How to Write a Disaster Recovery Plan

Response times, procedures and standard company-wide practices around natural and human created disasters are addressed and clearly defined and explained in effective recovery plans. The strength of a disaster recovery plan can influence a company’s long-term health should a significant business interruption occur. Following are key areas to include in a recovery plan that is suitable for small, medium and large size companies.

Stress Confidentiality of Disaster Recovery Plan

Write a brief confidentiality statement noting that the disaster recovery plan is intended for company employees only and is not to be distributed outside the company. To ensure that the plan is only distributed to necessary persons, create and insert a distribution list with the name of each person who will receive the plan, the name of the person’s department, the version of the plan the person is to receive and the date that the person was sent the plan. Update the distribution list as changes to personnel occur.

Gain Management Statement and Approval for the Plan

Include a statement of approval for the recovery plan from senior management. Craft a senior management statement that clearly states that the company’s senior management team is committed to supporting the company’s disaster recovery and restoration process and plan as seen in superlines casino and gaming houses. More so, include clearly defined objectives for the plan with the management statement and approval. Focus on recovery time objectives, recovery point objectives and critical business initiative dates. For example, if the company is a shipping firm and June through August are peak months, include clear workarounds and alternative business steps the company will use to meet shipping needs during this critical period. Make sure that senior managers sign the statement and insert the statement at the start of the plan.

Identify Disaster Evacuation Procedures and Alternate Work Locations

Set up a standard location for employees to meet at, be accounted for and given further instructions on how to proceed during the disaster. Work with the company’s real estate department to identify alternate work locations in the event that standard business offices or equipment are unusable during a disaster. Ensure that most critical employees have alternate location office space and technology access. Write the specific location including street, city and state into the recovery plan and distribute to impacted employees so that everyone knows where to report during a disaster.

State Organizational Roles and Responsibilities

Define roles and responsibilities by departments and teams. Assign people to work on the management team and regularly assess the status of the disaster and make decisions on next steps until the company is fully functioning again. Write regular meeting times that are to be held via conference calls or in-person at a designated emergency management team hub into the plan. Include all conference call telephone numbers and pass codes as well as the exact building and office location for the team hub in the plan.

Identify team members who will assess the extinct of the disaster. Ensure that members of the company’s security and facilities department are on the disaster assessment team. Additionally, write in the names, telephone and cell phone numbers, street addresses and emails for local city-wide emergency departments including fire, police and medical emergency teams to have the data on hand should your company need the assistance of local external emergency teams to respond to a disaster.

Create Business Disaster Plan Restoration Process

Assign people to work on the recovery liaison and the restoration teams so that active steps are taken throughout the disaster to completely restore pertinent functions such as technology, business credit card records, updated business insurance records, office space and customer files to fully recover the business as soon as possible. Prioritize and address how the company will respond to items such as transferring business functions from alternate work locations back to the primary business site, contact customers and let them know that business has fully resumed at the primary business site and returning leased or rented equipment and technology

Draft a Quality Assurance Schedule

Write steps into the disaster recovery plan that identifies who will lead the review of the plan and regularly test the viability of the disaster recovery plan. Identify how often the plan will be reviewed and updated as changes occur throughout the company. Write in test dates, training for all employees by department around disaster recovery including evacuation procedures and conduct physical testing of technology systems at designated alternate work locations. Keep a record of all tests conducted and insert the record into the back of the plan.

Strengthen Business Insurance By Building and Maintaining Contact List

Use human resources databases to store, record and update the name and contact information for all employees at the company and all external clients that the company does business with including consultants and external business partners. Build in dates to test the accuracy of the contract information via call tree tests. Regularly update contact information as needed.

Business Financial Management Fundamentals

The basic goals of financial management in a business context are to make funds available for:

  • Investments for expansion and maintenance
  • Working capital for operations
  • Providing returns to business owners

Corporate finance and small business finance managers seek to maximize shareholder/owner value and returns by:

  • Monitoring the ROI of each investment
  • Leveraging debt to increase returns on equity
  • Adopting suitable pricing policies and
  • Exercising effective control over costs

Finance Management Areas and Tools

Investment Decisions: Businesses have to make decisions about which projects to invest in. The typical decision support tool for investment decisions is capital budgeting. Capital budgeting estimates the cash flows associated with a particular investment over its economic life. Cash outflows (e.g. payments for equipment and premises, operating expenses) and inflows (e.g. long-term loans and collection of receivables) under different investment options are compared, and the alternative with the best return is typically selected.

Cash flows are discounted for their time value. This means that an amount paid or received after two years is reduced to a present value by considering the interest that the money could have earned.

Working Capital: A business has to meet different kinds of payments on a day-to-day basis, including:

  • Repayment installments of long-term loans
  • Repayment of short-term borrowings
  • Payment of current liabilities (e.g. supply creditors, tax dues) and operating expenses (e.g. salaries, bank interest, travel)
  • Extending customer credit (postponing a cash receipt)

Working capital management involves estimating the cash requirements for every week/month/quarter/year and exploring the best options to make required funds available.

Profit Deployment: Profits can be retained in the business or distributed to owners. Investors invest in businesses to earn a return and this return can take the form of capital appreciation (increase in the value of the business) or dividends/owners’ drawings.

Retaining profits in the business and using it to expand operations typically leads to capital appreciation. However, this is possible only if profit distribution to owners is restricted to an amount less than the full amount of profit. Financial managers seek to strike a compromise between the two.

Business Financing Options

Common financing options and their typical use are:

  • Owner funds in the forms of share capital or cash brought in by proprietor or partners. Lenders typically look for a level of owner funding before agreeing to advance loans.
  • Venture capital funding involves getting private share capital from investors. This option is typically for innovative businesses with fast growth potential.
  • Long-term loans from banks and other financing institutions are used to finance long-term investments such as setting up a new plant
  • Demand loans and lines of credit from banks are used to finance working capital requirements
  • Availing supplier credit to postpone payments for supplies received
  • Options such as factoring receivables and government grants might also be available
  • Informal borrowings from relatives and friends, or formal borrowings from associate companies

Loans are typically secured by a charge on business assets like equipment, buildings, inventories, etc.

Business financial management has the twin objectives of ensuring availability of funds when needed, and maximizing the returns to owners of the business. Financial managers use tools like financial ratio analysis discounted cash flow analysis and cash flow forecasts to achieve these objectives.

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