Crisis management

Despite the wide array of natural disasters and other events that could affect your business, many business owners decide that the relatively small chance of a crisis occurring outweighs the cost and effort of planning. This means far too many small businesses wait for a crisis to happen before they start to think about how to deal with it, which can be a costly oversight.

Planning for disasters and other crises that could affect your business is not as difficult as it sounds. The trick is to assess where your business is at risk and to put plans in place to mitigate any possible damage or costs.

Planning in this way will help you keep your business afloat in the event of a crisis. This could be as easy as owning a back-up power generator that you can rely on in a power outage. Keeping computer back-ups off-site will help to mitigate a crisis such as water, fire or other damage to your computer equipment or other vital technology.

On this page:

• Acknowledge the risks
• Assess the risks
• Manage the risks
• Putting contingency plans in place
• Ensuring business continuity

Top

Acknowledge the risks

Unplanned events such as a fire, theft, staff illnesses, stock damage, power outages or IT systems failures could seriously affect your business. You risk losing customers, or your entire business, if you do not take steps to limit your exposure to these risks.

The first step is to stop assuming disasters and other crises only happen to other people and to find out where your business is at risk. By identifying the risks your business faces, you’ll be able to put contingency plans in place to help you either prevent, or at least reduce, the impact of disasters and other unplanned events.

Draw up a list of possible crises that could affect your business. Some obvious risks include natural disasters like storms and earthquakes with threats of flooding, water damage, wind damage, gas leaks and restricted access to buildings.

Your business could also be affected by theft, fire, power outages, telecommunications failure, fuel shortages, failure of your IT systems and other systems your business relies upon.

Consider whether your business would be able to function if you lost one or more key staff members, or if your staff become ill with swine flu or the outbreak of an infectious disease. Are you exposed to strikes or crises affecting your suppliers or customers?

Talk to your staff, your business peers and your advisers to draw up a detailed list of all the risks your business is exposed to. Some of the risks are likely to be specific to the industry you are in. Cattle farmers, for example, would include drought and livestock diseases in their list of potential risks.

Top

Assess the risks

Once you have identified the risks your business is exposed to, the next step is to assess the effect each of these could have on your business and the likelihood (or frequency) of them actually occurring.

This will help you identify high, medium or low risks and the chances of them affecting your business, which should help you map out a strategy to manage at least the more important risks your business faces.

Top

Manage the risks

Once you’ve identified the important risks your business faces, you’ll need to find ways to manage these risks.

It might help to group similar risks together and work out a combined strategy. For example, it might be easiest to deal with all the risks to your business premises as a combined unit. This could include the risks of theft, fire, floods, earthquakes and storm damage. This will help you consider appropriate actions such as updating your insurance policies, installing smoke detectors and burglar alarms, and deciding on a contingency plan to put in place in case you’re suddenly unable to access your business.

You could also address your IT and communications with a combined strategy, ensuring you have electronic back-ups of information securely stored off-site, and regularly maintain equipment. You should keep hard copies of your customer database and accounting records, or store your data and files on the cloud rather than on an in-house server.

Your insurance broker might be able to offer assistance with identifying risks and suggesting ways to manage them. But before you rush into an agreement with an insurance company, it is important that you understand exactly what the policy you are considering covers you for. It is also important to ensure both you (in the case of health or life insurance) and your property meet the health, safety and other requirements stipulated in your insurance policy.

Your risks and how you choose to manage them are likely to change over time, so it makes sense to diarise time to conduct an annual review.

Find out more about how to manage risks in the Shut Happens! [PDF] guide from Resilient Organisations.

Top

Putting contingency plans in place

Once your plans to mitigate the effect of crises are in place, you should also put plans in place to deal with emergencies.

In New Zealand, it is compulsory for businesses to have an evacuation scheme.

Download a guide to the New Zealand Fire Service Evacuation Scheme.

You might need to give your staff special training to deal with an emergency situation, especially if there is a chance you might have customers on-site. Ensure your employees know what to do in the event of an emergency and draw up a checklist of steps to be followed.

It is a good idea to draw up a list of people to contact – include your emergency services, police, local council offices, utility companies, neighbouring businesses, key customers or suppliers, and service providers like IT specialists, plumbers, electricians, and locksmiths.

Have at least one staff member with an up-to-date first aid certificate. St John offer courses specifically targeted at work places.

In the event of a disaster that will have affected a number of people, you will need to monitor the Civil Defence website for the latest updates and advice.

Top

Ensuring business continuity

It is important to have contingency plans in place to ensure your business can trade after a disaster. Think about how your business might be affected and plan a number of ways you might be able to work around these problems.

If your business is IT-based, and your critical data and information are stored on the cloud, for example, you might be able to work from home or alternative premises. A producer suddenly unable to operate might be able to outsource production to ensure promised deliveries are still met.