The Chamber of Commerce has recently published a study on the subject of disaster recovery and business continuity planning which reveals some startling information. 90% of businesses that lose their data will fail within two years, and 43% of businesses that suffer a disaster will fail immediately. Only 17% of SME's in the survey had a contingency or security plan in place, but the majority of these businesses had not tested the plan.
With statistics as frightening as these why don't businesses take proper precautions to protect themselves?
The answer is because, unlike responding to a customer complaint or fixing the photocopier when it breaks, there is no compelling event for us to set up a disaster recovery plan. Human nature dictates that if there is a problem then we will fix it, but if the problem has never happened to us, do we really need to worry about it?
A colleague recently told me a story about a company that did have a disaster recovery plan and then one fateful day they experienced a fire. Fortunately nobody was hurt in the fire and the company immediately activated its disaster recovery plan. The plan stated that the person who had been trained to carry out the plan was Fred … but unfortunately Fred had been dead for 3 years.
All companies need to prepare a recovery plan to cover disasters such as IT and utility failures, fraud, sabotage, theft, extreme flooding, fire, and terrorist attacks. To achieve this you need to analyse key business applications. Identify which applications are critical to the business and which applications could be put on hold for a period of time without causing long term damage.
You should also Identify an alternate temporary business site to locate personnel well away from the main building and also ensure that it is not served by the same utility companies, or communication company as the main building.
The Chamber of Commerce recommends that contingency plans will need to be carefully communicated to employees without creating undue alarm and explained as part of key business planning. They also recommend that regularly updated copies of the plan are available to all employees.
What would be the impact of a large scale disaster on the economy today?
To understand the impact of a large scale disaster on the economy we can learn some lessons from effects of the IRA bombing of Manchester in 1996. This event affected over 670 businesses and £5m of business was lost in the first few hours. Communications were not restored for 48 hours and certain areas were inaccessible for up to 5 days.
Since the Manchester bombing occurred businesses are now even more reliant on IT and electronically stored data. What would be the effect on the economy if a similar event happened today?
Speaking about the potential cost of an incident occurring today Michael Foot, Managing Director of the Financial Services Authority, said "Essentially, that day, billions and billions - probably trillions - of dollars, pounds and euros wouldn't flow to their correct home. As the day went on, you could get an enormous economic jolt through to real trade and investment markets. Stock markets and so on would be very badly affected when they came back on again. Liquidity they thought they had would not be there. Over time, what you would get would be international firms looking at New York, Tokyo, London; they would assess which one had failed to deliver and they would cut back investment there, leading to cuts in employment, and they would take their business to places that had proved to be resilient."
Perhaps it is not possible to properly measure the effects of this type of incident, and whilst it may, after a period of time, be possible to quantify the value of lost business, can we really quantify the wider economic and social damage?
How should businesses protect themselves?
Remember that a disaster does not have to be 'dramatic' in order to have a significant impact on your business. For example, what would happen to your business if there was a gas leak outside your office, and you were not allowed access to your premises? Under these circumstances could you continue to serve your customers?
In the event of a disaster occurring you need to ensure that your data is secure and you have an up to date disaster recovery plan. But most of all you need to ensure that Fred is alive and well and is able to carry out the plan.
