What’s the Plan?

 This week on The Business Blunders Series we will be talking about Business Continuity Planning. 

What is Business Continuity Planning and why is it important? First of all, it is not about impending doom! It is about continuing operations during unfavourable circumstances!

Contingency Planning is critical in any organization: fire departments will map out hydrant locations for every building and home, they will visit each commercial establishment and become familiar with the contents, alarms, and fire suppression systems, and they will place all this information into computers on the trucks so that crews have it at their fingertips as they roll down the road.

Businesses will back-up their data, secure their facilities, maintain their equipment, and carry insurance as a last resort. Some will take additional steps such as generators, emergency lighting, and even secondary locations in the event they must vacate the primary.

 

However, there is far more to Contingency Planning than this!

What does Contingency Planning entail? The answer to this question is: ‘It Depends! You may be able to afford a snow day, but others not.

We will start the process by conducting a Risk Assessment which is documenting what can go wrong, what is the probability of it happening, the significance if it happens, and what we can do to prevent it called the Mitigation.

Risk Assessment:

If we look at what can go wrong, the list is endless: fire, flood, break-in, accident, sickness, snowstorm, and even civil unrest. Other business factors may include labour disputes, broken machinery, or disrupted supply chains.

The Probability is the likelihood of the event happening; for example, statistically 15% of workers in Industry X are injured on the job, or more specific 10% workers in Profession Y sustain Injury Z.

The impact is what affect it will have on the organization; for example, Injury Z typically results in X days lost time at a cost of Y.

From our Guide: What’s the Plan?:

Looking at a few examples: the probability of a welder damaging her eyes is high, and the impact is also high. The probability of the accountant going in the shop and damaging their eyes from welding is low, but the impact would still be high. 

Without getting into mitigation strategies too deep yet, the welder will receive extensive training and specialize equipment, and the accountant will be advised of the precautions to take if they need to enter the shop area.

Both conversations will be documented!

Of course our last resort is insurance policies, but there is a great deal we can do to ensure we do not need to rely on that!

Mitigation:

A Mitigation Strategy is the actions you put in place to prevent a business disrupting event or minimize the impact should it occur.

Operational examples include preventative maintenance of infrastructure and equipment, a standing offer with equipment rental companies should yours have challenges, and back-up locations for making goods or performing services. Other operational examples include ensuring staff are properly oriented, trained, and protected.

Logistical examples include having backup suppliers and alternate transportation services available.

From our Forward Looking Guide - What’s the Plan:

In the federal penitentiary system, we operated vocational training programs in order to provide inmates employment skills with the hope to aid in their safe reintegration to the community. These programs include industrial manufacturing shops where they make furniture and cabinets, fabricate metal components such as lockers, and repair and overhaul military vehicles using cranes, welders, sandblasting equipment, and paint booths. 

We started out Operational Contingency Plan as follows:

Step 1: is identifying the risks including required Personal Protective Equipment (PPE) and general safety training. This training is delivered by qualified trades persons using a defined course syllabus, and the results and subsequent follow-up is documented. This not only ensures it is done but assists with Worker Compensation and accident investigations should they occur.

Step 2: is identifying the equipment needed, training required to use it, and maintenance schedules and procedures.

Step 3: is identifying the different types of emergencies that can occur, and how they will be managed in the event.

Step 4: Is identifying operational events such as labour unrest or supply-chain disruptions, and preparing a Mitigation Strategy for each... these included having alternate suppliers, back-up facilities, and contractors who can help us out if required.

To this point I have only touched on the subject; I hope by now, you have a good idea of where we are going with this, and how it may apply to you!

Infrastructure and Equipment:

If your organization depends on your infrastructure and/or equipment, you need to have a plan to protect and maintain them. This includes adequate security as well as proper maintenance schedules which are adhered to. Not only that, your staff must be adequately briefed and trained to access, operate, and maintain the facilities and equipment. 

From our Guide - What’s the Plan?:

Fire departments and search & rescue teams utilize various equipment including: trucks, boats, ATV, and perhaps even aircraft or hovercraft. Each of these pieces of equipment have been acquired in order to carry out a specific task, each require user training, and each must be maintained in order to ensure serviceability and safety.

Trucks require maintenance schedules; for example, the changing of oils and filters after a certain number of kilometres, and airplanes require certain airworthiness inspections after a given number of hours of flight.

In addition to maintenance, each of these pieces of equipment require specific training before being used. As an airplane is too obvious as an example, let’s discuss a firetruck... it is not appropriate to simply rely on the proper class of license for the vehicle for the jurisdiction, the operator must receive specialty training and endorsement for operating the vehicle using emergency lights and sirens... yes, some provinces and states require this additional training; if they don’t, you should provide it regardless! On the fireground, the driver is normally responsible for operating the water pumping system, and this requires a completely different training program.

Emergency Services organizations also have smaller pieces of equipment such as helmets, ropes, harnesses, chain saws, air compressors, ladders... and the list goes on. Each of these require specific training and scheduled maintenance. Yes, even setting up a ladder requires training which must be documented!

For Infrastructure…  An example is the owner of a 3 level Apartment Complex with a central steam heat boiler, an elevator, and a parking garage with a remote-controlled door.

 In regard to security, all doors must be secured, and tenants given keys or access codes; when tenants leave, keys or codes must be changed. In addition to this, should you install cameras, they must be checked, cleaned and protected.

In regard to maintenance, normally both the boiler and the elevator are governed by provincial or state regulations therefore require various inspections at pre-determined intervals. Maintenance contracts should be established, and the inspections and servicing must be recorded in logbooks.

Another example of servicing you may wish to consider, is a quarterly inspection on the roof including wear of the roofing material, serviceability of the ventilation system, and inspecting the mechanical components of the garage doors.

 As a final example, perhaps twice per year you want to review individual suites to ensure: windows are sealed, heat radiators are not leaking or obstructed, water faucets and toilets are not leaking, appliances are in order and the general state of the suite is maintained.

Final Thoughts:

Once we have performed our Risk Assessment, ranked our priorities, and prepared our Mitigation Strategies, we need to put them all in once place which could include a pdf file as well as a binder. The plan should be made accessable to all persons in the organization or at least the parts that pertain to them.

Included in the plan should be business disruption instructions to staff including alternate meeting points and contact information. The plan should also have information such as insurance and restoration companies, alternate suppliers and contractors, and others as applicable.

Summary and Conclusion:

Contingeny Planning is not about Impending Doom! It is about continuing to operate during unfavourable circumstances! With this, we are not talking about building an underground shelter out of an old bus; we are talking about using the bus to deliver our goods when the delivery van breaks down!

The process for preparing a Business Continuity Plan is not as difficult or time consuming as you might think:

We prepare a Risk Assessment, rank our priorities, prepare Mitigation Strategies, take care of Quick Wins, and then focus on the most critical elements in our list.

Remember we are only just touching on the subject, but if you want to learn more, consider our guide found on Amazon Kindle 

https://www.amazon.com/Daniel-W-Elliot-CPA-CGA/e/B08SCLCDP9

This is now a course on our Udemy account https://www.udemy.com/user/daniel-elliot-2/

Thank you for joining us on The Business Blunders Series - What's the Plan?

See you next week!