Should small biz be incentivised for continuity planning?

The vast majority of businesses, small and large, understand the importance of planning for a disaster. Whether a flood or a network outage, an unexpected crisis can have a major impact on a firm, affecting its productivity and damaging property. At worst, such an event – if not properly planned for – could even drive a company out of business.

Yet despite knowing the damage that an unexpected incident could cause, many businesses are still failing to prepare adequately. 

The consequences of ignoring business continuity planning go further than merely damaging an individual business. If a firm is forced to cease operating – either temporarily or permanently – as a result of a flood, fire, server outage or any other incident, its customers and suppliers will naturally take a hit too. When extrapolated to consider all such instances of business-related crises across the country over a year, it’s clear to see that this lack of preparation can have a significant effect on the economy as a whole.

Small businesses are more likely to be guilty of under-preparing than their larger counterparts. Research from disaster recovery solutions provider Databarracks reveals that only one in three small organisations has a continuity plan in place, compared with 54 per cent of medium and 73 per cent of large businesses. What’s more, over two-fifths of smaller enterprises admit they have no intention of implementing a continuity plan within the next year. Larger businesses are also more than twice as likely to have put their disaster recovery plans to the test over the past 12 months.

Disaster management officials from the Asia Pacific Economic Cooperation (Apec) believe there is a simple yet effective solution to dealing with the problem of small businesses not being adequately prepared for a crisis: giving them incentives to do so.

As a region, Asia Pacific suffers more natural disasters than any other part of the world, making it all the more important for businesses to have an effective and well-considered plan in place for such an event. Yet only 13 per cent of local small and medium-sized enterprises (SMEs) have actually drawn up a continuity plan that involves raising awareness of natural disasters, identifying key risks and giving teams the skills they need to mitigate them.

Given that SMEs account for 97 per cent of all businesses, 60 per cent of GDP and more than half of employment in the region – as well as being an integral part of cross-border supply chains – it’s clearly important that they have a suitable disaster recovery strategy in place.

Dr Li Wei-sen, co-chair of the Apec Emergency Preparedness Working Group, explained: “Small businesses play a significant and growing role in the international production and trade of goods, particularly as suppliers of component parts and equipment for larger manufacturers, but their disaster risk exposure remains disproportionately high.

“The knock-on effects of small business disruptions or shutdowns can be substantial given the increasingly globalised nature of production and trade, as earthquakes, floods and other natural disasters in the Asia Pacific have shown. 

“The adoption of business continuity plans by small and medium enterprises is critical to mitigating the disaster threat within the sector and to the global economy, but their recognition of this need and action to address it is often lacking.”

So while it may seem that businesses should not require any extra motivation to protect themselves against potential continuity risks, it is also clear that many are simply not doing so – and that their combined failings are a huge concern. As such, some kind of incentive scheme – as Apec proposes – could well be the answer.