$130bn reasons organisations should invest in business continuity

Organisations that fail to embrace disaster recovery principles and business continuity planning are incurring huge sums and run the risk of jeopardising their future says Mike Osborne, managing director of Phoenix’s Business Continuity Unit, in light of a recent report which identified that economic losses from disasters accounted for $130bn in 2013 worldwide.

A recent report from the Swiss Reinsurance Company Ltd (Swiss Re), the world’s second largest reinsurance company, has revealed that the total costs of disasters from natural catastrophes and man-made disasters totalled $130 billion in 2013. According to the findings, natural and man-made disasters cost insurers worldwide $44 billion and the St. Jude Storm in Europe last October alone is estimated to have caused more than $1 billion in insured claims.

While the report went on to highlight that global insurers covered up to $44bn, Osborne was quick to point out that this still left a $86bn hole which will of most likely been absorbed as an unexpected cost to businesses, as well as failing to account for the disruption and reputational damage these disasters would of inevitably caused:

“The figures released by Swiss Re were staggering. To think that the costs of global disasters comes in at $130bn is terrifying thought and hopefully any organisations that have seen this research will have given serious thoughts to the processes they put in place to protect their business.

“This really should bring home the importance of effective business continuity planning. Any organisation that does not undertake such practices currently, should use this as a call to action to do so, in order to safe guard their operational and financial futures.”

Osborne continued: “When reading figures such as this, it is perplexing to think why some organisations take such an apparent blasé approach to protecting their business. An extremely robust business continuity program typically costs less than one per cent of turnover, with such a program providing recovery into alternative facilities within four hours and a proactive customer and market communications capability.

“Business continuity, amongst some firms, is still viewed with a fail and fix mentality. In fact, some see it as an area in which cutbacks can be made, reducing the amount of funds and specialist staff available to understand and respond to major incidents. In a world where reputation is key, an approach like this can have disastrous consequences with huge financial implications - ultimately leading to businesses failing.”

Osborne concluded: “The figures from the survey clearly demonstrate the obvious benefits business continuity can have to safe guard and ensure continuity of service in the most testing times. Ultimately, there needs to be a shift away from a recovery mentality to one, which focuses on resilience. Disasters do occur and these results demonstrate that they can be costly. Organisations need to act now and not pay later.”