The train derailment in East Palestine, Ohio, was a reminder that tragedies and unforeseen events occur too often.
Several food processing plants throughout the United States have burned. Other companies have been the victims of ransomware attacks. Unfortunately, train derailments, hurricanes, floods, viruses, fires and other disasters occur frequently.
Businesses should be prepared for them by following three important steps before a crisis occurs: identification, mitigation and preparedness.
Contingency and risk planning are essential aspects of any successful business. They help you prepare for unexpected events and minimize damage to the company’s operations, reputation and financial stability.
In today’s rapidly changing business environment, you must prioritize contingency and risk planning as you face challenges from technology, black swan events, artificial intelligence and catastrophes. Prioritizing must be a part of the annual planning retreat.
One of the most significant challenges facing businesses today is the rapid pace of technological change. Technology has transformed how companies operate, and as a result, you must adapt quickly to stay competitive.
Technology brings new risks
With new technologies come new risks, and businesses must be prepared to manage them to avoid significant disruptions.
Consider how Chat GPT, the artificial intelligence chatbot, spread through the business environment and our personal lives starting at the end of 2022. It was one of the fastest-moving technologies for society to digest.
AI presents opportunities and challenges for business. It has the potential to transform your company by automating processes, improving customer experiences and creating new products and services. But it presents unknown risks, including ethical concerns and potential job losses.
Contingency and risk planning must include measures to monitor and manage AI risks. Consider developing ethical guidelines for AI use, providing employee training and support, and investing in programs to teach your employees new skills to help them adapt to changing job roles.
Be ready for cyber attacks
Technology also creates significant risk with cybersecurity.
As more business operations move online, cyberattacks are becoming all too common. The impact can be devastating
A cybersecurity breach can lead to data theft, financial losses, inaccessible financial and communication systems and damage to a company’s reputation. Contingency and risk planning must include real-time measures and monitoring to prevent cyberattacks, detect them early and respond quickly to minimize their impact.
Beware of the black swan
These rare and unpredictable events can threaten businesses and the nation’s economy. Examples include natural disasters, pandemics and economic crises. They can disrupt supply chains, operations, and demand for products and services.
Businesses must develop plans to manage supply chain disruptions, communicate with stakeholders and adjust their operations to cope with changing market conditions.
Catastrophes such as natural disasters, pandemics and terrorist attacks can also disrupt supply chains. They can damage infrastructure and cause significant loss of life. Companies should develop emergency response plans, provide training and support to employees and invest in technologies to help businesses respond quickly to crises.
Where to find help
Contingency and risk planning are critical aspects of any successful business. They should include measures to prevent, detect and respond to unexpected events.
Here are three ways to find help:
- First, use your insurance professional to help identify and assess the magnitude of the risks and strategies to mitigate them.
- Then look for a firm that specializes in crisis management, planning and communication. Don’t rely on a run-of-the mill PR firm. Your trade association might be able to recommend a firm that’s done crises work in your industry. Or you can do an online search for “best crisis planning firms.”
- Use your contacts on LinkedIn and ask for recommendations.
By prioritizing contingency and risk planning, you can minimize the negative impact of unforeseen circumstances and maintain your operations, reputation and financial stability.
Your company might not have foreseen COVID-19. But it should have been ready to defend against it.