- Business continuity is concerned with helping you maintain business operations in the event of a disaster or disruption
- Disaster recovery involves how your business will respond to and recover from a disaster, like a cyberattack, natural disaster, or pandemic
- Creating both business continuity and disaster recovery plans can help you:
- Reduce costs
- Minimize downtime
- Establish clarity
- Maintain a positive reputation
- Increase safety
- Provide peace of mind
- Quick ways to develop your strategy are to:
- Create a step-by-step guide
- Include the plan with other policies
- Create goals for each component
- Create network and site diagrams
- List key tools and resources
- Consider financial and legal implications
- Look for government relief
- Common mistakes to avoid with business continuity and disaster recovery:
- Not assessing your risks
- Failing to prioritize assets
- Not enough focus on prevention
- Poor security
- Neglecting incident response plans
- Focusing too much on infrastructure alone
- Failing to test
- Not planning for temporary workspaces
- Failing to back up important data
A few best practices include determining what’s most critical to your business, creating a detailed plan of action, and assessing your business’s unique risks.
You may think your business’s systems and operations are solid no matter what happens in the future. Disasters happen, however, even with the best-laid strategies in place. You may experience many kinds of disruptions over the years, such as a global pandemic, economic crisis, cyberattack, natural disaster, or data breach.
These disruptions can have many implications for businesses, including very high costs, data loss, system failure, and the breakdown of business infrastructure. You need to be prepared. The World Economic Forum reported that businesses continue to face top global risks like infectious disease, extreme weather, and natural resource crises.
Business continuity and disaster recovery planning is an essential step in ensuring a business is profitable and successful. It helps you consider future risks and assess what is most important to your operational and financial success. Over half of businesses experienced a disruptive event in the last five years, so unforeseen disasters and disruptions are very common across industries.
There are, however, many common mistakes businesses make when it comes to business continuity, disaster recovery, and related planning. Some organizations may not fully prepare in advance and then face all kinds of financial and data losses after a cyberattack. They could also experience a natural disaster and not have a plan for communicating with the team about next steps.
Planning now is the best thing you can do to ensure business continuity. Business continuity and disaster recovery, though different concepts, both help you strengthen your plans for addressing business disruptions and disasters.
What are these processes and how do they differ? This guide walks through disaster recovery vs. business continuity, benefits to your business, nine common mistakes businesses make, and best practices for success.
What Is Business Continuity?
Business continuity is an important concept for any organization, regardless of size. It involves planning how to ensure the continuity of critical operations and services in the event of a disruption or other unexpected occurrence.
Business continuity plans cover a wide range of scenarios, from natural disasters to cyberattacks and other systemic risks. The goal of business continuity is to provide organizations with the ability to maintain normal operations without losing customers, data, or resources.
This concept is concerned with how operations will keep going and stay consistent when a disruption happens, whereas disaster recovery is concerned with restoring everything after the fact. Business continuity aims to keep disruptions to processes and workflows minimal in the face of a disaster.
A great example of business continuity in action is related to the COVID-19 outbreak. Many businesses didn’t have a plan in place for dealing with a pandemic, in which employees couldn’t travel to the office or hold client meetings. They had to scramble to figure out how to keep their operations moving with these new restrictions.
Businesses must have a well-defined plan that outlines steps for responding to disruptions. This includes developing procedures for disaster recovery and contingency planning, setting up team structures that are adept at responding to contingencies in near real-time, communicating during disruptions, and creating detailed backup plans that can be activated if needed.
A good business continuity plan addresses any potential disruption even though you can’t predict the future. New threats or disasters may arise before you can fathom what they may look like.
The goal should be to have a basic plan in place for any disruption and an outline of how decisions will be made in the moment. Your strategy should include these elements:
- Risk analysis: Determine the biggest threats to the business and consider what the outcomes of those risks might be.
- Impacts of potential threats on the business: List all potential risks, who they impact, and the costs associated with those threats.
- Goals for recovery time: Evaluate how long systems can be down before serious harm is done.
- Staff roles and responsibilities: Who will be responsible for what in the event of a disruption? Make roles very clear.
Business continuity and disaster recovery are similar and work together within your organization to keep things moving and to minimize the impact of a disruption. Remember that business continuity helps you ensure operations continue as best as possible, while disaster recovery helps you bounce back from a disaster quickly.
You can reduce downtime and losses associated with unplanned activities while still providing uninterrupted service when you incorporate these tactics. Reviewing these plans on a regular basis can also help you identify gaps or vulnerabilities that need to be addressed to maintain stable operations, during especially stressful periods.
What Is Disaster Recovery?
Disaster recovery is similar to business continuity, and the two concepts have a few overlaps–in fact, disaster recovery is a critical component of any business continuity plan. It involves establishing processes and systems that allow an organization to recover from a major disruption, such as a natural disaster, cyberattack, or other unexpected event, just like business continuity.
These plans are designed to restore operations quickly and keep customers and stakeholders informed during the recovery period.
Other disaster examples are:
- Power outages
- Terrorist attacks
- Natural disasters, like tornadoes, floods, earthquakes, fires, and hurricanes
- Pandemics or epidemics
- Failures in the supply chain
The goals of disaster recovery are to minimize losses, protect vital data, ensure customer satisfaction, and reduce reputational damage. These plans can help you avoid significant disruptions while also ensuring you have the tools needed to properly handle post-disaster scenarios.
You need to develop thorough disaster recovery plans that cover all potential risks, test them regularly for accuracy and effectiveness, and engage in active communication with all stakeholders throughout the process.
Disaster recovery plans can help companies maintain operational continuity despite difficult circumstances. A major way disaster recovery differs from business continuity is that disaster recovery is focused on how you will respond to a disaster, and business continuity is about helping operations stay consistent and successful.
Disaster recovery is your business’s plan for dealing with these situations, should they arise. No one likes to think about a disaster, but being prepared helps ensure you don’t lose more than you have to.
You don’t want to risk going through a client data breach, nor do you want to risk losing sensitive data, business opportunities, or other valuable property or information. Anything that causes these losses or system downtime can be extremely costly. IBM found, for example, that the average cost of a data breach in the U.S. is $9.44 million.
Disaster recovery plans help you address these risks before they happen, putting a strategy together to recover everything that’s at risk or lost in a disaster. Primary concerns have to do with IT systems within the business, like network access, data storage, data backup, and downtime.
Disaster recovery may also include a summary of insurance coverages and a plan for addressing any legal or financial problems that arise because of a disaster. You should also include an employee safety plan that ensures your people are safe and that you can provide emergency communications if necessary.
Nine Mistakes to Avoid With Business Continuity and Disaster Recovery
Business continuity and disaster recovery plans are essential for any business, but many companies make serious errors when crafting and implementing them. These mistakes can lead to critical operations being halted or held down in the event of a crisis, which can then lead to poor business outcomes.
Here are nine common business continuity and disaster recovery mistakes to avoid:
1. Not Assessing Your Risks
The first step any business should take when developing a disaster recovery plan is to assess the biggest risks. This means identifying potential risks and hazards from natural disasters like floods, fires, data breaches, and electrical outages.
It’s also important for companies to understand their weaknesses and vulnerabilities so these can be addressed as part of the disaster recovery plan. Any disaster recovery plan could contain unnecessary precautions or not go far enough in protecting a company against emergencies without this preliminary assessment work.
2. Failing to Prioritize Assets
A lot of organizations overlook the importance of prioritizing their assets when compiling a business continuity plan. It’s particularly important to consider which systems your workforce uses daily, such as communications tools, cloud storage, enterprise security solutions, and other applications or services critical to everyday operations. It will be a major challenge to recover from an incident if you don’t prioritize these assets first.
3. Not Enough Focus on Prevention
Disaster recovery is all about responding quickly to situations that cause downtime or data loss. However, prevention should always be the first line of defense against these catastrophes.
Spend time researching potential threats and exploring strategies for minimizing their risks. Train employees regularly on the proper safety protocols for different tasks and likely disaster scenarios, as well.
4. Poor Security
Weak security measures can put your organization at risk for a more severe disaster caused by cyberattacks or malware infections. Your preventive strategies should include up-to-date antivirus software and firewalls that run continuous scans.
You also need robust password management systems in place across all networks and devices used by your team. Be sure to also put strict data-handling policies in place to minimize damage should an intrusion occur.
This involves using strict encryption methods for sensitive information stored on digital platforms, such as cloud storage solutions or websites hosted with third-party providers.
5. Neglecting Incident Response Plans
An incident response plan outlines key steps that must be taken in response to different types of disasters, such as natural disasters or cyber incidents. Avoiding this step would leave you without a plan of action if one of these events were to take place at your business.
The best way around this is to establish an incident response team made up of internal personnel who will be responsible for taking the necessary steps during any kind of crisis situation that may arise within the workplace.
This could include evacuating the building, alerting external emergency services, reporting the incident through appropriate channels like email notifications, ensuring collaboration between departments, or providing psychological support to team members.
6. Focusing Too Much on Infrastructure Alone
Your business’s infrastructure–which includes hardware, software, and networks–needs protection, too. It is not enough on its own, however, when it comes to making sure your company survives a disaster.
Functions like customer service and sales operations also need tackling. Pay close attention to everything from IT to your company culture to communication. Analyze how quickly workflows can resume while ensuring ongoing customer satisfaction. You may need more focus on employee motivation and engagement, too.
7. Failing to Test
Testing is essential when creating a successful business continuity and disaster recovery solution. It allows businesses to assess their plans before they deploy them, giving teams the time needed to make improvements while gauging how potent they are against disasters.
Some companies, unfortunately, either don’t perform any testing at all or they test inconsistently. These mistakes often lead to costly results further down the line, especially when faced with an abrupt disruption.
8. Not Planning for Temporary Workspaces
Businesses should have an action plan in place for how everything will continue operating if their physical workspace becomes unusable. This can include having designated emergency workspaces where employees can work remotely, making arrangements to temporarily rent office space, or even implementing mobile workstations onsite so staff can continue working uninterrupted.
Failing to plan for these contingencies can put a business’s livelihood at risk and can be especially costly if not addressed prior to an emergency situation.
9. Failing to Back Up Important Data
Backing up all data–including customer information and internal business data–is an essential part of any disaster recovery plan. Many companies fail to ensure they have sufficient backups or don’t keep regular backup schedules despite this risk.
Regular automated backups reduce the chance of losing valuable information due to an emergency situation. These backups should be stored securely offsite for maximum protection. Companies should also include provisions for backup testing in their plans so they know their system works as intended if an emergency arises.
Business can significantly reduce the likelihood of loss and disruption by identifying possible risks ahead of time, regularly running backups, and preparing contingencies for unplanned downtime. Doing so helps ensure long-term profitability and continuity for your business. Avoid these common mistakes when you’re planning for the future.
Quick Business Continuity and Disaster Recovery Best Practices
Navigating a business crisis can be challenging and overwhelming. You can mitigate the damage if you have robust plans in place to prevent and address disasters.
Developing a business continuity and disaster recovery strategy is one of the most important steps businesses can take to remain operational in difficult times. Here are a few best practices to consider when developing your own business continuity and disaster recovery plan:
- Determine critical functions and resources: Set priorities for your processes and services so the most important will keep running in the event of a disaster. Figure out which functions are critical to your business.
- Assess your biggest risks: Think about any unique threats your business has. Involve other team members to create a list of potential risks.
- Create a detailed plan of action: Your plan should include all of your systems, where data is located, steps to take if something is compromised, who will take on what role, and communication directions.
- Test your strategy: It’s always smart to test out your plan so you can see what works and what doesn’t. You can then make changes and keep improving. This also helps team members become familiar with protocols so there is less confusion when a disaster occurs.
Planning ahead is the best way to ensure business continuity and fast disaster recovery. No one likes to think about disasters, but your business needs to be prepared in case something unexpected happens. Having a plan in place can help you keep your operations running smoothly and ensure your customers don’t suffer because of an unforeseen event.
Overall, What Is the Difference Between Business Continuity and Disaster Recovery?
Business continuity and disaster recovery are two terms that are often used interchangeably but they have different meanings. Business continuity refers to the process of ensuring that essential business functions continue to operate during and after a disruption.
Disaster recovery, on the other hand, refers to the process of restoring IT infrastructure and data after a disruption.
According to Gartner Research , “Business Continuity Management (BCM) is defined as a holistic management process that identifies potential impacts that threaten an organization.” BCM is focused on reducing risk by identifying threats in advance.
Disaster Recovery Planning (DRP), “defines how an organization will respond when unplanned outages occur.” DRP typically focuses on technology-based solutions for recovering from disruptions.
In conclusion, business continuity planning ensures that essential business functions continue during a disruption while disaster recovery planning restores IT infrastructure after a disruption. Both are important components of an organization’s overall resilience strategy. By having both plans in place organizations can ensure their preparedness against any unexpected events or disasters.
Six Key Business Continuity and Disaster Recovery Benefits for Your Business
These concepts may sound complicated, especially for small businesses. The pandemic did show us just how fast things can change, however, so it’s important to prioritize this type of planning even if you think you have great security measures and plans in place. Here are the key benefits for your business:
1. Reduce Costs
The cost of a disaster or extended period of downtime can be extremely high for a business. You have to deal with the data you lost, damage that was done to physical property, reputation hits, and loss of time and productivity. Putting a plan in place helps you mitigate these consequences and save money.
2. Minimize Downtime
Downtime is one of the biggest risks of a disaster or disruption. Even losing one employee or experiencing a power outage can create damaging downtime.
One study found that more than 60% of outages result in at least $100,000 in total losses, a number that has increased over the years. Implementing a strategy to keep operations moving, at least partially, and minimizing downtime can be a game changer for small businesses.
3. Establish Clarity
You may think you can deal with a disaster when it happens rather than worry about it now. It’s hard to think straight in the middle of a crisis, however, and it may be very stressful and confusing.
Everyone involved may have an opinion on how to handle things, as well, which can lead to confusion. This is why a plan is a must. You’ll have everything already in writing, and team members will know exactly what to do next and who is responsible for which tasks.
This clarity helps you work as a collective and recover faster. It can also help people reduce stress in the moment.
4. Maintain a Positive Reputation
Disasters like a cyberattack can quickly erode a business’s reputation. Customers want to work with businesses that prioritize security and safety, so it doesn’t look good when client information has been shared. Keep a positive reputation with your audiences by addressing these risks in advance.
5. Increase Safety
Business continuity and disaster recovery plans also help you ensure employees are as safe as possible during a disaster. You may include a plan for employees shifting to remote work if there is a natural disaster or pandemic, for example.
Another option could be to come up with a clear safety plan in the event of a fire in the building or an attacker entering the premises.
6. Provide Peace of Mind
Business leaders and employees alike will feel more safe and secure if a plan is in place, even if certain disasters never happen. They can review the plans so they know the basics of how disaster recovery will go.
Staff are more likely to feel like the business is prepared for the worst-case scenario. Simply knowing this can give everyone increased peace of mind.
Don’t underestimate just how important it is to have clear business continuity and disaster recovery plans in place. Sometimes all it takes is a clearly defined strategy to keep the business afloat.
Quick Tips for Business Continuity and Disaster Recovery
Understanding the benefits is important when creating a strategy, but actually writing out your plan is another thing. What should you include, and where do you begin? Each business may have a different set of needs and priorities. These tips, however, will point you in the right direction:
- Create a step-by-step guide. Team members may not know what to do in a disaster, so make instructions as simple as possible.
- Include your plan with your business policies. Business continuity and disaster recovery should be part of your employee handbook or other resources so people can reference them. Make sure everyone knows where this information is stored and how to access it quickly. It should be readily available to all stakeholders.
- Create separate goals for both business continuity and disaster recovery. Because these concepts differ, they need different objectives surrounding timelines and systems.
- Create network and site diagrams. One example could be to include a map of business premises to outline exit routes. Another is to map out the network to show what IT responses will look like and how potential threats may occur.
- List key tools and resources. Include a catalog of all business systems, software, and tools that will be employed during disaster recovery.
- Consider all financial and legal implications. Assessing your risks and impacts will help you think through potential consequences. Your plan should list all of these and how the business will respond to them. You may want to include, for example, business loans or legal assistance to pursue in the event of a loss or disaster.
- Look for government relief. There are often state and federal programs available after a crisis like a pandemic or a natural disaster. Look into what your business may qualify for. The Employee Retention Credit (ERC) is one example. This tax credit helps businesses get payroll tax relief if they lost money or had to close because of the pandemic.
You never know when your business will be targeted by a cyberattack or terrorist, or when a natural disaster or global crisis will hit. Thinking through the risks, your response plan, and the potential consequences will help you establish a strategy you and your team can deploy in an instant.
Contact ERC Today to Learn About Business Recovery Tax Credits
Events like the COVID-19 pandemic are hard to plan for. The last few years have shown businesses just how much can change, and many still struggle today from the aftereffects.
Nothing can completely prevent a disaster from striking, but creating a strong business continuity and disaster recovery plan can help ensure business success while you’re recovering from an unexpected event.
The government created relief programs to help businesses recover from pandemic closures and losses. One significant program is the Employee Retention Credit (ERC), which allows eligible employers to receive up to $26,000 per employee.
The ERC has ended, but you can still claim it retroactively. To qualify, your business had to have shut down (fully or partially) from a government order in 2020 or 2021, or you had to have lost at least 50% in gross receipts in 2020 or 20% in 2021 when compared to the same quarter in 2019.
You’ll use Form 941-X to amend your original tax return to claim your tax credit. Contact ERC Today for more information about your Employee Retention Credit options.