impact of terrorism on smes & business continuity

Business Continuity & The Impact Of Terrorism & Other Critical Incidents

On SMEs

By Dr. Mark D. Yates The British & American Security Expert atwww.businessconsultancyonestopshop.com

Business Management & Security Consultant

Dr. Mark Yates The British American Security Expert from www.businessconsultancyonestopshop.com T: 0845 617 0991. E: [email protected]

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Business Continuity & The Impact Of Terrorism & Other Critical Incidents On SMEs

Issue

• The tragic events of Post Sept’ 11th, in particular July 7th 2005 in London, should make all HR managers think carefully about how prepared their business is for this kind of event.

Dr. Mark Yates The British American Security Expert from www.businessconsultancyonestopshop.com T: 0845 617 0991. E: [email protected]

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The Problem• Statistics suggest that almost half (46%) of

London businesses do not have a business continuity plan in place.

• This means that those directly impacted, suffering a major or even a minor loss may find it impossible to continue to trade, particularly if they do not have terrorism insurance cover.

Source: Vanson Bourne research, October 2004

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Critical Incident Downside80% of all businesses affected by serious incidents never re-open,

or close within 18 months.

Business interruption hits companies in • Customer Relationships.• Cash Flow.• Reputation.• Staff Moral.

• Understanding incidents like fire, flood or computer failure, highlight where long term damage is done.

Dr. Mark Yates The British American Security Expert from www.businessconsultancyonestopshop.com T: 0845

617 0991. E: [email protected]

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Small Businesses Hit Harder• The impact of any critical incident is likely to

be more pronounced for SME’s. The majority of SME’s operate in specialised markets with limited product ranges & relatively small customer bases.

• Any short interruption to business can have a disproportionate effect, totally halting output & leaving customers high & dry.

Source: AXA Insurance.



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Insurance• The impact of this inability to trade will vary

depending on the insurance arrangements in place.

• Both sums insured, and cover need to be adequate.

• Without cover for both material damage and business interruption, including an extension to cover denial of access, and with cover extended to cover terrorism, these problems could result in the business having to close permanently.

Source: Business interruption.





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What Is Continuity Planning• It’s about anticipating crises that could befall a

business & planning for them.• It sets out clear roles & responsibilities.• It states who takes charge of specific roles.• It lists a series of contingencies.• Details clear emergency procedures to ensure

risks to staff are minimised.



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Continuity Planning

• Requires an assessment of all critical areas of a firm.

• Business continuity management is a valuable management tool.

• Understanding potential crises, their effects & knowing how to overcome them is the basis for business continuity planning.

• It’s also the best way to create firm company foundations to ensure it is robust, flexible & fit for tomorrows business.



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Continuity Planning - StaffIf staff are injured, either

physically or mentally

• when will they return to work? • Will they return to work at all? • Are there any liability issues towards them? • Did they lose personal property in the incident or

the subsequent clean-up operation? • Will the act of terrorism impact their ability to

recruit new staff? immediate help, support and counselling

for people more directly involved needs to be addressed.



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Business Continuity & The Impact Of Terrorism & Other Critical Incidents On SMEs Continuity Planning - Customers

• If customers were unable to contact a business in the aftermath of the incident, might they move their business elsewhere?

• If so, is it short-term or long-term? • What would happen to businesses if some

customers find a better service or product elsewhere?

• Is a business seen as a high risk target by its customers?

• Has the incident changed customers’ habits?



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business continuity

• Put simply, business continuity is about anticipating the events or circumstances that could hinder the running of a business, and planning to make sure that the business responds swiftly and continue to function in the event of an emergency.



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business continuity planA business continuity plan sets out clear roles and

responsibilities, for example those assigned to manage all liaison with

• Customers. • Employees. • emergency services.

It lists a series of contingencies that enable key business activities to continue in the most difficult

circumstances.



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Business Continuity & The Impact Of Terrorism & Other Critical Incidents On SMEs threats to a business

examples of threats to a business are • a vital computer system is unavailable. • critical process machinery is damaged. • loss of key employees. • the building, or part of the building, cannot

be accessed, and...• suppliers are unable to deliver.



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Common Small Business Disasters

• Fire/Flood• Computer telecoms failure• Key equipment failure• People issues – illness, resignation,

maternity leave• Denial of access to premises• Product defects• Bomb – terrorism threats• Legal regulatory action• Utilities failure



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emergency procedures

• Importantly, a business continuity plan also details clear emergency procedures to ensure that the safety and well-being of employees is a top priority.

• Because it requires an assessment of all critical areas of a firm, business continuity planning is a valuable management tool.



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Business Continuity & The Impact Of Terrorism & Other Critical Incidents On SMEs commercial benefit Of a continuity plan

There is also the commercial benefit to consider.

• Companies with business continuity plans are more attractive to do business with.

For example

• large businesses that rely on the outsourced services of third parties will prefer to work with suppliers who have a Business Continuity Plan in place.



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Business Continuity Plans

• Terrorism is only one aspect of threats that can adversely affect a business’s ability to trade. AXA Insurance recommends that all businesses should assess their vulnerability and reduce their susceptibility by developing business continuity plans.

• Source: Douglas Barnett, risk control strategy manager, AXA Insurance



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Terrorist Attacks• Major

disruption to businesses and personnel.



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Business Continuity Bespoke Guidance

• Business continuity need not be complicated. AXA Insurance has developed bespoke guidance documents on business continuity for SMEs, copies of which can be found at www.axa4business.co.uk

http://www.axa4business.co.uk/

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Potential Hazards• The list of potential hazards to maintaining a

successful business after a terrorist incident is endless.

• All businesses should give serious consideration to producing a robust business continuity plan.

• For SMEs it is even more important as they may not have the resources needed to fall back on.





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Other DisruptionsDisruptions (not limited to terror) but including • Economic• Pandemic• transport accidents• Crime• Weather• social and environmental or any other event

that threatens us.



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Fail to Plan – Plan To Fail• Early in 2005, KPMG and the CBI surveyed

businesses of all sizes across London on issues such as transport needs, skills shortages and how prepared they were for an attack on the city. In the SME sector 78% of businesses said they were prepared for an incident, but less than a fifth said that they had a dedicated team to handle a major incident, and barely a quarter of SMEs said they had managed to test their business continuity plans.

• Source: Alun Bowen, partner for middle market in London, KPMG



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Pressurised Workload

• While these findings show that some SMEs are aware of the risks and are rising to the challenge of doing business in a major city, their workloads are often so pressured that business continuity planning and testing can slip off of the agenda. The issue of business continuity must continue to feature highly on the agenda, particularly as insurers are now seriously looking at how a business plans for a major incident before insuring them.




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Business Continuity & The Impact Of Terrorism & Other Critical Incidents On SMEs Testing Plans• The recent events in London demonstrate the need

for SMEs to have more confidence that the plans that they have in place are effective. Testing plans is an essential part of any strategy and in a sector which is so fiercely competitive and failure to effectively plan how a company will continue to operate in the event of a serious incident could see the more prepared companies running away with your business.




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IT Support Systems

•Numerous IT Companies specialise in support systems for Business IT continuity.

Dr. Mark Yates The British American Security Expert from www.businessconsultancyonestopshop.com T:

0845 617 0991. E: [email protected]

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SME Business Continuity• The proprietor, director or owner of an SME

will have to work out what solutions in business continuity are cost effective, scaleable and appropriate for themselves.

Business continuity should be about commercial advantage, leading to enhanced performance and inspiring confidence, not just about survival or picking up the pieces.



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Disaster Recovery

• Most large organisations have some sort of disaster recovery plan for their IT. But where is the equivalent HR disaster plan? If people cannot get to work and the phone system in their office has been cut off, what should they do?



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Business Continuity & The Impact Of Terrorism & Other Critical Incidents On SMEs Remote Working Facilities• On a daily basis thousands of 'information

workers' commute into City offices to sit at an office desk and communicate to the rest of the world using email and the phone. With the right technology they accomplish this from home or another remote location. So the provision of remote working facilities should be a major part of the disaster recovery plan for all employees, not just a provision for a few flexible workers.



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Uncertain Times

•We are all conducting business in uncertain times. Protecting the future of the firm has to be the number one priority for every business manager.



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Firm - Too Small For A Business Continuity Plan?

• The smaller your business the more important it is to have a contingency plan in place. Any incident, no matter how small is capable of impacting your business & profitability.

• The size of any continuity plan will depend on the risks facing each business – it will be as large or as small as needed.



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The Real Problems• Incorrect mind-set - it will never

happen to me.• Procrastination – I’ll get around to it

next week.• Ineffective delegation – I’ll get

someone in the company to look at this.

• We’ll test our plan sometime soon.



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Managing a Crisis

Lightening Never Strikes Twice...

• A business continuity plan is all about ensuring that a crisis is managed effectively - before it escalates to a disaster.



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Business Continuity & The Impact Of Terrorism & Other Critical Incidents On SMEs Business Continuity Summary

• 80% of all businesses affected by serious incidents never re-open, or close within 18 months.

• 46% of London businesses do not have a business continuity plan in place.

• Less than 20% of London Businesses have a dedicated team to handle a major incident.

• barely a quarter of SMEs said they had managed to test their business continuity plans.

• Insurers are now seriously looking at how a business, plans for a major incident before insuring them.



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Our Professional Threat Management Unit Service

Our Threat Management Unit will • design• Produce• Test• Evaluate• Manage

Your business continuity plan.



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Business Continuity & The Impact Of Terrorism & Other Critical Incidents On SMEs Contact Details

For a business continuity planning consultation, or details on corporate

training contact Dr. Mark D. Yates

T: UK 0845 617 0991E: [email protected]: www.businessconsultancyonestopshop.com

mailto:[email protected]