Posted on August 2, 2011 by Jason Hamilton, CPP
Risk is associated with virtually every activity in life. However, when applied to a business operation, it is more commonly translated into an assessment of the severity of a given event versus its probability of occurrence. Severity can mean direct financial impact, damage and/or business interruption. This central tenet of Risk Management is often overlooked as businesses prepare for a disaster, often focusing on the most catastrophic natural disaster event(s) that could impact their business.
So what’s the problem with this approach? It is FAR more likely that a small scale business DISRUPTION can not only have the same devastating impact and at the same time, be much more likely to occur. Such is the perfect storm that can quickly shut down any business not engaged in Disruption Preparedness. I think its safe to say that most small businesses can’t rely on a Federal Government “bailout” for a failure to plan.
When evaluating the various risks a business can face, a Risk Analysis is tool that security, technology and insurance consultants use as an important management tool. The whole idea of the Risk Analysis is that it can:
- Identify potential risks;
- Evaluate the standards on what risks will be planned for;
- Evaluate to what extent those risks should be planned for.
According to Mr. James Broder, CPP, in his book Risk Management and the Security Survey, planning takes into consideration the following:
- Identification of the assets in need of protection (community equipment / property, buildings, industrial equipment, hazardous chemicals or even personnel, to name a few);
- Identification of the kinds of risk or peril that may affect the assets involved (loss of office / plant, natural disaster internal/external theft, fire, labor disturbance are good examples);
- Determination of the probability of occurrence (not a science, but an art, the art of projecting probabilities);
- Determination of the impact or effect (in dollars if possible) if a loss occurs. (Risk Management & the Security Survey, 2000)
As Mr. Broder points about above, each type of risk (or peril) has the potential for impact, but it is probability that will determine to what extent a business should prepare and invest money in plans to mitigate the risk.
During the Disaster Recovery and Business Continuity Series sponsored by Anexio, participants were introduced to this very concept by Mr. Chad Bowers and his company, Bold Planning Solutions. Chad used the concept of Disruption Preparedness to drive the point home with the importance of preparing not only for the next “named storm”, but for the more probable events that can have just as big an impact on a business operation. Bold Planning Solutions offers a number of these Risk Management tools to help businesses focus their Business Continuity Planning and allocate their preparation funds effectively.
For assistance and focus in Business Continuity Planning (and DISRPUTION Preparedness), the Disaster Recovery and Business Continuity Series is a great place to start. Businesses that plan effectively do so by educating key management personnel in Risk Management, taking planning seriously and surrounding themselves with subject matter and Risk Management experts – their go-to people after a crisis occurs. In this way, expectations are set before an emergency occurs and makes working through the recovery process more manageable, when tensions and stress levels are at their highest.




