Risk Assessment, 2nd Edition

19 Business Continuity Plan

Bruce Hollcroft¹ and Bruce Lyon²

¹ PayneWest Insurance, A Marsh & McLennan Agency LLC Company

² Brown & Brown

19.1 Introduction

Business continuity is often listed as one of the top concerns of organizational executives such as chief executive officers (CEOs), chief financial officers (CFOs), and chief operating officers (COOs) in risk and insurance surveys. According to The Federal Emergency Management Association (FEMA) and the Small Business Administration (SBA), 40% of businesses fail to reopen after a disaster and another 25% fail within one year. Approximately 90% of small businesses fail within two years of a disaster (Citation, year). Business continuity refers to an organization’s ability ensure its operations and core business functions are not severely impacted by a disaster or event. Examples of disasters or significant events could include earthquakes, workplace violence, cyberattacks, pandemics, and many more. A business continuity plan (BCP) is primarily concerned with maintaining an organization’s business functions and operations that are critical to its business objectives after a disaster or event.

Some business interruption scenarios are insurable though commercial insurance carriers, but many are not (i.e. pandemics typically are excluded from coverage). This makes it even more important for an organization to have a BCP since the scenario may not be insured. Business interruption coverage is generally tied to property insurance ...