Business Continuity Planning

2010 was a turbulent year, ending on a low of social unrest. Strikes and protests dominated the headlines, with student fee protests causing chaos and major disruption to a number of businesses and services. Given the prevailing economic issues further incidents cannot be ruled out in 2011.

The Millbank disturbance, in particular, affected the operation of local businesses for several weeks. The police authorities and fire brigade closed down the whole Millbank site to enable them to carry out forensic examinations. Access was denied to tenants and the public long after the event.

Standard business interruption insurance may not cover your business for an event like this. To be protected against the follow-on effects from a riot, your policies must include ‘riot’ within ‘all risks’ cover or as a specified/defined peril. One occupier of the Millbank site had successfully made provisions to move its work to another location, but the disruption still had a major effect. Insurers are in negotiation but the reserve on the loss of business and additional costs may exceed £250,000.

The occupier’s business continuity plans helped to minimise disruption to its business.  Unfortunately, not all of its fellow tenants at the Conservative Party Headquarters were prepared for the riotous action against their political neighbours. It’s important that any plan should recognise who occupies neighbouring buildings.

Another example of damage caused by locality to another site is the Buncefield disaster. It is doubtful whether the occupiers of the trading estate near Buncefield fully appreciated the devastating effects a fire in its storage tanks would have on their own livelihood. After five years the liabilities and compensation arrangements are only now being completed. Some businesses ceased trading.

In a busy operation an adequate disaster recovery or business continuity plan is often low down the agenda. However, research from the Chartered Management Institute (CMI)* shows that 79% of managers who had activated their business continuity plans in the previous 12 months agreed that it effectively reduced the impact of disruption.  This once again emphasisesthe importance of planning.

A leading insurer** has outlined seven Essential Steps in Business Continuity Planning to help you start yours:

  • Select a team to work it through
  • Analyse threats and look at practical measures to reduce risk
  • Plan how to cope with the immediacy of any incident
  • Prepare support documents, contact lists and action lists for example
  • Plan for the recovery
  • Pay attention to computer and data risks
  • See if it works and keep it alive!

*CMI survey, Disruption & Resilience, The 2010 Business Continuity Management Survey, March 2010

** Aviva 2010

Last reviewed 10/5/2011

To talk to an expert in your area and get a quote, contact your local insurance broker.