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Building Disaster-Resilient Small Businesses

Donna Childs

media@childscapital.comCo-Author, Contingency Planning and Disaster Recovery:

a Small Business Guide, John Wiley & Sons Inc., 2002

(ISBN 0-471-23613-6)

Available on Amazon.com

More information from us: www.preparedsmallbusiness.com

September 14-15, 2006

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Our Experience Was Unusual

Source:

http://www.ready.gov/business/other/testimonials.html#childs

Launched September 23, 2004

Re-launched and expanded September 7, 2006

Top Concern of Small Business

• A membership survey conducted by the National Federation of Independent Businesses found that 30% of small businesses had experienced a major disaster within the past year.

• The Red Cross has found disaster preparedness to be the top concern of small businesses. Lack of knowledge, lack of time and lack of funds are the top three reasons small businesses cite for their under-preparedness.

• In 2006, disaster preparedness is the top concern of small businesses.

• The business owner’s largest single asset is typically his equity in the business.

The Market for Risk

Retrocession coverage

Reinsurance company

Insurance

company

Policyholder

Premium

Premium

Premium

Claims

Claims

Claims

There is more than meets the eye!

Short exercise – risk assessment

In pairs, please take ten minutes

to discuss your clients’

1. Most serious disaster

2. Biggest risk

Then we will discuss the trend!

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Spectrum of Risk

High frequency,

Low severity

High severity,

Low frequency

Examples:Human errorComputer crashPower outage

Examples:Natural disastersSabotageTerrorism

Examples:FireFloodPolice action

Categories:

1. Human errors 4. Environmental hazards

2. Equipment failures 5. Fires and other disasters

3. Third-party failures 6. Terrorism and sabotageSource: Donna R. Childs and Stefan Dietrich, PhD, Contingency Planning and Disaster

Recovery: a Small Business Guide, Wiley, 2002.

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Unique Risks – Unique Preparation

While frequency of risk decreases, other risks, such as data security, may increase

Third-party failures

Environ-mental

hazards

Fires and other

disasters

Unintentional errors

Failures of service

providers

Conditions that displace

you from your worksite

Fires and natural hazards

Investigate issues related to training –

these can erode productivity, sign-offs for backups

Invest in due diligence, service guarantees and

redundancy

Plan for human safety and temporary

remote operations

Plan for more severe threats to human safety & longer periods of

remote operations

Features

Risk category

Unique response

Intentional, systematic

campaign to cause harm

Be aware of the psychological and emotional needs of

employees

Terrorism and

sabotage

Equipment failures

Malfunctions or complete failures of machinery

Examine set-up and maintenance programs, predict

failures

Human errors

Source: Donna R. Childs and Stefan Dietrich, PhD, Contingency Planning and Disaster Recovery: a Small Business Guide, Wiley, 2002.

Human errors

Train users• How to store data on your computer

system (and how not to store data)• How to share data among users• How to name files in progress and

files for archive purposes• How to use version control for

documents • How to create logical links between

files• How to archive files and how to

initiate immediate snap shot backup

Back up data• How to delete files• How to retrieve files from your

backup system• How to safely shut down your

computer system

Psychological issues• Stress• Fatigue

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Protection Against Third-Party Failures

You probably have little choice with respect to utilities.

Means of access varies depending on where you live (DSL central office distance, cable TV availability, dedicated data lines costly)

Jewelry business and SLAs Photography business

Remember that you may need your phone lines also to send faxes, to connect to the Internet via modem and for credit card authorizations.

New York power outage

Law firm with RAID system Accounting firm with external

drives Aerospace company switched

off humidity control.

Limitations Case Study

Telephoneservice

Internetaccess

Electrical power

Protect yourself with backup power and UPS units.

But remember that backup systems on the same power circuit may break as well.

You need redundancy w/ bandwidth management

Understand providers’ service-level agreements, and providers’ contingency plans

Most companies have or are in the process of converting to VoIP.

But the “plain old phone line” is still worth something…

Considerations

Source: Donna R. Childs and Stefan Dietrich, PhD, Contingency Planning and Disaster Recovery: a Small Business Guide, Wiley, 2002.

Terrorism and sabotage

• Careful investigation• Sound processes• Psychological consequences

The Disaster After the Disaster

Like everything else, your success in securing prompt payment of your insurance claims depends on your preparation.

“Pertinent perils” Order insurance á la carte from the menu Substantiate asset value Payment process

When filing a claim:

CAT Center Timely notice Organization, signaling

www.preparedsmallbusiness.com

Most Vulnerable

Questions?

• It is time for questions and answers.• If time does not permit us to address your issue here,

please e-mail me at media@childscapital.com