We all dread the idea of a disaster that interrupts any normal business activity flow. With thinning margins these days any distraction can turn a profitable year into a loss.
The key to surviving a disaster is to have a plan. And having an executable disaster recovery plan in place is a must. The plan must be written, rehearsed, tested, and updated on a regular basis for any changes in services or operations.
Data Disaster Recovery
With the availability of secured online storage, back up your data for operations daily, if not continuously, through a service such as Carbonite, Mozy, or one of many others. If you are using Infrastructure as a Service (IaaS), or cloud computing, have your data’s mirror image stored in another geographic location. Should a natural disaster strike your facilities, or the cloud service provider’s facilities, you can still access your data from anywhere in the world.
It’s Not Just Data
Weather disasters, or other environmental events such as an earthquake, will disrupt operations too. Your disaster recovery plans need to include continuing operations strategies. Consider multiple courses of action, depending on a disaster’s impact. For instance, one strategy is to have operations continue from employees’ homes or a local alternative office. You could implement a reciprocal agreement with another business to share office space. If the disaster covers a wide geographic area, however, having employees work from home or a local space won’t be an option. An alternative reciprocal agreement with a business 100 miles away could be part of a multilevel strategic plan.
The reciprocal agreement idea should be carried through to producing goods, maybe via a similar agreement with a competitor. Remember, this would be reciprocal; you would be opening your business to a competitor too if a disaster triggers the obligation. Such an agreement would include a mutual nondisclosure and noncompete clause. This strategy would include the time of day or night the competitor’s equipment is available for your production run. I have seen this work well in the printing industry, and the concept saved my father’s business when a fire ruined his printing equipment. A trailer brought to his normal business site for office work was the first step of the planned strategy. His otherwise competitive printer across town allowed his work to be run from 7 p.m. to 6 a.m .
Test the Plan
To avoid post-disaster panic mode, the plan needs to be tested. Testing will allow you to make adjustments to the strategy based on test results. Even the offsite manufacturing process should be tested. Since all businesses change, the test should be performed on a periodic basis -- at least every three years.
Talk to your business insurance carrier about their business interruption insurance policy. This coverage may include extraordinary expenses required to implement your disaster recovery plan. Another reason to have a plan in place is to be able to estimate the amount of insurance coverage required to bridge a disastrous event.
A disaster can strike at any time. Surviving one is a matter of having a tested plan in place beforehand. From a CPA’s perspective, it is a matter of truly being a going concern.
About Robert Listerman
Robert A. Listerman, CPA, is president of Business Technology Resources, LLC. He is chair of the PICPA’s IT Assurance Continuing Education Subcommittee.