Disaster Recovery: What CFOs Must Know

In an urbanised, industrialised world, it’s easy to think that man controls the working environment. Flick a switch and your office gets cooler. Flick another and the information you need is at your fingertips.
But then the unexpected happens. Earthquakes. Volcanic ash blocking the airspace. H1N1. Such events remind us that economic cycles are not the only cause of uncertainty in business. 
When such disasters occur, many organisations find out – too late – that their business continuity planning was not up to the mark. So how can you make sure that your own business could continue to function during or after a crisis?
Plan before, not during, a disaster. The results of neglecting disaster recovery planning can be dire. Faced with a major incident such as fire, floods, crime, terrorism or IT failure, a high proportion of businesses never re-open, or eventually close within two years, according to studies by insurance giant AXA.
Even much smaller events can destabilise a business. In Regus’s experience, one of the most common scenarios requiring our customers to activate a workplace recovery plan is a problem relating to utilities. A power failure, for example, or a burst water pipe in the offices upstairs can render your workplace unusable for days.
If you don’t have rapid access to alternative workspace and business facilities, the consequences can include loss of business and customers; loss of goodwill and reputation; loss of production; loss of data; and cash flow problems.
Moreover, the consequences can last much longer than the original problem. The reputational stain of cancelled meetings, unmanned phones, lost data, or chaotic admin systems can linger for months or years.
Plan properly, and formalise your plans. According to Ernst and Young, 34% of companies cite ‘workplace recovery’ as their greatest technical challenge in creating a business plan. As a result, many of them procrastinate.
But even if disaster doesn’t strike, the lack of a robust disaster recovery plan can harm a business. Increasingly, the tender procedures of large companies require suppliers to give details of their business continuity planning. An inadequate plan can cause you to fall at the first hurdle. Lack of planning can also elicit disapproval from audit committees and regulators, especially in the financial services industry.
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