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Disaster recovery plan

A disaster recovery plan is a set of procedures and steps to protect businesses and aid in recovery after a natural or man-made disaster.

What is a disaster recovery plan?

A disaster recovery plan (also known as a business recovery plan) is an essential document for all small businesses. It helps business owners respond effectively to a catastrophic event, safeguarding business assets and re-establishing operations as quickly as possible.

The plan should be highly detailed and practical, showing you exactly what to do after a disaster takes place. A disaster recovery plan and business interruption insurance are crucial resources for companies in the aftermath of a disaster.

What are the benefits of a disaster recovery plan?

Despite numerous benefits to having a disaster recovery plan, 61% of small business owners polled in a recent survey don’t have a formal business continuity plan in place. Disaster recovery planning helps businesses by:

  • Minimizing damage to business property and injuries to staff after a disaster. If your property is damaged, commercial property insurance can potentially cover replacement costs.
  • Ensuring continuity of computer and office operations so customer service can resume as soon as possible
  • Mitigating customer defections during and after an extended business closure
  • Allowing for ongoing invoicing and posting of business receivables so that firms remain solvent
  • Making sure a disaster does not put your company out of business

What should a disaster recovery plan include?

Because you must address many factors in your disaster recovery planning, it’s helpful to work with a disaster recovery plan checklist. Broadly speaking, make sure your plan addresses the following elements:

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Establish and equip an alternative location for your business.
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Develop a plan for maintaining communications (both internally and externally) after a disaster strikes. 
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Ensure that technology and data backups are in place to guarantee continued operations after a crisis.
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Document all key business functions (including supply chain) and take steps to maintain their integrity post-disaster.
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Create a safety/evacuation plan to prevent staff injuries.
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Develop a plan to test and periodically review and revise your disaster recovery document.

What role does insurance play in a disaster recovery plan?

A key part of disaster recovery planning is reviewing your business insurance to make sure you have adequate coverage for the costs of remediating a disaster.

An important insurance policy to consider is business interruption insurance. It provides cash to replace your lost revenue, normal operating expenses, and the cost of moving your business to a temporary location.

Having business interruption insurance might be the difference between your company surviving a disaster or shutting its doors permanently.

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Business insurance glossary