Would you crumble in a crisis?

If you knew your health was at risk, would you take preventive measures to
improve it or just hope for the best? The answer would seem obvious, yet many
businesses ignore this logic when it comes to business continuity planning and
risk management. Most managers simply hope for the best when it comes to
protecting their livelihood and employees.

‘Risk management’ is the identification of threats facing a business –
floods, fire, death of key personnel, terrorist attack, theft or product
contamination – to name just a few. Business continuity planning is about
ensuring a business can continue to operate should the risk become a reality.
All businesses need to learn how to prepare for unexpected events that may

The traditional reaction is to view planning for such events as an additional
cost for something that will probably never happen. Investment in the area is
seen as the preserve of large or listed companies required by law to conform to
set standards. However, external pressures mean that attitudes in smaller
companies have to change.

Large companies are extending the corporate governance requirements they have
to meet further down the supply chain to protect their profitability. Smaller
companies that don’t adhere to these guidelines can find themselves pushed off
the list of suppliers. Even if you reject the common sense reasons behind
business continuity planning, taking steps to ensure your business can continue
in the event of a crisis is an effective marketing tool.

US-style legal action against negligent employers is becoming more prevalent
in the UK. Management’s ‘duty of care’ is forcing companies to address risks to
employees in the workplace – or risk facing expensive legal action. The
explosion at the Hemel Hempstead oil depot last December, which paralysed local
businesses, has resulted in more than 2,700 claims against the company. In any
case, few people want to work for a company that won’t invest in their

It is a mistake to believe that crisis costs will be covered by insurance,
making extra investment unnecessary. Lost time, sick pay, damage or loss of raw
materials, repairs to plants and equipment, extra wages, and so on, are often
not covered by policies.

There are always risks. Terrorism, personal security, pandemics, flooding,
white collar crime, staff illness and product recalls are just a few of the
hundreds of possible risks and it is impossible to prepare for them all.

But if your business doesn’t have a continuity plan you need a crisis
management health check. It may just save your livelihood.

Rupert Reid is risk management consultant at Vantis plc

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