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$56bn reasons to invest in business continuity

Figures in a recent report from the Swiss Reinsurance Company Ltd (Swiss Re) provide justification for business continuity investments says Mike Osborne, managing director of Phoenix’s Business Continuity Unit.

The ‘Sigma - preliminary estimates for H12013’ report states that the total costs of disasters from natural catastrophes and man-made disasters totalled $56 billion in the first half of 2013, breaking down to $307,692,300 a day. Despite being down from the $67 billion seen in the first half of 2012, the loss figures are still huge.

The report highlights that global insurers covered up to $20bn of the $56bn losses, but, as Mr. Osborne points out, this still leaves a $36bn hole which will most likely have been absorbed as an unexpected cost to businesses, organizations and governments. The loss figures also do not take into account the knock-on reputational damage these disasters would have inevitably caused.

“The figures released by Swiss Re were staggering. To think that the costs of global disasters comes in at $56bn, which can be broken down to almost a quarter of a million dollars a minute is a terrifying thought and hopefully any organizations 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 organization 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 organizations take such an apparently blasé approach to protecting their business. An extremely robust business continuity program typically costs less than one percent 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 companies, 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 report clearly demonstrate the obvious benefits that 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. Organizations need to act now and not pay later.”

http://www.phoenix.co.uk

•Date: 30th August 2013 • World •Type: Article • Topic: BC general

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