5 Common Misconceptions About Business Continuity Planning
According to the Federal Emergency Management Agency, approximately one out of four businesses are unable to reopen after a disaster. Additionally, a staggering 60% of small businesses have to shutter their doors within six months of falling victim to a cyberattack. These statistics highlight the importance of a robust business continuity plan.
While many factors contribute to the failure of these businesses, most of them can be traced back to deficiencies in their business continuity plan. Countless company leaders, particularly those operating small- to medium-sized businesses (SMBs), neglect key aspects of emergency preparedness and business continuity planning.
These leaders have bought into a few too many common business continuity misconceptions. To help you protect business continuity, the team at Preparis has identified five common misconceptions. We also reveal the truth about these dangerous myths.
Business Continuity Planning Defined
Business continuity planning (BCP) focuses on improving organizational resilience. A business continuity plan accomplishes this by outlining key prevention and recovery protocols.
Ideally, a business continuity strategy will help you proactively guard against operational disruptions. However, the plan should also provide a roadmap for resuming normal operations as efficiently as possible following a disaster or critical incident.
In decades gone by, business continuity strategies were stored in physical binders and kept on site. While there is nothing wrong with keeping a physical copy of your emergency preparedness plan on hand, a binder should not be your primary means of accessing these materials.
If it is, then that itself is a surefire sign that your business continuity plan is due for an overhaul.
Digitally transformed businesses leverage modern BCP solutions. These solutions include contact tracing tools, business continuity planning features, BCP testing capabilities, and more. Cutting-edge BCP tech optimizes organizational resilience and agility in the event of a critical incident.
5 Business Continuity Planning Myths
Business continuity planning myths tend to be more prevalent in the SMB space. The biggest issue facing SMBs is that they rarely have the budget to hire a full-time BCP practitioner. Instead, one or more trusted staff members will be tasked with overseeing business continuity planning while juggling their other responsibilities.
However, larger businesses are not immune to these misconceptions. Organizations experiencing rapid growth may inadvertently fall prey to some of these misbeliefs as they attempt to scale their business model.
While there are many different myths about business continuity planning, we have focused on five of the most damaging. If these myths guide business continuity planning, they have a propensity to cause significant harm to an organization.
Myth 1: BCP Is Only for Natural Disaster Recovery
Before the technological revolution, virtually all business continuity planning focused on recovery from natural disasters.
There is no question that emergency preparedness is important. One out of four businesses is never able to reopen after closing due to a natural disaster. Additionally, 25% of companies that do reopen fail within 12 months of doing so.
As evidenced by the statistics mentioned above, disaster recovery must be a component of a business continuity plan. However, the plan needs to address other threats as well. Otherwise, businesses will remain vulnerable.
Truth: BCP Should Address Multiple Resilience Concerns
The biggest threat to business continuity facing most organizations is a cyberattack. According to research, a single cyberattack carries a global average cost of $4.45 million per incident, signaling a 15% increase over three years. Many small to medium-sized businesses cannot absorb that degree of financial hardship, even if they recoup some of the money via insurance.
Unfortunately, some SMB owners take the “it will never happen to me” approach. This overconfidence is based on another big myth that leads countless companies to neglect BCP. The truth is that nearly half of all cyberattacks target SMBs.
SMBs are ripe targets for hackers for several reasons. Small to medium-sized businesses have less robust security than international enterprises. This vulnerability means that hackers have an easier time penetrating SMBs’ networks and can quickly obtain valuable data.
Myth 2: Only Big Companies Need BC Planning
Another common misconception about business continuity planning is that it is only necessary for mega conglomerates and large enterprises. Nothing could be further from the truth.
Every business, including yours, needs a comprehensive business continuity plan. The adage “if you fail to plan, then you are planning to fail” applies to BCP and many other facets of running a successful business.
Truth: Every Organization Needs a Business Continuity Plan
Busting this myth is simple. If your business does not currently have a business continuity plan, it is time to remedy this issue as quickly as possible.
Not sure where to begin? We recommend that you jumpstart your efforts by investing in some quality business continuity planning software. Traditionally, developing a BCP was a costly and time-consuming endeavor, which is part of the reason why it was viewed as something only accessible to big businesses.
However, BCP software has significantly lowered the cost of entry. This affordable technology is a wise investment for SMBs that want to protect business continuity through planning, testing, and training.
Myth 3: You Don’t Need to Test Your Plan
Does your company already have a business continuity plan in place? If so, then you are off to a great start. But having a plan is only part of the equation. When was the last time that you tested it?
If the answer is “never” or “I don’t remember,” you have fallen victim to myth number three. Testing your business continuity plan is the only way to verify that it actually works.
Truth: Your Plan Should Be Routinely Tested and Improved Upon
If you want to optimize your business continuity plan’s efficacy, then you should routinely test it. The exact interval at which you should test your plan will vary on factors such as the size and complexity of your business.
However, a good general rule is to test your business continuity plan at least twice per year. Additionally, you should retest your plan anytime you modify or alter it.
After each test, make sure to collect feedback from your team. Host a roundtable session so that you can zero in on what worked and what did not. Use this information to improve upon your plan and address any shortcomings that you identified.
Myth 4: Insurance Will Sufficiently Cover Your Losses
If you opted in for top-flight coverage and extra protections when selecting your business insurance policy, you probably assume you are well prepared for whatever disasters come your way. Unfortunately, this is often not the case.
As you know, your insurance policy is complex. It contains highly specific provisions regarding what types of losses are covered and which are not. It will also list a wide array of exclusions not covered under your policy.
Given these exclusions, your policy may provide far less protection than you think. That is why it is important to understand your policy’s limitations and how they will impact your ability to file a claim.
Truth: Insurance Typically Only Covers Documentable Expenses
Following a natural disaster or cyberattack, many business owners are shocked to learn that their insurance policy only covers a relatively small portion of their losses.
In the event of a natural disaster, the policy will likely cover things like structural damage, equipment damage, etc. But what about all those profits you forfeited while your company was shut down?
The losses attributed to cyberattacks can be even more substantial. In addition to profit losses caused directly by disruptions to business operations, you will also experience damage to your brand reputation. This damage can be difficult to measure and even more challenging to undo.
Myth #5: Your Staff Will Rise to the Occasion
One of the most dangerous myths about business continuity planning is that your staff will “step up” in a crisis. While there are certainly exceptions, most employees will not spontaneously become business continuity conscious during a crisis.
If they lack direction and training, your staff will struggle to navigate the challenges associated with a cyberattack or natural disaster.
Truth: Employees Fall to the Level of Their Training in Crises
The heading says it all. Employees will fall to the level of their training when they enter crisis mode. They will likely perform well under pressure and work together to protect business continuity if they have received high-quality training. Conversely, those who receive the bare minimum level of training will struggle during a crisis.
That rounds out our list of five common business continuity planning misconceptions. If you discover that you have bought into one or more of these myths, it is time to revisit your business continuity strategy. Investing in quality technologies and taking a proactive approach can enhance emergency preparedness and overall resilience. Reach out to us today to talk about your business continuity strategy.