There’s more to business continuity planning and execution than cashing the insurance check after a fire or flood. Most business insurance won’t cover the intangibles. In the case of a serious data loss or breach, money will not restore years of irreplaceable company data.

How disasters affect the business

If you don’t want to be part of the unfortunate 25 percent of businesses that do not come back after a disaster, you need to consider the potential implications and impact of a disaster, which could be fire, flood, storm or a takedown of the company computer network. Those losses could be:

• Financial — Lost profits, lower market share, regulatory fines, data breach penalties, etc. Take the monthly revenue of a company and divide it by zero.
• Reputation, damage to your brand, bad publicity. How well a company safeguards its own and its clients’ interests is part of the brand image.
• Litigation, loss of business license or liability because of subsequent court claims. Look for costs, even if the company survives a judgment.
• Breach of contract — Inability to meet service obligations to clients. A disruption in business can have a ripple effect up and down the supply chain.
• Going dead in the water, frozen business objectives and missed market opportunities. This may not be quantifiable in terms of money, but if the business stops growing and falls out of the race, it may have to bow out.

Most companies are not ready

As reported by PRNewswire.com, in a 2014 survey of 1,000 businesses of all sizes, the Disaster Recovery Preparedness Council reported that nearly three-quarters of survey respondents are not taking “adequate steps to protect their data and IT systems.” Other alarming findings were:

Lack of adequate disaster recovery budgets (64 percent)

Cost-conscious managers might ask, “How much does it cost?” The focus should be more on, “How much would a serious data breach cost?” Ask the former CEO of Target how much his data breach cost.

No fully documented disaster recovery plan (60 percent)

A basic principle of management is that for every job there is to do, someone must be designated to do it. Someone who intimately knows the business must be held responsible for business continuity. That person must develop a plan that focuses on what the business does, how it does it, and what it must do to continue generating income after a disaster.

Worse news: Of the 40 percent who have a plan, only 23 percent have tested the plan. No plan completely survives its first contact with real-world situations. The plan must be a reliable roadmap and checklist for remediation based on what the business will encounter during a disaster.

Plan testers consistently failed their own DR drills (65 percent)

Whether this bad news is a result of a bad plan or poor player performance — or both — it highlights the need to pay constant attention to both.

Downtime and outage costs

Respondents reported:

• Outages of critical apps (78 percent)—Those are the applications that actually run the business — accounts payable/receivable, etc.
• Losses ranging from a few thousand dollars to more than $5 million (63 percent) — The aforementioned Target breach cost $39 million in fines and a disastrous quarterly earnings slip.
• Data centers down for up to two weeks for respondents who experienced outages (28 percent). Can your business afford a two-week hiatus with no access to inventory, orders and customer data?

The foregoing is one potential answer to the question, “How much will the plan cost?”

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