40% of businesses never reopen after a disaster. For those that do, only 29% were still operating after two years.
That translates to 52 out of 100 businesses go out-of-business 2 years after the disaster. This statistic is from FEMA.
Business Continuity has been a recent topic of discussion among my Vistage group (explained at the end of this post). It surprises me how businesses neglect to adequately prepare. Odds are pretty good you won’t recover. It seems to me business owners and C-Level executives have a fiduciary obligation to their clients, partners, investors and employees to adequately prepare.
Common reasons heard for not adequately preparing:
– It will never happen to me.
– I don’t live in a hurricane zone (insert natural disaster here).
– It takes too much time.
– It costs too much.
– My IT department has this covered.
– I have insurance.
I guess I shouldn’t be a surprised. The topic can be daunting. When we think of the Business Continuity/Disaster Recovery we think of hurricanes, tornados, earthquakes, wild fires, etc. Let’s look at it differently. Think about “Business Interruption”. Business Interruption is highly possible regardless of your geographic location, business size, or industry.
I work with a company that provides business continuity services. This is their sole purpose. They provide quarterly information about activities supporting their clients. Here is a quick rundown from Q1 2018 –
They had 112 business interruption events across 28 U.S. states and Canadian Territories.
- 66% related to power
- 12% related to alternate workspace
- 10% were undetermined
- 6% related to communications equipment
- 4% related to computer systems/technology hardware
Some of these were blizzard related, some were planned outages from the local power company, some were unplanned power outages, and one specifically was due to a computer virus. I would suggest the most likely for ALL businesses these days is a computer virus regardless of the industry and size of business. This particular business required 82 temporary laptops for 12 days until their original equipment was restored to operational.
These weren’t hurricane, tornado, flood, or fire related. There are many events that can disrupt your business. It is incumbent upon business owners and executives to make the time to evaluate your risk and put the appropriate measures in place to deal with them if needed. At a minimum you should perform a risk assessment and business impact analysis. That will put you on the right path and provide evidence to your clients, partners, investors and employees you are being diligent in your efforts. You may be surprised to find it will also provide a good foundation for strategic decisions going forward.
(I belong to a Vistage Trusted Advisor Group. We help each other improve our business practices by sharing experiences from our respective journeys and providing advice. This group of multi-discipline professionals works with a variety of clients across industries and varying in size. This provides a good perspective into the psyche of business owners and C-Level executives.)