It was clear that certain decisions made by key institutions regarding their level of preparedness for disasters significantly affected other decisions, both directly and indirectly. For example, an Ohio company was not able to complete its payroll because of their New York banking relationship, a World Trade Center based company's CEO went on TV and asked if anyone knew where his employees were, and insurance companies and brokers did not have complete sets of paper work concerning their clients. Clearly, a coordinated approach to business continuity planning is needed in order to apply the lessons learned from September 11th.

Since 9/11, studies have been done that show, on average, an organization can expect a major disaster every 15 years. A study by the University of Texas of U.S. businesses suffering catastrophic loss indicated that:

• 43% were forced to close at the time of the disaster
• 51% operated for another two years
• 6% of the businesses survived
• 72% of companies are inadequately prepared to recover from a disaster
• 82% of companies do not have a tested business continuity plan

Despite these facts about disaster preparedness, there are some myths regarding Business Continuity Planning.

"It won't happen to our firm." On average, there are 100 tornados, six major hurricanes and 1,600 earthquakes annually. Fires killed 3,925 people in 2003 and caused damages in excess of $12 billion. Tornados, hurricanes, earthquakes and floods kill an average of 472 people. None of these numbers take into account the lost time resulting from the catastrophe or revenue lost from customers who went to a different supplier of services/products.

Myth Number Two:

"I have insurance that covers a business loss; it's called Business Interruption Insurance." This insurance generally pays for loss of revenue due to a covered incident brought on by an event specified in the contract. But in the end, how are you going to buy back the customers who went to the competition while your firm was trying to recover from a disaster?

Myth Number Three:

"We have a great Disaster Recovery Plan for Information Technology and we test it all the time." Today's business management environment requires emphasis be placed on the total operation of the company, not just the IT portion. The 9/11 disaster showed that Disaster Recovery Plans for IT generally worked well, but that business continuity planning had not kept pace.

Myth Number Four:

"My operations are so big; we can't get our arms around Business Continuity Planning." No planning is an option - just not a very good one. How do you explain to your board and shareholders that you did not have a Business Continuity Plan in place when a disaster occurred and now you are out of business?

Myth Number Five:

"My suppliers will never let me down." Remember, your suppliers have the same thorny issues you do and their headaches will become yours. Make sure they have solid plans for handling business continuity and disaster impacting their operations. Also, make sure your suppliers have been briefed on your plan so that there are no surprises in the event of a disaster that impacts your company.

Myth Number Six:

"All I have to do is find a vendor with good software and I'll get this business continuity stuff out of my hair." A standardized software package may be one tool in your BCP toolkit. Since companies are different and needs are different, you will still need advice from experts in property loss protection, risk mitigation planning, and business continuity planning.

Business Continuity Planning (BCP)

Business Continuity Planning is the identification and sequencing of planned activities that will enable you to survive and recover your business functions in the event of a natural or manmade disaster that results in a partial or total disruption to your business. The BCP must address:

1. Emergency response
2. Crises communications
3. Essential business functions, the sequencing and timeframe in which they must be recovered (Recovery Time Objectives - RTOs) and the necessary equipment, human capital and critical vital records (electronic and non-electronic)
4. Contingency plan for downed Data Centers, and a Disaster Recovery plan aligned to the BCP to insure the essential business functions recovery time objectives (RTO) are met
5. Contingency plans for downed business facilities
6. Insurance for replacement of equipment and business interruption costs for lost revenues
7. Executive leadership and sponsorship for the plan development, maintenance, testing and execution during a disaster

The goal of your Company's BCP is to survive the disaster, minimize disruptions in revenue and cash flow, meet your regulatory reporting requirements, insure the welfare of your personnel, and secure the Company image, client retention and satisfaction. A well-defined BCP is a logical business and risk management program based on a business impact analysis (BIA). It clearly identifies the sequential actions needed to recover from a disaster. CEOs and Boards of Directors should not count on luck, heroism in the face of disaster, or an insurance policy to insure the Company's survival and recovery.

This is where the teaming of Equity Risk Partners and Synergy Associates is so important and valuable to you. Equity Risk Partners will develop a comprehensive insurance program for you that will protect you financially and Synergy Associates will help you develop a Business Continuity Plan that gives you the ability to successfully and quickly recover from a disaster. A solid insurance program and business continuity plan allows you to say to your stakeholder that you are well prepared in the event of a disaster.

Eli Dabich
Synergy Associates
2815 Cox Neck Road, Chester, MD 21619
410-643-5563 Phone / 410-643-9534 Fax
dabich@friend.ly.net