Disaster Planning For a Renewed Sense of Control

By Sandy LeDuc
LeDuc and Sikowitz

With the events of the last few months we've learned not to take much for granted. Business owners are imagining themselves in the shoes of those in the immediate areas of the recent disasters and wondering how they and their businesses would recover. This imagining is the beginning of a plan for disaster recovery and should consider some of the following points:

1. Data Recovery-your computer may not run your business but it undoubtedly contains information necessary to contact customers and vendors, collect receivables, prepare insurance claims, verify vendor claims, comply with tax laws and prove tax payments, identify open orders, locate offsite inventory and so on.
   
   Think through your current methods of backup and offsite data storage. Verify that the system is being followed. How much data would be lost if you had to restore from your offsite backup? Is it adequate?
   
   Contact your computer professionals to discuss more robust backup systems.
   
2. Property Insurance Coverage-disaster has probably been redefined since you negotiated your present insurance policies. Review your policies to make certain you understand what incidents are covered. Is terrorism covered? Are you insured for replacement value or, if not, do you understand how the terms depreciated or fair value are defined? Have you kept current with riders for technology, machinery and inventory increases? Has the company grown since you wrote the policy? Do you have data recovery coverage?
   
   Consider having copies of fixed asset invoices offsite. Verify that duplicates of your financial statements, tax returns and detailed depreciation schedules are maintained at your accountant's office or elsewhere. These documents can assist you in preparing insurance claims.
   
3. Business Interruption Insurance-this coverage is meant to provide coverage of fixed expenses during recovery following an incident that significantly impacts a business's revenue stream. If you have this coverage, has your policy been adjusted for changes in your company's business model or for growth? If you haven't considered this coverage, you may find it a reasonably priced product to add some support in an unforeseen event. Again, be sure that you understand the incidents that give rise to a claim and understand the claim process. Include information necessary for the claim process in the data recovery plan.

Have your management team walk through the process of a business recovery. Assemble a list of contact information that would be essential to the process. The exercise should raise everyone's consciousness about the possibilities for loss and recovery. Did anyone ever imagine that competitors from the World Trade Center would be sharing space today? Loss recovery will never be easy but steps taken today can add an element of control early in the process.

Winter 2002 - Volume 12, Number 1