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Fraud Tip: Implement Disaster Planning

Share current LOB: CommercialCorporateInstitutional

If you’re like many small business owners, you more than likely do not have a business continuity plan that ensures your company will survive a disaster or unexpected event. If you fall into this category, it’s time to consider instituting a back up plan that can help your business get back on its feet quickly when the unexpected occurs.

Here are four simple steps you can take to ensure your business assets will survive fires, electrical outages, cyber attacks or the sudden death or departure of a staff member.

1. Regularly back up and “lock up” your information assets.

Back up important data about customers, as well as financial and intellectual property, using disks and remote hard drives. It’s also important to protect this information with secure passwords. External hard drives for your computers are inexpensive and portable, and you can program them to regularly back up and password protect your information with minimal effort.

Many of the devices and tools you use today, including your cell phone, computer and accounting software, offer services that back up information for you online. Other digital financial systems, such as online banking, bill pay and payroll, allow you to back up records digitally and automatically.

2. Store your back up information offsite.

If you keep back up files in the same location as your computer systems, they too can fall victim to the same fire, power surge or crime that wipes away your primary information. Instead, you should use a third-party storage facility, your lawyer’s office, your home or another safe and remote location.

Storing information electronically avoids the need to store and track paper files. If you use online banking, you can store more than a year’s worth of transaction detail — check images, transactions, statements and records — securely and offsite at your bank.

3. Create a contingency plan.

Develop a contingency plan for your business so you can recover in case of an emergency, the departure of a key executive or the loss of the owner. Millions of owners plan to pass their business assets to their family or successor, but many have not taken simple steps to ensure their businesses will survive if they are no longer in the picture.

You should put a short-term contingency plan on paper to help ensure your business will recover or continue to run if you can’t lead in an emergency. A lawyer, financial advisor, accountant or banker should be able to provide you a template that lists the critical information necessary to keep the business running if you disappeared for 60 days.

4. Get data breach/cyber security insurance.

Data security breaches have been on the rise. You can and should take extensive steps to protect your software systems from intrusion. However, even many well-known companies with the best protection have been compromised. Fortunately, data breach insurance — a new class of insurance — can help protect you from the significant costs related to an intrusion. These include forensic costs to determine the extent of a violation, notification costs for customers or vendors and credit monitoring and crisis management.

Privacy protection in these policies can cover a host of risks, including employee, customer and partner privacy, intellectual property loss and violation of customer protection laws. A security or privacy breach can threaten any business, especially a smaller business that doesn’t have the capital or human resources to recover without financial support from an insurance provider.

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.