Mid-Market Firms Need Better Disaster Planning and Insurance

A quarter of the brokers surveyed estimated that less than 20% of middle-market businesses in their region are prepared for natural disasters. This varied widely by region, with 44% of brokers in Latin America citing a low level of preparedness, compared to only 11% in the U.S. and Canada saying the same.

Brokers also said the key elements of catastrophic risk management that mid-market companies were lacking were insurance and business continuity planning. When asked about steps taken by clients that adequately prepared for natural disasters some of the biggest were: purchasing adequate insurance, establishing business continuity plans, retrofitting facilities to better withstand disasters, strengthening supply chains, and improving worker response training.

Also, 71% of responding brokers said internal support from senior leadership was the most significant factor in determining whether a client is adequately prepared for a natural disaster. Jim Hackbarth, CEO of Assurex Global, told Insurance Journal that while natural disaster threats can vary by location, there are common threads that must be in place for middle managers to respond to them effectively. This includes insurance, effective business continuity management, an infrastructure to support readiness, and most importantly, support from the C-suite.

“Senior leadership’s support of the company’s risk management measures is universally paramount to their implementation, as well as to the company’s ultimate success and survival,” said Hackbarth.

One of the most important elements in planning for a disaster is putting people first. This includes planning to help or house employees and to have an infrastructure to allow them to work remotely. Organizations also need to establish a crisis communication plan that uses various methods of communications, from social media to text messaging and phone calls. There also should be a solid business continuity plan that outlines how the company can resume operations in a post-disaster environment with limited staff, limited vendors, and infrastructure.

In today’s digital age, disaster planning also means having a solid infrastructure to support data backup and recovery. According to data storage systems company Nexan, mid-market companies need a robust disaster recovery architecture that protects and helps rapidly to restore company data and systems after an event.

Jim Hendrick, area vice president of business continuity planning at Arthur J. Gallagher & Co. told Business Insurance that organizations also need a strong crisis management plan to help drive decision making during a situation and to ensure information gets to the right people. Along with other plans, the crisis management plan needs to be continually tested and improved.

“To me, if you don’t test your plans, you might as well not have them,” said Hendrick. “Not only does it test the validity of the plan, but also it’s a terrific training mechanism.”