Risks Covered by the Disaster Recovery Plan

In the highly competitive world of business and marketing, Organizations are pushed to be ahead of the race and walk the talk. Customer and Market expectations are higher where in the Companies are expected to walk the talk and demonstrate their capability to live through the promises. In such situation, Organizations have had to think on terms of business contingency, Disaster Recovery and Business continuity plans for they cannot afford any disruption of supplies to markets and failing the customer on account of any risk or threat to their business on account of natural calamities, political situations, terrorism or any such perceived risks.

In fact in high value products especially those involving critical functions at the Customers end as well as those involving high end technology, customers expect the suppliers to demonstrate their capability and an operational plan of business disaster recovery in place so that their business does not suffer on account of disruption of services or failure at the Supplier’s end. Suppliers are often required to commit to having the disaster recovery plan in place as a part of the Supplier Contract.

What Risks Does the DR Plan Cover ?

Risk assessment, Disaster Recovery and Business contingency planning involves the entire Organization at all levels. First and foremost it is important to understand the kind of risk that the Business Contingency plan aims to cover. The plan aims to primarily cover the risk of disruption to Business Process, Risk of Life to employees, Management Control & Asset recovery.

Threat to Business Process

1. Natural Disasters

   Businesses face threats from several quarters. Some of the threats can be due to geographical location or natural disasters and havoc caused by the weather and other natural calamities. In such cases, man has very little or no control over the situation. Even amongst the Natural disasters and threats, there are two kinds of risks namely predictable and unpredictable. Unpredictable risks like floods, hurricane, fire and other such events can totally disrupt the business without giving anyone a chance to prepare for the same.

2. Man made Disasters

   When we talk of manmade disasters, we are referring chiefly to acts of sabotage, terrorism, industrial espionage and attack, vandalism etc. Some of the companies prefer to include the supply failures due to supply chain network failure or supplier failure as a risk to the business and prepare contingency plan for the same.

   Some of the companies which are highly dependent upon limited suppliers for their raw materials and in cases where raw material supplies are scarce and not freely available, the business contingency plan can cover these specifics as perceived risks too.

   Similarly in technology and service sector companies, any disruption or threat to availability of skilled manpower required for the business process can also be covered under the risk making the business process unstable.

3. National & International Events

   Events like wars, international sanctions, unstable political situations and strikes etc can also cause potential threat of disruption of business operations and supplies to the markets. The extent of the perceived threat and risk depends upon the particular country and the business.

4. Technology & Critical Hardware failures

   Companies depending upon high end technologies, software and hardware run the risk of failures of the technology and systems thereby affecting the entire business process. The failure can be of the hardware or of the software. In certain other businesses, the critical machinery used in the manufacturing process can be under risk, thereby causing a threat to the supplies.

An analysis can go into minute level and identify a huge list of risks in the business. However the management needs to take a judicious call to filter out from the list of risks those that need to be covered essentially for, it becomes impossible to build a recovery plan around all of the risks that can be identified.

Authorship/Referencing - About the Author(s)

The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.