View All
In the modern world, organizations and communities face a multitude of threats, which can result in a multitude of losses. A “disaster” can be defined as anything that prevents access to key processes and activities; from natural events like floods, earthquakes or hurricanes to those that are man-made, both accidental (human error, device failure, power outage, industrial disaster, etc.) and intentional (cyberattack, theft, terrorism).
With sound planning, an organization should be able to resume normal operations following a disaster. The sheer number of risk factors involved can be overwhelming when assessing the disaster recovery process: location of premises and local environment, size of organization, type of business, the many forms a disaster may take, and more. The importance of having the right types of insurance cannot be overstated, and it’s more critical than ever for organizations to develop a proper business continuity plan (BCP).
The COVID-19 pandemic added a greater sense of urgency for risk mitigation and business resilience, accelerating major changes in business continuity plans (BCP). While the pandemic has mostly remained the front-and-center disaster of last year, record-setting hurricanes, wildfires and other natural disasters across the United States caused $95 billion in damages for 2020.
That is almost double the amount in 2019 and the third-highest losses since 2010. Of the record number of 30 named storms in 2020, 12 made landfall, breaking yet another record and causing $43 billion in losses. Hurricane Laura alone caused $13 billion in damage and the second costliest were convective storms (tornadoes, thunderstorms, hailstorms and derechos), causing $40 billion in damages and losses. The wildfires that spread throughout the West Coast caused another $16 billion in losses; approximately 4,000 homes were destroyed in Oregon alone.
Because of the number of environmental catastrophes during one of the warmest years on record, the insurance industry expects there will continue to be unprecedented disasters in the coming years. They are working with disaster recovery firms to implement proactive catastrophe plans and disaster recovery processes that protect business assets.
There is increased pressure on insureds to improve their business’ resilience to include meaningful environmental, social and corporate governance (ESG) and compliance and effective business continuity management (BCM). Companies will need to re-examine their risk finance strategies with a focus on reducing total cost of risk. There has already been an effort by many companies to apply a standardized engineering and loss prevention process. In preparing for 2021, it is important for management to assert responsibility for risk mitigation. This can be accomplished by:
This is a critical moment to take a holistic view of risk and prepare for large-scale catastrophes. Given the ongoing pandemic, the conditions of the market and the threats posed by climate change, having sound risk management is vital to an organization’s success and survival.
For Disaster Recovery & Business Continuance
Advancements in cognitive technologies, artificial intelligence and data analytics are helping organizations go beyond traditional ways of managing risk by using smart machines to manage disasters. In the event of a disaster, the ruination or destruction of a building shouldn’t mean ceasing operations.
The impact of unexpected events on business operations and financials can be minimized by leveraging cloud-based solutions or applications that store a company’s information in one secure but accessible place, resources like ATI Alert mentioned above.
Results of a Unitrends’ survey suggests that cloud-based Disaster Recovery-as-a-Software (DRaaS) will be used by over 59% of businesses in 2021. Moving forward, a data or IT disaster recovery plan using DRaaS should become a core element of a business continuity plan, and it should be tested periodically to ensure reliability. When planning disaster recovery from an IT perspective, organizations should include:
Even before the COVID-19 pandemic, the cyber insurance market was already taking a more proactive view of risk. An organization’s resilience will continue to amplify by utilizing technologies as an evolving and mandatory part of risk management in 2021.
Click below to access and download this complimentary resource.