Many businesses have no plans to recover from a business disaster, despite it being a regulatory requirement. Andrew Holt reports on how brokers are getting involved
When it comes to brokers and disaster recovery are brokers up to speed? The broker body, Biba is pushing for them to be. Last October the association undertook a survey looking at business interruption, risk management and business planning with the whole aspect of business continuity and disaster recovery at its heart.
What was revealed was how much of the business community need the broker’s input. Steve Foulsham, Biba technical services officer, says: “What became apparent is the number of businesses – especially SMEs – who have no form of business continuity planning.”
Fifty per cent of businesses said ‘ ‘ they had no form of business continuity plan and, of those, 85% believed they didn’t need one. “Brokers have a role to play here, advising their SME clients about the importance of business interruption and disaster recovery, because it is only an extension of risk management and brokers are now advising on this all the time,” says Foulsham.
Biba has also been busy pushing the business interruption and disaster recovery message through the parliamentary system, lobbying the government on its importance to UK plc. In this regard, Biba hooked up with Hemel Hempstead MP Mike Penning, whose constituency includes the Buncefield site, to highlight the case of disaster recovery. Buncefield impacted on 400 businesses, resulting in 16 relocations.
“Brokers have to be able to advise on all threats to a business,” says Foulsham. When you consider, terrorism, flooding and other natural and human disasters, that is one hell of a list of capabilities brokers must be able to deal with.
“Business continuity and business resilience should be a central part of the agenda when a broker meets a business client and this should be reviewed on a regular basis,” adds Foulsham.
But it is not just a case of drawing up a list of requirements he says. “Business continuity is a bespoke service and the requirement of each business is specialist to that business. Brokers know what requirements each business needs so therefore know what specialist needs they have.”
The outgoing executive director of Airmic, David Gamble, agrees. “Brokers who choose the value-added route should consider risk management in its roundest sense. Offering this kind of guidance will not only make you a valued partner for your SME clients, it will increase the chances of them surviving and prospering.”
This survey follows Biba’s teaming up with Broker Continuity Planning ‘ ‘ to launch a broker-orientated facility for “work area recovery space” including full broker IT services.
The scheme provides a real life disrecovery solution but more importantly it helps members to comply with FSA regulations. The FSA requires all regulated businesses to have a business continuity plan.
“An enormous range of people and organisations from social workers to global corporations all claim to practise risk management, but we lack a shared understanding of what it means
Geoff Taylor, Airmic
Regulations state: “A firm should have in place appropriate arrangements having regard to the nature, scale and complexity of its business, to ensure that it can continue to function and meet its regulatory obligations in the event of an unforeseen interruption.”
Biba says the FSA regulations make it quite clear that having a written plan is not enough. The plan must be capable of action and must be tested.
Each ‘recovery’ site will be specially created for the insurance market and will offer up to 100 seats in a modern office, fully cabled and fitted with new seats, desks, telephones and Dell hardware. “Brokers are regulated by the FSA so business continuity planning applies to them,” says Foulsham.
Among Airmic members, business continuity planning, environmental exposures, reputation and contractor exposures are the issues emerging most rapidly.
On a practical level, Airmic and Det Norske Veritas (DNV) are co-operating in an in-depth research project into enterprise risk management (ERM), to show its applicability to business.
The aim is to measure the worth of ERM and the circumstances under which it adds most value. It is the first research of its type, since it attempts to present a rigorous bottom-up assessment of the benefits of ERM.
Airmic chairman Geoff Taylor says: “An enormous range of people and organisations from social workers to global corporations all claim to practise risk management, but we lack a shared understanding of what it means. We need to bring clarity to an overused concept and demonstrate how best to go about ERM.”
David Salmon, of DNV, adds: “We intend to provide an insight into what works to provide practical support to anyone involved,” said. “We hope to derive a bottom-up picture of the actual benefits of ERM, and also provide an insight into how to avoid the pitfalls. Our assessment will be based on the real-life experiences of the organisations involved.”
The findings are expected by early 2008 and will make interesting reading to many.
Taylor adds: “I see this report becoming a reference point for risk managers, businessmen, government and anyone else with an interest in risk.”
