When disaster strikes, how much will it cost you to be offline? The unprecedented weather events of 2016 have been an eloquent illustration of the cost of not being prepared for business disruption, yet a survey of food businesses by Food South Australia last year revealed up to 80% of food businesses may not have a fully prepared and documented risk management strategy. What can you do about that right now?
You’ve seen the stories in the news – thousands of businesses have faced severe losses and disruption to production through recent wild weather and power outages.
Information technology systems are the life force of so many businesses now, keeping everything from cash flow to production pumping. These are the systems that enable food companies to be able to trade. Turn off that switch, and you risk your customers taking themselves elsewhere – and maybe not coming back.
That’s why Director of Technology Services Graham Wadsley at Food South Australia member Hood Sweeney says the events of last September “threw into stark reality the need for business to evaluate their back-up systems and put into place contingency plans for instances like this.”
Hood Sweeney’s IT emergency response service hit the ground running in the early hours of 29 September last year, activated by the first distress call at 1.10am. Seventy more calls followed but, because these businesses had detailed plans for just such situations, only four businesses affected were still offline by 11am the next morning – and in all those cases the data was undamaged and the systems were safe, and the companies were just waiting for the power to come back on.
In one case where the client’s server was lost, the business owners expected to have to send staff home for the rest of the week while they figured out how to deal with the losses and get back online. Hood Sweeney actually got them back up and running in just 90 minutes.
It’s the planning that makes back-up systems effective. Without a system and a process, all installing a back-up generator will really do is turn your lights back on so you can see the full extent of the damage.
What is disaster planning?
Of course power interruptions aren’t the only risks food businesses face. Risk is intrinsic to living, and certainly part of doing business. Your approach to risk depends on your risk profile – that is, how much risk you are prepared to take without protection against a negative impact on you and your business.
Disaster planning is about more than setting up your insurance. It’s essential to be aware that even comprehensive insurance may not compensate your business for the full cost of a major incident.
Disaster recovery planning is the process of looking at potential major disasters that could affect your business such as fire, flood, illness, sabotage or product failure, identifying the risk and potential cost and developing a plan of action to deal with it. Can you, for example, shift your operation to other premises in the event of a flood or fire? Do you know how long it will take to restore your computer systems if they fail? What will you do if all your customer records are lost?
If your workshop or retail premises burns down, you may be able to clear the debris and rebuild – if you are sufficiently insured. You may even be covered for loss of profits. But the missed opportunities for growth, the disruption to your life and your business plans, the extra paperwork… Insurance will not cover any of these costs, which may be even more significant.
Similarly, product liability insurance may cover you for a food quality breakdown, but the loss of reputation may destroy your product and your brand, and could put you out of business. And if you, as a principal or owner of the business, can’t be at work, there is a real risk that even the best-intentioned and supportive staff team can’t keep the show on the road.
Your disaster recovery does not necessarily need to be a 500 page monster. It may be brief, as long as it identifes the risk and how you will respond to it, who will do what and who needs to be advised should this event occur.
How do I assess my risk?
Whatever your risk profile, it is sensible to minimise avoidable risks. There are templates available on various websites to get you started, look for one that’s suitable to the nature of your business.
Some insurance policies are required by legislation for you to operate a food business. These include covering your risk with regard to food safety, occupational health, welfare and safety (OHS&W),and public liability workers compensation. You should consider whether product recall insurance is relevant to your business as well.
Involve your financial and legal advisors, accountant and staff in the development of this plan and make sure you revisit it at least annually to ensure it is up to date and ready for action.
Here are some more tips to help your business be ready for anything:
- Document your business processes
- Include adherence to safety procedures and use of safety equipment as part of each staff member’s job description and performance review process
- Make sure the safe use of equipment is included in your training program when inducting new staff or running training for staff new to a process
- Run regular refresher training and test drills frequently so safe and effective responses in emergencies become familiar to all staff
- Maintain high safety standards and very strict food safety standards
- Ensure your equipment is well guarded to avoid personal injury, with Standard Operating Procedures in place and clearly visible
- Maintain and service your equipment frequently and ensure any repairs for damage or defects is completed promptly by accredited professionals
- Maintain a neat and orderly work environment
- Fit out the work environment with safety equipment such as fire extinguishers and blankets, eye rinses and first aid kits – and check/restock every few months
- Ensure at least one staff member is trained to administer first aid
- Maintain good stock control
- Bank your cash regularly
- Secure your premises adequately, and pay attention to regularly updating access codes and ensuring keys are accounted for (and handed back by exiting employees)
- Back up computer systems regularly, storing backups offsite or in the cloud and ensure your IT staff are equipped with access and current passwords (maintaining a log of user ids and passwords for all systems is advisable – ensure this is stored somewhere safe and secure and regularly updated)