Skip to main content

The events unfolding in Japan may seem remote and rare to most Canadians, but the reality is that disaster can strike any place, any time.

And the question that should be top of mind for business owners is to what extent they are prepared for a catastrophe - earthquake, fire, flood, pandemic - that could seriously damage, shut down, or even destroy their operations.

Yet emergency preparedness is not part of the strategic planning of most Canadian small and medium-sized businesses.

Experts say companies need solid contingency plans not only to protect their hard assets but also for intangibles, such as reputation and responsibilities to customers, employees, shareholders and the community.

"For too many businesses, thinking about disaster planning summons up the image of Henny Penny running around crying, 'The sky is falling!' It's not taken seriously," said Mary-Ellen Heiman, director of development at the Canadian Centre for Emergency Preparedness.

A 2009 survey by Angus Reid for American Express indicated that 70 per cent of Canadian small-business owners are either "not at all" (70 per cent) or "not very familiar" (23 per cent) with the concept of business continuity planning. It also showed that 58 per cent were "not very" or "not at all" prepared for a variety of disruptive events, including floods, fires or illnesses.

Business continuity planning ensures a company has measures in place to keep operations going - perhaps not at full speed - in the event of a disaster.

The plan should include preventive measures, such as ensuring a secure back-up computer system and arranging for alternate suppliers who can swing into action at a moment's notice should one or more of your existing providers go down.

Some experts recommend an off-site location for backup storage in case separate hard drives are also lost or damaged in a disaster situation.

Michael Smith, a business crisis consultant with Readysmith Advisers Ltd., in Oakville, Ont., said a risk assessment can be relatively painless. "Take a look at your critical business processes and determine which ones are critical, such as order intake, and plan for how you would handle that in an emergency."

Firms are increasingly turning to cloud computing as a safety measure, with several providers offering virtual storage at relatively low cost, Mr. Smith added.

Another key area is insurance, he said, including business interruption coverage, which helps cover the costs involved in disruptions to operations, including payroll or stock replacement.

Even in extreme events - you are a commercial printer and your only facility is destroyed - there are contingency plans, such as arranging with another company that is not in your niche to temporarily take on your jobs while you rebuild, Mr. Smith said.

Catherine Swift, head of the Canadian Federation of Independent Business, said too many entrepreneurs still don't think disaster could strike here, despite the growing list of natural catastrophes around the world. "Emergency preparedness should be in your mind right from the start, from the very beginning. As time goes on and you expand, it should be updated and become more sophisticated," she said.

Of course, you can never fully prepare for the fallout from unforeseen events, but "if you already have an emergency plan and designate someone responsible when something hits then you're at least ahead of the game," Ms. Swift said.

Last year, the Canadian Centre for Emergency Preparedness launched a website, B-ReadyNow, to help small-business owners actively plan for disruptions to their operations. Issues addressed include an inability to access your workplace site, data loss, threats and risk assessment, site and staff disruptions, and supply-chain interruptions.

Small and medium-sized businesses can certainly use this kind of help, Ms. Heiman said.

The Angus Reid survey found that 41 per cent of companies surveyed had experienced a significant disruption to their operations. Of that group, 46 per cent said they felt a negative impact of a disruption that lasted for more than 30 days.

"The notion we want to get across is the importance of identifying what you think you might be able to realistically put together in terms of prevention or recovery plans," Ms. Heiman said.

In the end, that kind of planning also makes simple business sense. "When banks and insurance companies look at a business plan from a small or medium-sized firm and see that there is a disaster or contingency element to it, they are looked upon as less of a risk.

"It's just good business planning."