We often get asked the question whether business continuity planning is mandatory. Another question is whether business continuity planning is insurance against loss. Yet another is whether you need a business continuity plan if you have insurance against loss.
Here are some brief thoughts on the subject:
Insurance against loss is a contract with an insurance company in the event of business disruption and damage.
A business plan is a mitigation measure against a disruptive incident, property and plant loss, and reputational damage.
But insurance can only go so far. The more you want to cover, the more expensive insurance becomes.
Imagine this: You drive in your car without a seatbelt. You may have insurance for your vehicle, personal accident insurance, and medical insurance. What happens if you have an accident? Surely you could’ve taken precautions by driving with a seatbelt?
In a way, business continuity planning is like a seatbelt. Basically, business continuity plans help your company to prevent unnecessary losses. Most importantly, your business continuity plan helps your business recover faster after a disruptive incident.
It’s interesting that seat belts in vehicles became mandatory after many deaths resulting from motor vehicle accidents. However, seat belts have been proven to be a life-saving device.
Business continuity is not mandatory in most instances, except for certain organisations. Regulations in some countries require business continuity plans in industries such as finance and healthcare, and in those organisations that manage national critical infrastructure (e.g., the energy sector).
But having a business continuity plan can reduce your cost of insurance and win new valuable business when customers require that your business has one.
So, while business continuity planning is not a legal obligation, it does set a company apart as a proactive and responsible business that takes into account the interests of all its stakeholders.