Business continuity plans: Everything to know

As a business owner, the last thing you want to worry about is an unforeseen event disrupting your operations. With all the hard work you put in to keep your company thriving, it’s not fun to think about a flood, a cyberattack or supply chain disruptions. But the truth is, when you take the time to actually plan for the worst-case scenario, you arm yourself with the tools to survive the unexpected. 

A business continuity plan (BCP) is a strategy that helps prepare your company to withstand and recover from any type of catastrophe. When you figure out the risks your business could face, create detailed backup plans for various scenarios and adequately prepare your employees, you put yourself in a much stronger position to weather any potential storms.

As a business owner, it’s important to understand the risks your company faces so you can create a BCP to help protect it.

How do you create a BCP? What key roles and responsibilities should each department have? Read on to learn more about BCPs and how to develop a robust program for your company.

What you’ll learn:

• A BCP is a document that helps a company identify the specific risks facing the organization and the steps to take to minimize the damage. 

• Every department and team member throughout the company should understand their role and responsibilities in the BCP.

• Regular testing and evaluating the BCP is essential to keeping it updated and relevant.

A BCP is a living document that outlines the steps a business should take when an unexpected event disrupts normal operations. It’s designed to help protect the business’s assets and employees—and ensure the organization can get up and running quickly following the disruption.

The BCP should involve strategies that define how to communicate effectively, keep facilities running and maintain business processes throughout the event. It should also explain how to protect sensitive information during a security breach and how to manage things like shipping, logistics, suppliers and inventory. And, of course, it should detail how to keep employees safe.

Similar to a disaster recovery plan, which tends to focus more on technology downtimes, a BCP serves as a road map to ensure your business can recover from an emergency. The BCP needs to be tested regularly to make sure any new weaknesses can be identified and fixed. Critical to its success: Every employee needs to understand their defined role in the BCP should an incident occur.

While your company’s business plan may outline how to achieve its growth goals, the goal of a BCP is to minimize the impact of disruptions. It outlines the steps to safeguard the company before an event occurs, actions to take during the event to keep the company running and strategies to help the company recover quickly in the aftermath.

A well-thought-out BCP should include:

• A plan to keep the business running during an emergency

• Strategies for minimizing losses and financial risks

• Steps to protect employees and reduce accidents

• Ways to preserve—or enhance—your business’s reputation in the wake of the event

• Ideas for keeping your business competitive when others may struggle to recover

There are several necessary steps involved in creating a BCP for your company. And each department should play a role in developing the business continuity program. 

Perhaps the best way to start is by conducting a business impact analysis (BIA). The BIA identifies the potential risks your company faces and compiles the information needed to design a successful recovery. Some common risks may include ruined equipment, damaged property and buildings, disrupted operations, lost sales and even regulatory fines.

For example, let’s say you’ve identified that a data breach is one major risk facing your business. What are the potential losses? Could the business face lawsuits? How long would it take to recover? With a better understanding of each specific risk, you’ll be able to assess its true potential impact. The end result: a more effective BCP. 

Once you’ve determined these key risks, the following steps can be taken:

1. Identify critical business functions needed to survive. Consider what functions are needed to keep processes running. Determine the key equipment, employees and services—like production, shipping, IT and customer service—that are essential for running your business successfully on a daily basis. Then, understand what the potential consequences might be if these critical business functions were impacted.

2. Determine recovery steps. How much downtime can the business endure following an event? This is known as the recovery time objective (RTO)—the maximum amount of time the company can afford to be without critical functions. 

3. Create a continuity team. The continuity team develops the BCP and identifies the specific functions each department will be responsible for before, during and after the event. Each team member should understand the plan and how to present it to the rest of the organization.

4. Perform regular training. All employees should be trained on the BCP and understand their role in the plan before an incident occurs. As the BCP gets updated, employees should also be aware of any changes through regularly scheduled training and receive revised copies of the BCP. 

The continuity team should include employees from several different departments. Here’s a closer look at the roles and responsibilities team members often have in a BCP.

The leadership team is responsible for providing direction and guidance on policy creation. They are also crucial in implementing the BCP, supporting training activities for employees and ensuring the right funds are available for recovery operations in an emergency.

The leadership team must establish a clear line of succession, assigning specific responsibilities to each team member for maintaining and managing critical business functions throughout the crisis.

The human resources (HR) department’s role is to ensure that employees are prepared for any emergency and provide support throughout the event. HR can also see to it that the BCP adheres to applicable laws and regulations during the crisis.

HR should also help communicate the policy so all employees have a clear understanding of their own roles and responsibilities. Should it be necessary, they can help identify departments and personnel responsible for activating the BCP.

During a crisis, IT should focus on maintaining critical systems and safeguarding data. In creating the BCP, this team is responsible for planning how to minimize downtime and recovering any information lost during the event.

To be proactive, steps should be taken to ensure files are backed up, properly stored and easy to find following a crisis like a cyberattack or data breach.

The finance department should identify financial risks and determine the necessary measures to mitigate their impact. It should also work with IT to streamline processes to potentially reduce costs, track expenses and maintain cash flow. At the same time, they need to ensure that crucial financial systems and data can be quickly restored following the event.

Finance should also be responsible for reviewing current insurance policies, specifically their business interruption policy, to better understand how the company is covered for emergencies like natural disasters or cyber incidents. Emergency funds should be established, too, to help cover unexpected costs that emerge from the event.

The communications department is responsible for keeping employees updated throughout the event so everyone stays informed and connected. Communications determines how to inform staff of the incident and what systems will be used to provide updates on the recovery status.

Communications can also create a list of important contacts, both internal and external, so all employees know who they can contact with questions during the crisis.

The final stage in developing a business continuity plan involves testing the program, practicing each step and making necessary updates based on any weaknesses discovered. Periodic evaluations will help your company recognize any gaps in the plan that need to be addressed. Remember, the BCP is a living document that should be updated regularly as new risks emerge.

Here are the steps to take to evaluate your company’s BCP:

1. Develop testing criteria and procedures. In this step, you’ll define the objectives and set goals for what the test aims to achieve. Tests can include tabletop exercises to walk through the BCP or real-life disaster simulations to assess response times. You could also conduct full-scale exercises that closely mimic an actual incident, but these tend to be more expensive and disruptive to the organization.

2. Schedule regular testing. To keep your BCP updated and relevant to current events and disaster types, testing should occur at least once a year. Conduct a few different types of tests to ensure you’re covering various scenarios and avoiding repetition.

3. Evaluate the outcomes. Following the test, perform a comprehensive evaluation of the results. Take note of areas that could use improvement, highlight what worked well and assess the overall effectiveness of the BCP. Make sure each department responded in a timely manner and performed its designated tasks as expected. 

4. Update as needed. Once testing is complete, gather employee feedback on what worked well and what areas of the BCP could use some improvement. Then, make sure changes are implemented and communicated to the team so everyone stays aligned on the procedures.

Once the BCP is finalized and updated, it should be distributed to all employees. Whether you choose to provide digital or paper copies, all team members should have full access to the BCP, including all previous versions.

A BCP can help your organization maintain or get back to normal operating procedures following an unforeseen event, whether it’s a natural disaster, data breach, systems failure or any other unexpected circumstance. Involve team members in all departments when creating the BCP and ensure the entire company understands their individual roles and responsibilities. Regularly test the BCP and continually update it as needed to keep it relevant.

Creating a strong BCP goes a long way toward making sure your company stays financially resilient. Capital One is here as your business partner with credit card solutions that can help you prepare for unexpected events and expenses. Compare business credit cards and see if you’re pre-approved—without hurting your personal credit score.