What’s Your Plan, Stan?

All operations big and small need to have plans for the unexpected. So in the event of an emergency, or maybe a very large order, financial resources, communication procedures and logistics are ready to respond. If it has the chance to disrupt the normal operational flow, it needs to have a pre thought out plan to insure you and your business comes out on top.

When the warehouse is burning down, your state is experiencing a terrible natural disaster, or an unexpected death of a key executive occurs, this is NOT the time to think about what your plan should be. Even with the calmest under pressure management, crises management plans need to be handed pre event, not during or post.

Our company forklift driver pierced large barrels of chemicals in our warehouse! How important are environmental and emergency response regulations that apply to my business? Very, and this is generally a requirement to be included in many regulatory permits that are business specific. If you are not sure where to start, in Michigan, The State of Michigan Department of Environmental Quality will provide businesses with necessary expertise on environmental risks. For facilities that use or handle substances that have a potential threat to humans or the environment, from spill control and prevention, hazardous waste and air pollution, Local Emergency Planning Committees along with police and fire departments have emergency planning and training to step in at a moment’s notice. This is an important part of a Contingency Plan since spills or exposures to chemicals can interrupt operations and be costly.

IT Asset Security is one of the most critical components of a solid Continuity Plan. When you think of intellectual property that could be stolen or destroyed such as trade secrets, computer programs and equipment, this is Asset Security and nothing to mess with. Your contingency plan should have a backup of corporate records. If key machines are lost and you are unable to produce your product and not meet your customers demands, Contingent Business Interruption (CBI) insurance can help soften the financial impact.

Many factors will influence your business Contingency Plan. Here is a 8 step outline of procedures to use when writing a Contingency Plan.

  • Set up a contingency planning committee and choose someone to lead the group
  • List every business process in each department
  • Discuss key assumptions with management in each department
  • Prioritize each assumption in order. Play the “what if” game
  • Decide how you will compensate if something negative occurs to stay profitable
  • It takes a village to raise a child, same applies here. Get the input of many!
  • Take a second look. Go over the contingency plan again, find areas that may have been missed
  • Practice makes perfect! Test your contingency plan. Sometimes conflicts occur between departments’ contingency plans. This is generally found in the interdepartmental review. Play role scenarios without shutting down systems. After review tests have been completed, bugs have been worked out; it’s time for the final number. Fully test your plan, set aside time to shutdown areas in real time, putting your contingency plan into full effect.
  • Working with a knowledgeable insurance agent on what areas of your contingency plan are covered by your existing insurance coverage, and what might not be, is a great way to secure financial stability of losses. Work scenarios out with your agent; find out the most effective way to modify your commercial insurance policy to meet your needs.

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