Most midsize businesses have business continuity plans but few have tested them, according to The Hartford’s survey of midsize business owners and C-level executives. This shortcoming presents potential risk for businesses, which may be unable to meet client needs due to an interruption in their operation or lose revenue due to a supplier issue.
While the majority of midsize businesses (59 percent) surveyed had a formal, documented continuity plan, one-third (33 percent) had an informal, verbal plan, and 8 percent reported having no plan at all. Just 19 percent of businesses had tested their plan.
“Weather-related events, fires, thefts and supplier interruptions are just a few of the issues that can impact a business,” said Eric Cannon, assistant vice president of property underwriting at The Hartford. “While many midsize businesses have taken the important step of developing a formal continuity plan, testing and updating that plan on a regular basis can mean the difference between a business’s ability to recover quickly versus being unable to meet client needs.”
The Hartford survey found that more than one-third (36 percent) of midsize businesses had been unable to meet a client need due to an interruption in their operation, putting their relationship with that client at risk. Of those businesses:
- A majority (57 percent) used an alternate supplier and avoided any direct impact on their clients.
- 39 percent lost business to other suppliers but had clients return once their business resumed operations.
- Nine percent lost clients that did not return.
Role of suppliers in continuity planning
Most midsize businesses surveyed (84 percent) rely on suppliers, vendors or consultants. Four in 10 had suffered a supplier interruption and almost one-third (32 percent) had lost revenue due to a supplier problem.
“Even the smallest vendor or that vendor’s supplier can impact a business’s ability to meet its customers’ needs. The savvy business owner must take the time to understand the continuity plans of its suppliers and their suppliers in order to fully know who is at the table and who can step in when back-ups are needed,” said Cannon. “It is also important for business owners to speak with their insurance agent about their continuity plans and business interruption coverage.”
Source: The Hartford
Was this article valuable?
Here are more articles you may enjoy.