehensive risk management assessment should include risks to people and property caused by disasters. In the case of an emergency, you can mitigate the risk of death, injury and property damage by undergoing proper training and procuring the proper preparedness supplies.


          5. Make your premises secure

            Unfortunately, looting is common during natural disasters when business premises are largely left unattended.


            If you operate a retail business you are an ideal target for looters, so you need to know how to protect your stock prior to a disaster.


            The first thing to do is install a security alarm and display the alarm company’s logo so that potential perpetrators can see it. Not only will these measures serve as deterrents, looters are likely to flee the scene if an alarm is triggered.


            Where appropriate, install security doors and windows. In the event of an emergency, try to move your stock into a secure storage area so that it is less visible. This may also limit the damage done.

            6. Stress test your operations

              According to Michael Fingland, managing director of Vantage Performance, business owners need to stress test their businesses through financial modelling and “what-if” scenarios.


              This will help them to determine the knock-on impact of a natural disaster and the initiatives they need to implement to minimise this impact.


              For example, depending on the nature of your business, you may need to plan for assistance and support for your staff, whether it is financial assistance, counseling or daycare for their children.


              “Stress testing puts business owners in a stronger position if they need to negotiate with their financiers, by showing they are prepared for change and able to handle challenges,” Fingland says.


              7. Plan for your re-opening

                You must ensure you have a plan to resume business once you have recovered from a disaster. To make a business resumption plan, you will need to make a list of supplies, equipment and other items critical to your business.


                Identify other places where you can relocate to, as well as considering the clients you will need to notify in case you move. In the event of an emergency, you want all changes to be as seamless as possible for your customers, your staff and yourself.


                8. Work flexibly

                  Harmers Workplace Lawyers’ Duff says employers should enable their staff, where possible, to work from another location, such as their home, in case they are unable to come to work or the venue is no longer workable.


                  She says businesses should regularly review their business continuity plans to ensure they are not caught out in the event of a disaster.


                  “Ensuring proper backups are in place, as well as providing staff with the capacity to work offsite, could be of significant assistance in such a situation,” Duff says.


                  9. Spread the skills

                    Don’t fall into the trap of delegating certain responsibilities to a single staff member. Ensure you train all your staff in as many areas of the business as possible to avoid getting stuck in the event of a disaster when staff numbers may be limited.


                    John Downes, director of the Business Development Company, says business owners in particular are often incapable of delegating tasks to their staff.


                    In doing so, Downes says business owners fall into the trap of “becoming the business”, which means their staff are ill-equipped to operate in their absence, which is a definite possibility in the event of a disaster.


                    10. Have emergency procedures in place

                    Evacuation plans might not seem like a necessity for start-ups, but they are vital for the safety of your staff in the event of an emergency, particularly if you work in a large office building.


                    It’s also worthwhile for you and your staff take classes in survival skills. Often, staff will be in a better position to perform first aid than emergency personnel who may not have immediate access to the business premises.


                    Staff members should know CPR, how to differentiate between serious and minor injuries and how to attend to injuries that are treatable. A first aid kit should remain on the business premises and be restocked regularly.