This is the second article on Disaster Planning.
In the first article we examined the experience and actions of Chantel Elliott and her firm members in South Africa when days of rioting and looting devastated the communities in the Durban area. We also looked at opportunities to expand services in light of the ever-increasing risk of worldwide disasters. The challenge for everyone is – “Are you prepared, do you have a plan and has it been road tested? This applies to everyone, but most importantly to all business owners.
Even The Queen of England is not exempt from disaster
Queen Elizabeth has endured a number of disasters while serving her country and Commonwealth. Her children’s marriages (bar one) have ended in divorce and you may recall the turmoil surrounding the August 1997 death of Princess Diana. Then there is Prince Andrew and Harry and Meghan…a right royal mess?
Five years earlier in November 1992, Windsor Castle, the Queen of England’s home suffered extensive damage. While many priceless items were saved many were lost. This happened despite Windsor Castle having its own fire department of 20 men, six of whom were full-time. Based in stables two miles south of the castle, they arrived on the scene after only a few minutes, equipped with a Land Rover and pump tender. This was the year the Queen described as her annus horribilis.
Key application – no matter what precautions you take or plans you make, disasters occur. Do you have any valuable paintings (Windsor Castle was full of them)? Other items? Are they adequately insured?
Reasons for having a detailed and tested Disaster Recovery Plan in place
- To minimize interruptions to normal operations
- To limit the extent of disruption and damage
- To minimize the economic impact of the interruption
- To establish alternative means of operation in advance
- To train personnel with emergency procedures
- To provide for smooth and rapid restoration of service.
A disaster recovery plan is a formal document created by an organisation that contains detailed instructions on how to respond to unplanned incidents such as natural disasters, power outages, cyber attacks and any other disruptive events. The plan should contain strategies to minimize the effects of a disaster, so an organisation will continue to operate – or quickly resume key operations.
Key point: Disruptions can lead to lost revenue, brand damage and dissatisfied customers. And, the longer the recovery time, the greater the adverse business impact. Therefore, a good disaster recovery plan should enable rapid recovery from disruptions, regardless of the nature and source of the disruption.
Disaster recovery plan checklist
- Are your records backed up daily, 365 days a year?
- Are your plans up to date?
- Does the plan indicate procedures for non critical tasks?
- Can everyone who needs to access your plans?
- Do they know what their roles are?
- Have you road tested these plans?
- Might you need to operate from a separate location?
- Does the plan include the continuity of your supply chain?
- Does the plan include a safety/evacuation plan to prevent injuries?
- Do you maintain a personnel skills register? (This might assist when it comes to offering staff to serve as volunteers in the event of a disaster)
- Does your plan distinguish between critical and non-critical tasks?
- Does your plan include what and how to communicate? One firm recently set up a WhatsApp group to allow everyone to communicate
- In the event of a disaster does the plan identify milestones and timelines?
- In the event of a disaster does the plan identify who will perform the various recovery tasks?
- How quickly are these tasks to be performed?
- If you, or your clients have multiple sites, will procedures vary?
- What are to be the arrangements for the recovery or reinstatement of any hardware?
Do you have a Disaster Recovery plan? I would be pleased to hear from you if these two articles have helped you in maybe enhancing your own plans. Please contact me: email@example.com
Planning for disaster recovery may seem like something you can (and many do) always put off until tomorrow. And hasn’t it been that way for some time? But don’t con yourself into thinking that successful disaster recovery can be pulled off on-the-fly in the midst of a serious disruption. There are too many moving pieces — in terms of different hardware and software systems, personnel, clients and business processes — to make it feasible to “wing” disaster recovery. That’s why it is essential to have a detailed disaster recovery plan in place well before disaster strikes.
What role does insurance play in a disaster recovery plan?
A key part of disaster recovery planning is reviewing your business insurance to make sure you have adequate coverage for the cost of addressing the consequences of a disaster. Insurance companies refer to this as business interruption insurance. This type of cover might be the difference between the business surviving a disaster or shutting its doors permanently.
ISO 27001 – Information Security Aspects of Business Continuity Management
This is an International Information Security Standard
I do not intend to endeavour to summarise this standard but would recommend that you use the internet to learn more about this standard. You could start here: https://www.itgovernance.co.uk/iso27001
Volunteering – Examples of how accountants can be of value:
- One of my clients is a 60-partner firm. During discussions with the Managing Partner she told me that one of the non-negotiable requirements for a new partner admission is the necessity for those under consideration for making partner to be an active member of a Community Association. With 60 partners that firm provides community connections that are essential when it comes to referrals, but more importantly in times of need the partners are deeply committed to serving the community. They are all well connected within the community.
- Government and international relief agencies that respond can spearhead immediate relief, but they need to leave locals to continue the ongoing recovery effort. Jessica Nesbitt is an EY director and a captain in the Australia Army Reserve. She is involved in the defence force’s Operation Bushfire Assist (https://www.army.gov.au/our-news/media-releases/operation-bushfire-assist ) and says accountants might become involved in large-scale operations to rebuild communities on a pro-bono basis.
- Prior to any disaster “there is surely a role for accountants to play in helping clients compile a risk register and a disaster recovery plan. Even if this is considered a low chance of occurring.” So says Nelson-based Brice Gilkison, CA, a sustainable business advisor.
- Post disaster, accountants’ assistance in accessing financial records, submitting application for government and agency grants is essential. There are likely to be insurance claims to be submitted. Negotiations with banks for emergency loans who will undoubtedly require evidence of the ability to repay. That may well depend on whether the business that is applying was economically viable before the disaster or whether it was in fact already struggling. In any event, these conversations are never easy and the input of an experienced financial advisor is essential.
- Counselling. While accountants may not be trained counsellors, we are experienced in all matters financial. “Listening to clients about how they feel and helping them bring back their focus and clarity is important” advises Warren Johnstone, of BDO New Zealand in the aftermath of the Christchurch earthquake.
HELPING CLIENT’S AFTER A DISASTER
The Chartered Accountants of Australia and New Zealand have produced an excellent checklist which I consider to be an essential aide memoire of you are taking action to review or prepare your Disaster Recovery plan.
Here are some of the insights you will find in this online document:
- Are you OK?
- Engage with your workers – You’ll be heartened by their support
- Secure business records, obtaining replacement records if necessary
- Government emergency grants and community support funds
- Trading stock, equipment and buildings
- Repairs, clean up costs, temporary storage costs
- Do you operate from leased premises? Your suppliers
- Your customers
- Review business cash flow and business forecasts for the current financial year and subsequent years
- Learn from this
The above are just the headings – to view the detail of this really helpful summary – visit Australian and New Zealand Chartered Accountants website. You will need to use your preferred Search Engine and enter this: New Zealand Chartered Accountants Disaster Planning Checklist. You will then be able to download their PDF.
WHERE ELSE TO GO FOR HELP AND RESEARCH:
Search using terms such as Disaster Recovery using your preferred Search Engine
Visit sites such as: https://www.ready.gov/business (Great for accessing a wide range of toolkits
https://www.ready.gov/business-continuity-plan and https://www.fsb.org.uk/resources-page/how-to-create-a-business-continuity-plan.html (Business Continuity Plans)