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Recovering from Disaster: How a Business Continuity Plan Can Reduce Your Losses


In 2017, the U.S. experienced costly and record-breaking natural disasters of many varieties. Floods and mudslides affected California early in the year. Snowfall accumulation broke records in the north. Hurricanes caused widespread flooding and damage in the southern and eastern areas of the country, costing the nation approximately $200 billion. The west experienced some excessively dry conditions later in the year, which caused several wildfires and cost an additional $18 billion.

In 2018, three disastrous natural events costing more than $1 billion have already occurred as of April 6: two snowstorms and one severe storm. Projections for the year indicate the chances of natural disasters occurring in 2018 may be higher than normal as well.

All areas of the nation are at risk for natural disasters, so businesses need to plan for them. The map below from the National Oceanic and Atmospheric Administration indicates where severe weather and other natural disasters cost $16 billion or more in 2017.

NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and Climate Disasters (2018)

NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and Climate Disasters (2018). Retrieved from:

Effects on Businesses

According to the Federal Emergency Management Agency, 40% of small businesses will not reopen after a natural disaster. One year later, 25% more affected small businesses will close. By year three, 75% without a business continuity plan will fail. Business owners still have a chance to minimize their risk this year and avoid becoming a statistic.

Risk management is increasingly important for ensuring a business’s success. Severe weather and other natural disasters can affect the following aspects of a business:

  • Property
  • Workspaces
  • Resources
  • Customer access to the business and its services
  • Supplier transactions
  • Worker safety
  • IT infrastructure
  • Communication processes
  • Confidentiality of information

Storms and other natural events may mean businesses close only briefly, but lost clients, revenue and property value are possible.

Planning for potential brief and long-term interruptions to business operations can be crucial to a business’s continued success. Business interruption can cause lost profits as well as loss in asset value. When an organization assesses its risk and plans for potential disaster, the chances of the business being able to survive increases.

Planning Ahead

Business Continuity Plan

A business continuity plan significantly improves a business’s durability. To create one, a company determines the essentials and resources necessary for its operations, how quickly they need to be available, and then recreates those processes in the business continuity plan.

What will your business need to survive? The list might include space to meet with clients, access to client information, specialized equipment, processing software, avenues of communication, assistance for and availability of your workforce, etc. After a natural disaster, your business’s needs may be more extensive and include communicating assurances to clients, suppliers and employees. A well-drafted and tested business continuity plan provides peace of mind when disaster occurs, and allows you to start acting on a plan immediately.

Disaster Recovery Plan

Historically, half of companies that experience a major computer outage in a disaster have been forced to close within five years, and only about half of U.S. businesses have a disaster recovery program that enables IT systems to be up and running within an acceptable timeframe after a disaster. You may need a disaster recovery plan to facilitate a quick, smooth return to normal operations.

If your business relies on computer access, databases or processing programs, you may want to consider your needs beyond simply creating a backup of your data. A disaster recovery plan helps you anticipate all your IT infrastructure needs. It proceeds from an understanding of IT services your business depends on and can help you design preventative controls, contingency plans, emergency mode operations and recovery procedures. These plans can also assist with ensuring any transition to an alternate IT site will be easy and quick to accomplish.

Insurance to Cover Losses

Insurance helps with recovering losses. Choosing the right insurance provides sufficient coverage.

There have been many court cases involving inadequate insurance – they’re expensive and hard to win. Policies carry different sublimits, so if your policy offers $50 million in coverage, the sublimit might be $10 million for a flood. A company planning to use insurance in the instance of a disaster needs to understand what the sublimits are and plan accordingly.

Investing in adequate coverage does not mean businesses should overpay for their insurance. You should consider engaging an independent insurance consultant who understands both the insurance coverage issues and the accounting for business interruption. The consultant can answer your questions and analyze the company’s needs to ensure the purchase of appropriate insurance without overspending. Typically, an insurance review can uncover 10% or more in savings.

Making a Claim When Disaster Strikes

Making an insurance claim can be overwhelming, especially amid a crisis. Losses are often difficult to evaluate and reimbursement may be complex to understand. Insurance policies often cover accounting fees for loss adjustment expenses, so using an insurance consultant may not cost a penny for the insured. An independent consultant can help with claim submittal and representation, quantification of the lost profits damages, settlement review, policy review and more.

To contact Bill Goddard and review your insurance policy before a disaster occurs, use the adjacent form “Schedule a Meeting: Bill.”


Drye, W. (2017). 2017 Hurricane Season Was the Most Expensive in U.S. History. National Geographic. Retrieved from:

Erdman, J. (2017). Erie, Pennsylvania, Smashes State Snowfall Record with More than 65 Inches of Snow Since Christmas Eve. The Weather Channel. Retrieved from:

Kluger, J. (2017). Scientists Predict 2018 Will Be a Bad Year for Earthquakes. Here’s Why. TIME Magazine. Retrieved from:

Jenner, L. (2017). Dozens of Wildfires in Western United States. National Aeronautics and Space Administration. Retrieved from:

Mooney, C., & Dennis, B. (2018). Extreme Hurricanes and Wildfires Made 2017 the Most Costly U.S. Disaster Year on Record. The Washington Post. Retrieved from:

NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and Climate Disasters (2018). Retrieved from:

Inland Flooding Toolkit. (2017). Ready Business. Retrieved from:

Scheinost, M., & Ward, T. (2018). The 2018 Hurricane Season Could Be as Busy as the 2017 Season. CNN. Retrieved from:


Schedule a Meeting: Bill

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