When Disaster Strikes: Preparation, Response and Recovery for Businesses

Taking proactive measures can help minimize the impact of a disaster on your business, while having sufficient insurance coverage can expedite the recovery process.

Disaster Preparation

Households—especially in areas prone to hurricanes, tornadoes, and earthquakes—often prepare for disasters by storing extra supplies, having an evacuation plan, and learning about emergency resources. Businesses should similarly prepare, focusing on restoring their operations as soon as possible and minimizing losses.

To prepare adequately for a disaster, take the following steps:

• Develop a formal written plan—Sometimes called a “Disaster Recovery Plan” or “Business Continuity Plan,” this document should detail how your business will respond to and recover from a disaster, including temporarily relocating your business. The National Fire Protection Association (NFPA) has developed a National Preparedness Standard for developing a plan. Some companies also develop specific plans to protect and recover their information technology (IT) infrastructure. In today’s era of cloud computing, it is increasingly easier to back up data offsite.
• Train employees—Share your Disaster Recovery Plan with employees, assign responsibilities, and offer training so that your workforce can help your business recover. You may also want to conduct drills to assess and improve response.
• Store emergency supplies—Keep flashlights, a first-aid kit, and a battery-powered radio at your business. Depending on its location, you may even want to store food, water, and blankets. Consider stocking equipment that can help your business return to operations, such as a generator, as feasible and needed.
• Maintain critical information offsite—To get your business up and operating again after a disaster, you’ll need to be able to access essential business information. In addition to backing up computer data, keep an offsite list of your insurance policies, banking information, and the phone numbers of employees, key customers, vendors and suppliers, your insurance professional, and others. You’ll also want to maintain an inventory of your business equipment, supplies, and merchandise; you may also want to photograph items.

Disaster Response and Recovery

After a disaster, you’ll want to implement your Disaster Recovery Plan. Read the Insurance Information Institute’s Settling Insurance Claims after a Disaster, which details several steps to control damage and recover costs.

In the immediate aftermath of a disaster, take the following actions as appropriate:

• Secure your building, boarding up entry points if necessary.
• Make temporary repairs to minimize further damage, such as placing a tarp over a hole in your roof.
• Relocate salvageable equipment and property to a safe, protected location.
• Inspect your property and keep a detailed list of damages; take photos to document damage.
• Clean up your property, wearing safety gear such as gloves and protective eyewear. If feasible, save damaged property for your insurance adjuster to inspect.
• Contact your insurance professional and your insurer to begin the claims process.
• Keep receipts of all expenses related to the disaster.

Once you’ve secured your property and taken other immediate steps, you can focus on making your business operational again. You should lay the groundwork for restarting operations in your Disaster Recovery Plan. Issues to consider include:

• Location—Should you open a new temporary location, or can you operate from your home or use the facilities of a partner or even a friendly competitor?
• Communications—How will you communicate with your employees, customers, vendors, and suppliers?
• Insurance claims—In addition to filing a property claim, you’ll want to file a business interruption insurance claim if you carry this type of coverage. This insurance will help you cover the costs of relocating and lost income.

Source: Insurance Information Institute