Investing in the Future
February 19, 2019 – According to the Federal Emergency Management Agency (FEMA), more than 40% of businesses never re-open after a disaster, and for those that do only 25% are still operating after a year. [1]
Unplanned down time costs on average $926 – $17,244 per minute; [2] this includes lost revenue, production losses, recovery expenses, and equipment replacement.
Median cost for a small business due to extreme weather is $3,000 a day, [3] a price that few can afford to bear with 90% of small businesses failing within a year if they cannot resume operations in 5 days or less. [1] Hurricane Sandy cost 86,000 jobs in November 2012.
Despite this, 57% of small businesses do not have a risk management plan, and of those groups who do have plans, 90% spend less than a day per month maintaining them. [3]
Benefits of Having a Plan:
- Safeguard human life
- Save property and resources
- Reduce time making critical decisions
- Recover business functions quicker
- Shorten the recovery window
- Ensure customer services and confidence
- Ensure job security
- Increase employee confidence and morale
- Retain market share
How do these things pay off in the real world? Take Morgan Stanley as an example. In 1993, when terrorists first attacked the World Trade Center, Morgan Stanley was not satisfied with the four hours that it took to evacuate its employees. Therefore, the company developed a multi-faceted emergency plan and practiced it frequently. The company also began offering grief counseling to its employees, increased its security presence, and improved its communication strategies to help provide timely information to management, employees, investors, clients, regulators and the media. This paid off when terrorists struck again on September 11, 2001. Immediately after the attacks, Morgan Stanley employees were ordered to evacuate the towers and did so in 45 minutes. While 12 of its staff did perish in the disaster, many more could have lost their lives had Morgan Stanley not had a solid disaster plan in place and practiced it frequently. [4]
Know Your Greatest Risks:
- Natural
- Political
- Man-made
- Technological
- Security
- Accidents
- Loss of Key People / Owner
- Public Relations
- Media Crisis
While you will hopefully never need to use a contingency plan, having a strong plan, and a team of experts behind you can give you the necessary support to lean on should the unexpected occur. IBTX’s Risk Management Services team can take an active approach in protecting you and your company’s investments in the future. With a team consisting of human resource services to help build a strong company culture, financial planning to ensure your wealth and investments take you to the places you want, and safety and loss control services to help protect your employees, and teach them to protect themselves, while on the job.
Posted by Kelly McGrath in Blog, Wealth Management