Equitable Adaptation Legal & Policy Toolkit

 

Business Continuity Plans

Extreme weather events are increasing, and with them, threats to business — especially small, localized ones.See footnote 1 Climate events can have lasting effects on businesses, including, but not limited to: supply chain disruptions; customer access to storefronts; and infrastructure and property damage. Due to these threats, businesses should enhance their resilience through the development of a business continuity plan that explicitly takes climate change impacts into account.

Business continuity plans are risk management tools that business owners create to facilitate the long-term survival of their business by identifying their risks. Business continuity plans establish approaches that either help to avoid risks or direct what actions should be taken in the event that risk is realized. “It encompasses both the process of identifying the parts of your organization that you can’t afford to lose, and the framework of strategies and measures designed to limit disruptions and enable key activities to resume as quickly as possible after an event.”See footnote 2 

A successful business continuity plan recognizes the threat to operations that climate impacts can pose, and creates a variety of different plans and strategies to deal with those threats. The incorporation of a business continuity plan into the way businesses are run – especially small businesses owned by disadvantaged populations — will be (1) better able to recover quickly from a shock; (2) better able to withstand a shock; and (3) in some instances, better able to avoid a shock altogether.

Considerations of Business Continuity Plans for Economic Resilience

Economic

  • There likely is not much cost involved in the actual development of a business continuity plan. Owners of a business, whether small or large, need to analyze their business operations and develop strategies that will keep their business running when a climate event strikes.
  • The implementation of a business continuity plan may have some costs (ex. the installation of backup generators, the use of alternate supply chains, storefront cleanup, etc.).
  • The existence of business continuity plans can help demonstrate to potential investors that business owners are serious about their business, have the intention to continue to operate during disaster events and have contingency plans in place.

Environmental

  • Climate impacts have the potential to affect much of the economy, including supply chains, resource availability, and consumer consumption.
  • Business continuity plans can take climate events into account, especially as their frequency increases due to climate change.

Social/Equity

  • Frontline communities are often hit “first and worst” by climate events. This includes community members that own businesses and/or businesses within frontline communities themselves.
  • The creation of business development plans can help mitigate the disproportionate effects of these climate disasters. 

Administrative

  • Businesses within a community can coordinate in their development of business continuity plans to ensure that operations across an entire sector continue during disaster events, or at least start again shortly after a disaster event occurs.
  • The larger a business or organization is, the more complex its business continuity plan will likely be. While coordination with outside entities is usually unnecessary, coordination internally within departments will facilitate the most comprehensive business continuity plan. 

Legal

  • Businesses that are members of certain associations or organizations, like the Financial Industry Regulatory Authority, are actually required to have written business continuity plans.
  • OSHA also requires that businesses have plans established for evacuation during a disaster event, as well as who will be responsible for critical plant operations.
  • Public Law 110-53 recommends that all private businesses have a business continuity plan developed (it is, however, just a recommendation/voluntary).

Lessons Learned

  • After a natural disaster, “roughly 40% to 60% of small businesses are never able to reopen their doors.”See footnote 3 Business continuity plans can help to mitigate the effects of climate events and ensure that businesses are able to reopen their doors earlier than they would have been able to otherwise, had a business continuity plan not been in place.
  • There are numerous online resources available (including those listed below) that lay out step-by-step how businesses — large or small — can create business continuity plans
  • The best business continuity plans operate as a guidebook on actions and procedures that should be undertaken by employees both during and after a disaster event. As a result, these plans should be detailed, and explicitly lay out who has responsibilities for what operations. Doing so will help avoid confusion during what is likely already a chaotic time.
  • There is usually not much (if any) cost associated with the creation of a business continuity plan, outside of the time used by the creator to develop it. There can be costs associated with its implementation, however. On the other hand, not having a business continuity plan can lead to extended closures and loss of revenue. Business owners should do an internal analysis of the costs associated with implementing a business continuity plan versus business closures.

 

Related Resources

 
Adapting to Climate Change Using Your Business Continuity Management System

This report provides guidance to businesses on how to incorporate climate change preparedness into their business continuity management system (BCMS). A BCMS is a framework for dealing with potential and actual disruptive events that may impact all areas of a business. Through business continuity management, businesses can identify and mitigate risks and minimize disruption to standard business operations. The report identifies 13 tasks that businesses should undertake to integrate climate preparedness into their BCMS.

Weathering the Storm: Building Business Resilience to Climate Change

From the Center for Climate and Energy Solutions (C2ES), this report provides a detailed snapshot of the state of resilience planning among a cross-section of global companies, and outlines steps companies can take to better assess and manage their growing climate risks. The report includes a comprehensive review of resilience practices among S&P Global 100 Index companies and detailed case studies of six companies in diverse sectors: American Water, Bayer, The Hartford Group, National Grid, Rio Tinto and Weyerhaeuser.

The Definitive Guide to Disaster Planning

Agility Recovery released this resource as a guide for business owners of large or small operations that lays out the steps that should be taken in the creation and implementation of a business continuity program. A business continuity plan, according to the guide, should establish a comprehensive disaster plan that ensures that the business can survive a variety of interruptions, and ensure that the business itself can: recover from a weather event; reduce liability concerns; protect revenue sources; and build a culture of preparedness, among other things. In order to create a plan that accomplishes all this, the guide lays out a 12-step process that business owners should undertake if they want their business to survive an event, including those induced by climate change.

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