COVID-19 has led to the cancellation of many festivals and events. In some cases, permanently. Wimbledon, however, will live on, due in no small part to their pandemic insurance. The losses from this year’s cancelled tournament will be covered by a payout of $226 million. That’s some mighty handy risk management.
Insurance, of course, is something most businesses have, and only one aspect of a business continuity plan, so why bother mentioning Wimbledon at all? Well, it turns out that having adequate insurance isn’t so common. The 2020 Tokyo Olympics? This years Eurovision contest? No insurance, no payout, just huge losses. So, what stopped them from preparing?
First, what exactly is a business continuity plan?
Business continuity is all about ensuring business functions can continue or, at least, resume quickly when confronted with natural disasters, like fire or flood (or pandemics), or malicious cyberattacks. A BC plan provides managers and employees with a blueprint of what to do when it comes to the different facets of a company, like human resources, infrastructure, vendors and assets.
A pertinent example: when the office space normally occupied by employees is no longer available (due to damage or pandemic-induced social isolation), do you have the protocols in place that allow staff to work effectively from home?
If you have vendors located in areas that are particularly vulnerable to natural disasters, like earthquakes or floods, do you believe they have the appropriate measures in place to keep functioning when the unthinkable happens, or do you need a contingency plan involving alternate suppliers?
A business continuity plan provides answers to these concerns. Now, back to the original question. Why do so many organisers and companies not have an adequate BC plan in place?
Poor management support and budget restraints
The first reason why companies fail to implement a plan for business continuity is a lack of management support. Business executives find it difficult to justify the costs of preparations for ‘what if’ scenarios that seem far away or unlikely to occur. Wimbledon paid $3.2 million per year since 2002 in insurance after the SARS outbreak gave the world a scare. That’s a hefty amount to carve out of your budget for a ‘what if’ scenario. Indeed, budgetary restrictions is another reason why businesses fail to plan for continuity.
Always be prepared
But even if organisations spend the time and money on creating a business continuity plan, it could be all for nought if there isn’t a culture of preparedness necessary to maintain and execute it. Business continuity plans are “living” documents that should evolve in step with organisation changes such as employee turnovers, and it should be continuously communicated to managers and staff. It involves ongoing costs and effort, but that’s what is required if a business continuity plan is to be worth more than the paper it’s written on.
Communication with the supply chain
However, sound business continuity extends beyond what happens internally. It must encompass the whole supply chain. There must be open and honest communication with vendors and, at the bare minimum, files on hand with details on who to contact in an emergency. Beyond that, businesses must ensure their own critical processes are not impacted by vendors who themselves lack business continuity plans.
To recap, the top five issues with business continuity are:
- Lack of management support
- Budget restraints
- Poor culture of preparedness
- Lack of training and awareness compounded by employee turnover
- Difficulty communicating with external partners
Business continuity plans may be tricky and expensive, but COVID-19 has surely demonstrated how required they are. It takes discipline and foresight to prepare for a drought when it’s raining, but business continuity is all about preparing for the unthinkable, along with the common and mundane things that upset normal business routine.
The folks at Wimbledon didn’t know COVID-19 was going to deal a hammer blow to 2020, but they knew something was going to happen at some point in the future. They have outlaid great expense to insure themselves against such events, but they’ve saved an extraordinary amount of capital as a result.
If you want to be more like Wimbledon than the Olympics, then get in touch Comprara today, and let’s get your business ready for when the next disaster strikes.