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Mitigating Business Risks: Planning for the Unexpected

In business, you have to be ready for the unexpected. This is something that has always been said, but in truth it isn’t something that has always been done as much as it should be. It’s not a huge surprise that businesses have been generally caught unaware by unforeseen circumstances. The day-to-day work of staying prepared for what’s happening right now can be more than enough to keep everyone busy. But when the pandemic struck in 2020, people realized just what “expect the unexpected” really meant. Fast adjustments needed to be made, and the businesses that handled that better were the ones that survived, in the main.

If you’re not equipped to handle unforeseen circumstances, it can spell disaster for your business. Having an action plan for emergencies is essential – and ideally, you will have more than one plan, because there is more than one different kind of emergency. An action plan that prepares you for a natural disaster will look very different from one which, for example, helps you deal with a cyber attack or the sudden appearance of a well-resourced competitor. In this post, we will look at the necessary elements of preparedness and hopefully help you be prepared for unexpected circumstances.

What do you need to prepare for?

As the above information indicates, there are any number of eventualities that can be sprung upon your business. These can be man-made or natural, acute or chronic. Your business can face an unprecedented economic downturn – which most countries in the world are experiencing right now – or see its premises ravaged by extreme weather events or fire. New legislation can mean that you need to radically change the way you do things, or changes in the management structure of your business can be sprung upon you unexpectedly. 

In some of the above cases, normal service cannot resume immediately or for some time after. If your premises are damaged by extreme events, your plan will need to take account of how you can continue to provide a service either from temporary premises or remotely. In an economic downturn, you’ll need to know how you will cut costs without holing your business beneath the water line. If a board member suddenly steps down, or dies, then you may benefit from a buy-sell agreement that ensures the business will not lose direction.

What should your plan cover?

As already noted, you should be thinking in terms of plans, plural. The reason for this is that there is no one-size-fits-all preparedness plan that can cover every unforeseen circumstance. Any plan you make will have certain elements that must be there – convening a meeting to decide next steps, getting agreements in place to put said plan into action, and suchlike. But then, there will be divergence depending on what you need to respond to. 

For example, if you need to deal with a natural disaster, the plan will include securing the necessary supply lines that allow you to continue to operate, even if it is at a reduced pace. If someone high up in the organisation dies, leaving a void at the top of the business, you will need to have buy-sell agreement insurance that allows you to implement the necessary agreements without delay or undue uncertainty. If you need to implement a stripped-down operation in the aftermath of a severe economic downturn, you’ll need to have planned for making the necessary savings – and do so in such a way as to protect the majority of your staff, as recovery is close to impossible with fewer people doing the work.

How do you fund an emergency plan?

Here’s the rub: that’s a question that absolutely needs to be answered before you try to put any plan into action. From the moment your business goes live, you need to have a contingency fund, and ideally you will need to be adding to that fund as time goes on. Cash reserves can allow you to protect jobs in the case of a downturn, can help you secure legal advice in the case of a messy falling-out at the top of the business, and allow you to secure emergency premises should yours be unusable after fire, flood or storm. Consider how much it would be likely to cost if you needed to do any of these things, and then plan to have contingency funds on hand that will cover that with some to spare. Emergencies always cost more than expected.

Additionally, you should make sure to have insurance over and above the aforementioned buy-sell agreement plan. Insurance is always a tricky consideration; you’ll be tempted to do without it because you are paying premiums that you hope you never have to cash in. But if the time comes when you’re likely to need them, you’ll be overjoyed that you kept up the payments. It’s always going to be harder to find money when you really need it, because you’re stuck with fewer options than you would have ordinarily.

Preparing for unforeseen and undesirable events is not the most fun you’re ever going to have in your business. Even thinking theoretically about what emergency preparedness means for your business will involve thinking about something you don’t want to have to consider. Nobody wants to be committed to thinking “What happens if this person dies? What happens if an explosion destroys the office?”; unfortunately, if these things happen, you’re going to be in a much worse place if you haven’t planned.

It makes sense to draw up as many plans as you can imagine needing; it may seem like excessive fastidiousness, but it will make you feel more confident going forward if you know that plans are in place to deal with any prospective emergency. Making these plans – and keeping them up-to-date – will stand you in good stead as you aim to make your business the success it deserves to be. As the last few years have taught us, unforeseen circumstances always seem unlikely right up until the moment they become inevitable.

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