Business interruptions can cause a lot of harm to a company’s reputation and its ability to remain financially solvent. While there’s no way to completely eliminate the potential for interruptions, business owners can take steps to minimize them. Read on to find six tips to get business owners who want to minimize the impact of unavoidable interruptions.
1. Determine the Potential Risks
Every business has a different set of potential risks for interruptions. Some of them will be preventable, such as many types of human risks. Others, like natural disasters and other environmental risks, can only be mitigated.
Once business owners have identified and ranked all potential risks, they can get a better understanding of their vulnerabilities and start to prepare. If there are potential risks that can’t be avoided, take the time to come up with a damage mitigation plan.
2. Calculate the Cost
Cost containment is one of the most important aspects of mitigating risks. Depending on the type of business interruption, costs could include lost sales, increased expenses, regulatory fines, contractual penalties, or delays.
3. Understand Insurance Options
Most business owners take out basic commercial insurance policies, but few understand the specifics of what’s covered and what’s not. In most cases, basic business interruption insurance claims can only be filed in one of three circumstances:
There has been physical damage to the premises that has caused operations to be suspended.
The damage to the property prevents customers or employees from entering and is covered by the insurance policy.
The entire area has been closed by the government due to property damage that is covered by the insurance policy.
Business interruption insurance coverage varies significantly, and all kinds of policy terms apply. The best thing for business owners to do if they’re having trouble getting their claims paid is to contact a commercial insurance lawyer who can help.
4. Implement Prevention and Mitigation Strategies
There are three approaches to controlling or containing hazards that could cause business interruptions. Prevention strategies help businesses avoid hazards. Deterrence strategies identify criminal activities that could cause business interruptions and define steps to prevent them. Mitigation strategies take steps to contain hazards that can’t be prevented. Every business should have a plan that covers all three of these categories.
5. Create a Communication Plan
If there has been a crisis that interrupts business operations, the company will need to communicate not just the issue but also ongoing updates to employees and customers. Start by establishing a chain of command for conveying critical information to workers, and make sure the communication network is bi-directional for more efficient passing of information. It’s also a good idea to come up with pre-scripted messages for communicating vital information to employees and customers.
6. Prepare an Emergency Plan
To be effective, emergency plans must be established, reviewed, and practiced in advance. A good emergency plan will include all the following elements:
IT and data recovery
An inventory of resources
A test run
It’s Time to Get Prepared
Business interruptions can cause companies to lose revenue, damage their reputations, and create ongoing issues for employees, customers, and vendors. Having a plan in place to minimize business disruptions and mitigate damage should an unavoidable disruption occur can help, so don’t put off preparing for such an event.