If you’re a CFO, are you prepared for a disaster?
Fire. Flood. Earthquake. As company CFO, are these events what keep you awake at night worrying about potential business disruptors? How about a prolonged power outage?
What about your computer system being invaded by a malicious actor, either to steal information or to install ransomware? What if your cloud-based platform has a single point of failure that you overlooked?
Here in Northern California we recently saw the dramatic impact on communities and businesses caused by the wildfires in the North Bay. Even before the last fire was extinguished, estimates of overall economic damage reached $85 billion.
The fact is, it’s impossible to plan for every catastrophic situation that may or may not have an impact on your company’s business continuity. But that doesn’t mean you can’t try. In fact, you must.
Counting the cost
Business disruption from disaster can be widespread, even affecting start-ups and smaller companies. A 2016 United Kingdom study found that more than 550,000 small businesses in the U.K. had been forced to halt trading due to business disruption in the prior two years.
“…the average cost of an outage to a single data center in 2016 was $740,357″
And the cost of business disruption can be huge…and rising. A survey by Information Technology Intelligence Consulting suggests that 81 percent of large enterprises report that just one hour of downtime per year costs the organization over $300k.The cost of downtime to individual locations can also be great. Take for example, a data center. A report by Ponemon Institute indicates that the average cost of an outage to a single data center in 2016 was $740,357, a 38 percent increase over the average cost in 2010. Those numbers can rise for manufacturing facilities, labs, even hospitals.
Risks to business continuity can be varying and widespread, stretching across multiple time zones and continents. JLL assisted one global company with more than 30 real estate assets in 27 countries like Australia, South Korea, Russia, the U.S., and China, develop a facilities assessments program which resulted in identifying more than 250 risks to its global production and operations.
It’s important that every CFO understands his or her company’s risks and liabilities, however many they may be. The process begins with understanding the need for a discussion internally to help identify those risks and mitigate them. While you won’t be able to create a plan for every disaster or eventuality you identify, you can at least have a process and system in place so that you aren’t addressing each situation cold.