Businesses know they could experience operational disruptions from natural disasters, but most do not have sufficient risk mitigation plans in place, according to new research from Zurich Insurance Group.
The researchers polled 170 executives of medium and large companies, and found there was a widespread perception that natural disasters were becoming more common and more severe. Respondents said a business disruption from a natural catastrophe could potentially compromise several aspects of the enterprise. The most serious threats came from the continuity of IT support, critical business functions and logistics. Zurich found there was significant room for improvement in planning strategies to ensure continuity. Preparation for loss of IT support was found to be particularly important because a natural disaster could cause a power outage that would temporarily shut down IT infrastructure. An IT outage could leave company data vulnerable.
While businesses are aware of the need for risk analysis in strategic sourcing, they do not always put plans into action, The Metropolitan Corporate Counsel reported. Many companies feel prior catastrophes will not reoccur or that the disruptions would not be as severe. Consideration of risk and mitigation strategies are necessary, though it is impossible for companies to avoid risk completely.
Some organizations are taking steps to improve IT continuity in case of a disaster, but there are very few integrated risk plans, according to the Zurich research. In addition, ensuring logistics will continue after a natural disaster can be nearly impossible because it is typically outside of a company's immediate control, and there is the potential for damaged infrastructure. Since such events are unpredictable, it underscores the importance of adequate preparation and maintaining a solid understanding of an organization's exposure to risk.