Business owners have plenty on their plates with the very real, day-to-day responsibilities that come with running a business. So, to ask them to stop and fully imagine a disaster, and its ramifications can seem overwhelming and a cruel and unnecessary exercise. However, when the reality is… asking them to do just that is one of the most valuable things that they can ever do.
Let’s face it, imagining worst case scenarios is not how anyone wants to spend their time. It can be scary, stressful and overwhelming. But smart business owners do. The fact of the matter is at Air-Sur, “planning and thinking through critical scenarios” is something that we encourage you to do.
Our experience has shown that the most effective way any complex organization can protect itself against loss is through a comprehensive risk management program. And a critical component of this program should be the development of a Disaster Plan – a clearly thought through, well written plan that outlines how your corporation would continue if it suffered a catastrophic loss such as fire, wind- storm or other major loss.
The Two Phase Plan
Phase One: Evaluate, Plan & Protect
Not only is this the cornerstone of any Disaster Plan, it is also a critical part of your overall Risk Management effort. For some assets, determining current value can be done from invoices and current financial records. The real trick is often defining replacement value, particularly for your significant assets such as real property and/or business personal property. Here you may wish to consider the assistance of a professional insurance appraiser (as opposed to a real estate appraiser) to help identify a realistic replacement cost in light of current and anticipated market conditions.
Planning for business continuation and the replacement of critical assets such as buildings or computer systems presents some unique considerations. Replacing existing buildings may be more difficult due to new zoning requirements or building codes that will affect not only cost, but your ability to replace a structure in a reasonable time frame with similar size/capabilities. On the other hand, certain assets such as computers may cost less to replace with equal or enhanced capability, given the tremendous change in technology.
Income protection planning is one of the most important parts of this process, and one that is often not evaluated properly. Your cash stream is critical to protecting vital “non-insurable” assets such as your employees, and having funds available to help protect your market position, etc. Make sure you adequately assess your needs.
While income protection insurance can be purchased in different formats, we generally recommend you consider blanket coverage for a set “face” amount. This removes confusing co-Insurance consideration, plus provides coverage for “ordinary payroll” expenses to help more effectively retain your employees during reconstruction.
Check back for Part Two in our next blog; detailed information on Post Disaster Recovery Plans.
At Air Sur, we work with our clients to develop comprehensive risk management plans, and strongly encourage a detailed disaster plan. In response to the growing complexity of our client’s organizations and their risk management needs, our Professional Client Care® program delivers cutting edge solutions that provide you with maximum organization and accessibility to EVERY part of your corporate insurance program.
Our number one priority is you and Protecting Your Future at Every Moment® which includes the good times and the unthinkable times. Please contact us today and let’s get started keeping you and your company safe and sound.