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When disaster strikes, businesses are hit harder financially than the sum of their insurance policy. Here are some other (bigger) costs to prepare for
Company risk directors carry a weighty responsibility on their shoulders when it comes to protecting assets and budgeting in the event of a disaster – be it natural or manmade. It’s not just the ever-growing expense of office technology, property and wages making the stakes higher. The increasing complexity of our world means companies face a greater probability that uninsured losses could sneak up and hit them when they’re already down.
It’s one thing to take the cost of your office equipment and infrastructure and add that to the amount of revenue lost while your team comes to a temporary standstill – things that can be easily documented in your insurance cover. But there is another layer of hidden costs to be faced after the more immediate ones. They’re much harder to put a price on – which means that most company insurance policies aren’t set up for them.
Take reputational damage. If your business were to experience a cyberattack, for example, the situation might not be quite as simple as ‘business-as-usual’ once your systems are up and running again and the lost hours have been claimed on insurance.
If this breach of your systems led to a lack of trust from consumers and investors, your company could experience a sudden hit to its stock value. If that were to happen, not only would you face a financial loss of value, but resources would need to be allocated to rebuilding investor trust and reparative PR and marketing efforts.
When there’s a heavy reliance on company insurance to recover operations, the potential for uninsured losses to devastate businesses is greater. But there are ways that risk directors can take a more comprehensive approach when building a ‘back-to-business’ plan, which factor in these stealthy (and gut-wrenching) potential losses that crises can cause. Calculating the real cost of a catastrophe requires risk directors to think beyond the everyday costs of running a company and take a bigger picture approach.
Yes, going up to your chief financial officer and advising that budget needs to be spent on installing flood defences – for a hefty amount of money, similar to the sum of items on the insurance – is a challenge. But by taking the time to calculate projections for uninsured losses, risk professionals may just convince them. If the flood could cost millions in uninsured losses – lost customers, panicked investors, a drop in business growth that can’t be regained – suddenly paying for insulation might seem like a better option.
By applying a total financial loss approach – rather than relying on a watertight insurance policy – risk directors will most likely find opportunities to invest in solutions that could be a saving grace for their company later down the line, before it’s too late.
Today, there are workplace recovery solutions that help risk directors take a much more holistic approach for planning for disasters in the workplace. Through rigorous scenario planning, data management processes and consulting with specialists across a variety of fields – such as those who can guarantee disaster recovery office space – risk directors can gain a more honest insight into the financial fallout their company could be up against during a catastrophe, so they can prepare, budget and advise other departments accordingly.
Check out Regus’ testable Workplace Recovery solutions