The Prevent Defense

 

The coach warns about the importance of disaster planning.Expect The Unexpected

There are times when everything is going perfectly. The team is working together like a well-oiled machine, you’re scoring orders left and right, you’re moving the business up and down the field at will, your competitors aren’t able to block any of your moves…

And then you get hit from behind by something totally unexpected.

Having a crisis plan in place is essential to the health of your business. With a crisis plan in place, you don’t need to know how to fight a raging, out of control inferno because you already have the fire extinguishers in place before a fire starts.

A crisis can be anything from a flood, earthquake and fire to computer hacking, loss of a key partner, a protest or a strike. Some have very little chance of happening; others can shake your business to the core.

The goal of a crisis plan is to identify every possible eventuality in terms of the probability it will occur and the impact it will have on your business. Once you’ve identified the different events that can affect your business, you determine how much control you have over preventing each from happening in the first place or reducing the impact if it were to happen. This is known as the degree of influence you have over any particular event.

For instance, you may run a business where the probability of a robbery is high. You can reduce the impact of the event by reducing its probability (installing security cameras, anti-theft devices, more lighting in the parking lot, etc.) or reduce the impact it will have on your business (not keeping valuables in sight, reducing the amount of cash on the premises, etc.).

Once you identify a crisis you want to ask five key questions for each and rate them on a scale from 1 (least impact) to 10 (biggest impact). Then divide the sum of all five answers by five to get an average.

Questions to ask:

1. If the crisis runs the risk of escalating in intensity, how intense might it get and how quickly?
2. To what extent will your crisis fall under someone else’s watchful eye, such as the news media or a government regulatory agency?
3. To what extent will the crisis interfere with the normal operations of your business?
4. Is your internal/external public image at risk?
5. To what extent would your company’s bottom line be damaged?

Let’s put this through a possible scenario.

EVENT 1 2 3 4 5 Average
1. Robbery 7 8 9 2 3 5.8

A robbery will intensify quickly, hence a 7. The police or another law enforcement agency will get involved, so #2 is a 9. It will shut your business down for at least the rest of the day, perhaps longer if there is damage, an injury or a fatality, so an 8. Will your image be hurt? Probably not as you’re a victim, so #4 is a 2. Any financial impact would be negligible, especially if you’re insured or the money or items are recovered, so #5 is a 3. This gives you a 5.8 impact on your business.

Now, assess the probability that the event will happen on a scale from 0 to 100%. This will give you an answer such as 5.8/60, i.e., it would have a slightly higher than medium impact and there is a fair probability it will happen.

You want to identify all the potential crises that have both a high impact and a high probability and find ways to either reduce their impact or the chance that they will occur in the first place. Using the example, in the case of a robbery you could add security cameras and other anti-theft devices to your place of business to reduce the probability, which would be relatively easy to do.

You want to do this for every possible crisis that can affect your business, even those that seem very unlikely (you can probably dispense with running scenarios involving a zombie apocalypse or alien invasion). In assessing the impact, consider the cost in hard dollars and soft dollars. Hard dollars are pretty obvious, but losses in soft dollars can include decreased productivity, low employee morale, increased absenteeism, increased workers’ compensation claims, bad press, erosion of community support, etc.

Depending on the crisis at hand, the cost of intervention may appear to equal the hard cost of a possible loss. But the soft dollar losses can create a trickling effect on your business where you continue to lose revenue long after the initial crisis has passed, often without noticing until it’s too late.

A well-conceived crisis plan has another benefit. It helps you make decisions in the midst of a crisis. You don’t have to consider options on the fly; they are already written down. All you and your team have to do is follow the plan. You already know that if ‘A’ happens, you should do ‘B’ then ‘C’, ‘D’, ‘E’, and so on.

This is a pretty basic tutorial on crisis planning and management, but it should show you that 1) crisis planning is an important part of your overall business plan and 2), not having a plan can cripple or even kill your business, especially a small business.

Want to know more about crisis planning and business continuity? We have a free “When Trouble Strikes: A Crisis Planner for Business” publication written specifically with small businesses in mind. It covers the topic extensively and gives you additional tools to do your own crisis planning and mitigation.

Share
Translate »