Interruptions are an inevitable part of any business, but that doesn’t make them any less frustrating and sometimes scary. Learn how to prepare for disruptions and protect revenue with business continuity and disaster recovery.

Downtime and disruptions caused by natural disasters, fires, supply chain issues, and other external factors can be costly. Business continuity and disaster recovery (BCDR) are important for protecting operations. They help keep cash flow steady and reduce losses during and after incidents. An effective disaster recovery and business continuity plan will foster long-term resilience in your business.

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What Is Business Continuity?

Business continuity means keeping normal operations going daily. These interruptions are bound to happen in any business, and can be virtual, physical, financial, or even impact a brand and reputation. With so many different types of risk, a proactive approach is needed to keep important operations running during disruptions.

Business continuity helps minimize downtime, maintain customer trust, and reduce financial losses. Running a business smoothly is an ongoing task. Business continuity means planning the company’s systems, procedures, and functions for possible future interruptions.

What Is a Business Continuity Plan?

A business continuity management plan articulates how the company will proceed during any type of disaster. The components of a business continuity plan work together to ensure smooth operations during unexpected events.

  • Business Impact Analysis (BIA): Conducting a BIA involves identifying which of the business’s operations are most essential and trying to prevent any interruption to those critical functions.
  • Risk assessment and mitigation strategies: Risk assessments determine the likelihood of various disasters and negative events occurring. They also predict the operational and financial effects of those events on a business and identify strategies to minimize them.
  • Communication plans and role assignments: During a disaster, everyone should know their role and the safety plan. It’s a good idea to practice this before an emergency occurs.

What Is Disaster Recovery?

Disaster recovery is a reactive strategy for restoring systems, data, and operations after the disruption. While people often think of natural disasters when they think of disaster recovery, it can also address any event that has negatively affected business operations such as an equipment failure, an active shooter, or a cyberattack. Disaster recovery aims to regain any data lost, mitigate damage, and speed up recovery times for businesses.

What Is a Business Recovery Plan?

A disaster recovery plan, sometimes called a business recovery plan, focuses on data backups, recovery time objectives (RTOs), and contingency strategies. Effective disaster recovery requires robust infrastructure and clear processes. During a disaster, stress will be high and the focus will be on business continuity. This isn’t a good time to come up with a recovery plan, so do it before you need it.

  • Data backup and restoration strategies: Data loss can have serious ramifications for a business, so it’s important to have a plan to recover data. Also, monitor your regular data backups so you know they will be there when needed.
  • IT infrastructure recovery plans: IT infrastructure includes all a business’s hardware, software, and network components. Have a clear plan of how each can be quickly restored as needed.
  • Testing and updating recovery protocols: Run through recovery protocols to work out any kinks during the planning stage and form contingency strategies. If you change cloud providers or update IT infrastructure, make sure to update the protocols.

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Why BCDR Is Important

The importance of disaster recovery and business continuity cannot be overstated. Having a combined BCDR plan is vital for all businesses, especially in high-risk industries. It safeguards revenue, customer trust, and long-term growth by preparing for unforeseen events.

Business continuity planning and disaster recovery benefit everyone involved in a business. They help employees feel more confident because they will know what to expect and that the company is making an effort to protect them in case of a disaster. They also help investors and stakeholders understand the risks for the business.

  • Financial Impacts of Downtime: The average cost of downtime for large companies is $9,000 per minute. Therefore, every second you can reduce downtime is valuable.
  • Protecting Reputation and Trust: When operations halt, deadlines and deliveries may be missed, resulting in upset clients. This can negatively affect the reputation of your business, even when the disruption is beyond your control.
  • Compliance and Regulatory Requirements: Depending on your industry and location of operations, there may be legal requirements for certain natural disasters. For example, there are regulations that financial service providers and healthcare providers must follow to ensure that sensitive client data stays secure during cyberattacks.

Examples of BCDR Scenarios

Both natural and human-made disruptions can impact business operations and cash flow. However, the effects they have will vary depending on the specific situation, your business, and other factors.

  • Natural Disasters: These include earthquakes, tornadoes, floods, hurricanes, and other types of storms.
  • Cybersecurity Threats: Malware is the most common type of cyberattack. It often steals sensitive information such as passwords and credit card numbers. It may even damage or destroy IT infrastructure.
  • Supply Chain Disruptions: This could be caused by damage from natural disasters, cyberattacks, or shortages in certain products or materials. Logistical issues or inefficiencies could also relate to it.
  • Pandemics and Health Crises: As we all learned in 2020, a major health crisis can halt the operation of many different kinds of businesses. Storefronts and food service providers tend to be most at risk of these types of disasters.
  • Power or Utility Outages: Power outages can happen anywhere. Some cities even have planned outages during extreme weather to minimize overuse. No matter what a company does, a power outage or water outage will likely disrupt operations.
  • Unexpected Physical Damage: This includes damage from equipment being misused, mishandled, or involved in an accident.

Business Continuity vs. Disaster Recovery: The Differences

Continuity planning and disaster recovery are both necessary for comprehensive risk management. They complement each other to cover all aspects of an organization’s response to disruptions and threats.

Scope and Focus

What is the difference between business continuity and disaster recovery scope and focus?

Business continuity focuses on keeping operations functioning as normally as possible. Its scope is anything done in advance to mitigate the effects of disasters and actions taken during the disaster. This could include having data stored in multiple places or keeping a surplus of essential supplies.

Alternatively, disaster recovery has a narrower scope. It’s about effectively reacting after an interruption has occurred and doing damage control and data recovery as needed.

Timeframe

There is also another timing difference between business continuity and disaster recovery. When a disaster occurs, business continuity addresses immediate needs and actions. The approaches may be ongoing throughout the event. Disaster recovery is focused on post-incident recovery.

For example, a business continuity plan for a business may explain what each employee and executive should do if the power goes out. On the other hand, a disaster recovery plan for a business would detail how the IT department will ensure that all systems are functioning properly once the power comes back on.

Business Integration 

The last major difference between disaster recovery and business continuity is in how they are integrated into your business. Businesses integrate continuity plans into daily operations, while they activate disaster recovery plans only during incidents. Your business continuity plans will likely include instructions for each department or maybe even each team member while the disaster recovery plan will mostly be work for the IT department and management.

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Steps to Develop a Business Continuity and Disaster Recovery Plan

It’s not about choosing disaster recovery vs. business continuity; it’s about combining these two complementary approaches into a comprehensive disaster management plan. Below are the key steps to create a BCDR plan tailored to your business’s unique needs.

Conduct a Risk Assessment

Identify potential risks and vulnerabilities that could disrupt operations. Think through different possible internal and external threats, considering the area you operate in and your industry. The following questions may be helpful to guide your risk assessment:

  • Is our office building older or prone to fire?
  • Are we in an area that floods often?
  • How secure are our data and our client’s data?
  • How secure are the business’s cash assets?

Perform a Business Impact Analysis

Use the information from your risk assessment to conduct a BIA. Identify your business’s most critical processes and estimate the amount of downtime each one could tolerate. Then, analyze the ways each of the threats identified in your risk assessment can affect critical processes. While it’s not possible to predict exactly what disaster will strike, calculate the possibility of each threat happening to the best of your ability.

Develop and Document Your BCDR Plan

Create a clear, actionable plan that outlines specific strategies, roles, and responsibilities. Employees need detailed documentation to guide them during crises, so be thorough. Include the following elements in your BCDR plan:

  • The most likely scenarios that could occur and their possible effects
  • How the company will prepare for each possible scenario ahead of time
  • How operations and resources will be prioritized during a disaster
  • Each employee’s or department’s role during a disaster
  • Timeframes of when each strategy or process should be used
  • Contingency plans in case certain functions need to be triaged or operations need to be moved to another location

Train Employees and Test Your Plan

Train all employees on BCDR protocols. Consider doing a refresh training with current employees at least once a year. Preparation and repetition reduce the chances of errors during real emergencies.

Additionally, have employees run simulations to identify gaps or areas where the plan could improve. This will also help ensure you have all the supplies you need to enact the BCDR plan. Make adjustments to improve responses and recovery protocols as needed.

Continuously Update Your Plan

It’s a good idea to review and update your BCDR plan at least once a year to address evolving risks and business needs. Furthermore, anytime you rearrange the office, make significant changes to your cash management system, or add new software, you may want to update part of your BCDR plan. Don’t forget to always retrain employees on those updates.

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BCDR in Cash Management and Financial Operations

Cash is a vulnerable asset and can become even more so during a disaster. A business continuity plan and disaster recovery plan should explain how to protect cash during a disaster. They should also describe steps to keep all financial assets safe and accessible during and after the disaster. If you are a franchise business still working on developing your cash management system, this Guide to Cash Management eBook can help.

Ensuring Continuity in Cash Flow

You can use a smart safe to help maintain uninterrupted cash flow during disruptions. When you add the Integrated Cash Logistics cash capture system to your BCDR plan, cash deposited in the safe is credited to the business’s bank account within 24 hours, regardless of external challenges. With quick, automated access to your cash, you do not have to worry about dealing with provisional credit or trying to secure cash in the middle of an emergency.

Securing Critical Financial Data

Protecting financial data from cyber threats, theft, and loss is crucial. It helps prevent revenue loss and keeps your business’s reputation strong. Use robust backup systems and encryption as part of a comprehensive disaster recovery and business continuity strategy. Also, have clear roles outlined to minimize who has access to financial data during emergency and non-emergency times.

Reducing Risk and Downtime

BCDR strategies can reduce operational risk and downtime in financial operations. Integrated Cash Logistics (ICL) absorbs the risks associated with delayed cash pickups or money lost in transit during a natural disaster. Eliminating these traditional cash-handling vulnerabilities creates unparalleled security and peace of mind for businesses.

Turn Risks into Resilience: Discover CashSimple® Today

A robust business continuity/disaster recovery strategy safeguards operations, particularly in cash management, by ensuring uninterrupted cash flow and financial resilience. CashSimple® streamlined technology provides secure cash management regardless of disruptions.

ICL provides one contact for all your cash management needs. We offer 24/7 phone support to answer your questions. Whether you face a major disaster or it’s a standard day of the week, we are here to help. Schedule a demo today and learn how CashSimple® can help you keep your money secure through any disaster.