Most midsize businesses have business continuity plans but few have tested them, according to The Hartford’s survey of midsize business owners and C-level executives in the US. This shortcoming presents potential risk for businesses, which may be unable to meet client needs due to an interruption in their operation or lose revenue due to a supplier issue.
The Midsize Business Monitor showed that the majority of midsize businesses surveyed (59%) had a formal, documented business continuity plan, one-third (33%) had an informal, verbal plan, and 8% reported having no plan at all. While this may be considered encouraging, what was damning was that only 19% of businesses had actually tested their plan.
The theme for Business Continuity Awareness Week 2015, run by the Business Continuity Institute, was testing and exercising and one of the key themes that came out of the week was that a plan that has not been exercised is simply not a plan. You can only tell if a plan works when it is put to the test and it is far better to find out that it doesn’t work during an exercise rather than when the very existence of your business depends on it.
“Weather-related events, fires, thefts and supplier interruptions are just a few of the issues that can impact a business,” said Eric Cannon, assistant vice president of property underwriting at The Hartford. “While many midsize businesses have taken the important step of developing a formal continuity plan, testing and updating that plan on a regular basis can mean the difference between a business’s ability to recover quickly versus being unable to meet client needs.”
The Hartford survey found that more than one-third (36%) of midsize businesses had been unable to meet a client need due to an interruption in their operation, putting their relationship with that client at risk. While the majority managed to find an alternative supplier, nearly half (48%) lost business to other suppliers and 9% stated this loss was permanent.
Most midsize businesses surveyed (84%) rely on suppliers, vendors or consultants, yet four in 10 had suffered a supplier interruption and almost one-third (32%) had lost revenue due to a supplier problem.
“Even the smallest vendor or that vendor’s supplier can impact a business’s ability to meet its customers’ needs. The savvy business owner must take the time to understand the continuity plans of its suppliers and their suppliers in order to fully know who is at the table and who can step in when back-ups are needed,” said Cannon.