REPORT: Risk Management Shortfalls Lead to Business Interruption Threats
In the past 12 months, two-thirds of local businesses have been affected by business interruption, including such issues as power outages, natural disasters and public unrest.
This is according to the 2014 Metrofile Information and Records Management Trends Index conducted among more than 200 management executives from local business operating mainly in the financial services, consumer goods and services and business services industries, among others.
Greg Comline, General Manager of Global Continuity South Africa – a group company of JSE-listed Metrofile Holdings Limited - says this statistic highlights the importance for businesses of every size to have an effective disaster recovery plan (DRP) and business continuity plan (BCP) in place.
“A synchronised BCP and DRP are two key elements required for the continuation of business processes and information systems to enable organisations to recover from an unexpected interruptions,” he said.
The survey also found that approximately 40 percent of businesses have no DRP or BCP in place.
“This is highly concerning because in the event of a serious interruption, such as a natural disaster or cyber-attack which can render key functions incapacitated, both the revenue and bottom line may be severely affected,” Comline continued.
Of the 40 percent that do not have a DRP or BCP, a staggering 78 percent of businesses do not foresee the implementation of one in future.
Comline points out that the main reason for the absence of either is usually a lack of understanding for the associated risks as well as a concern for the expenses of implementing a strategy.
He added: “It is often worthwhile working with credible suppliers to cover the business requirements for continuity planning and in most cases this can be done cost effectively, saving the company from potential financial losses and reputational damage in the long run”.
The problem is not only the lack of a DRP, but also dependence on a mediocre or vague plan that is not tested regularly.
A third of businesses with a DRP admit to limited confidence in their existing structure and believe that the business will still experience a setback following a medium to severe business interruption. Comline says that not testing the DRP at least biannually means companies sometimes do not realise the scale of the issue and this reduces the resilience of the business.
“By not having a synchronised Business Continuity Programme in place, the business itself and the various stakeholders are all at risk,” he concluded. “The biggest mistake a business of any size can make is doing nothing until it is too late.
“At times, not even the cover from Business Interruption insurance can buy the critical resources that you need to recover from a disaster.”
5 minutes with... Janthana Kaenprakhamroy, CEO, Tapoly
Founder and CEO of award-winning insurtech firm Tapoly, Janthana Kaenprakhamroy heads up Europe’s first on-demand insurance platform for the gig economy, winning industry awards, innovating in the digital insurance space, and leading with inclusivity.
Here, Business Chief talks to Janthana about her leadership style and skills.
What do you do, in a nutshell?
I’m founder and CEO of Tapoly, a digital MGA providing a full stack of commercial lines insurance specifically for SMEs and freelancers, as well as a SaaS solution to connect insurers with their distribution partners. We build bespoke, end-to-end platforms encompassing the whole customer journey, but can also integrate our APIs within existing systems. We were proud to win Insurance Provider of the Year at the British Small Business Awards 2018 and receive silver in the Insurtech category at the Efma & Accenture Innovation in Insurance Awards 2019.
How would you describe your leadership style?
I try to be as inclusive a leader as possible. I’m committed to creating space for everyone to shine. Many of the roles at Tapoly are performed by women and I speak at industry events to encourage more people to get involved in insurance/insurtech. Similarly, I always try to maintain a growth mindset. I think it’s important to retain values to support learning and development, like reliability, working hard and punctuality.
What’s the best leadership advice you’ve received?
Build your network and seek advice. As a leader, you need smart people around you to help you grow your business. It’s not about personally being the best, but being able to find resources and get help where needed.
How do you see leadership changing in a COVID world?
I think the pandemic has proven the importance of inclusive leadership so that everyone feels supported and valued. It’s also shown the importance of being flexible as a leader. We’ve had to remain adaptable to continue delivering high levels of customer service. This flexibility has also been important when supporting employees as everyone has had individual pressures to deal with during this time. Leaders should continue to embed this flexibility within their organisations moving forward.
They say ‘from every crisis comes opportunity’, what opportunities do you see?
The past year has been challenging, but it has also proven the importance of digital transformation in insurance. When working from home was required, it was much harder for insurers to adjust who had not embedded technology within their operating processes because they did not have data stored in the cloud and it caused communication delays with concerned customers at a time when this communication should have been a priority, which ultimately impacts the level of customer satisfaction. This demonstrates the importance of what we are trying to achieve at Tapoly in driving digitalisation in insurance and making communication between insurers and distribution partners seamless.
What advice would you give to your younger self just starting out in the industry?
Start sooner, don’t be afraid to take (calculated) risks and make sure you raise enough money to get you through the initial seed stage.