Planning for disaster at your small business8 min read

Risk management
6 minute read

A small business is defined as a business with 1-99 employees. According the government of Canada, small businesses account for almost 98% of the total business throughout the country. Can you imagine if 98% of Canada’s businesses shut down? That would be a scary situation, which is why risk management and business continuity planning is very important as a small business owner.

What is business continuity?

Business continuity planning is essentially preparing your business for the worst. It’s implementing a step-by-step plan for the future should an emergency situation occur, and it’s something that some small business owners overlook. What would you do if there was a power outage? How would you recover from a cyber attack? Are you properly prepared for natural disasters? These are just a few of the questions you need to begin asking yourself to develop a business continuity plan.

“After a crisis, 1 in 4 businesses will never re-open. Proper business continuity and disaster planning can help other small businesses avoid the same fate,” explains Fred Muldowney-Brooks, Director of Risk Services & Solutions for Northbridge Financial Corporation. “It begins with asking yourself: ‘if I were to experience a loss tomorrow, what would I do?’ You need to determine the specific steps you’ll need to take in order to keep your business running,” Fred continued.

Business continuity requires you to look at your business through 3 lenses: financial, operational and marketing. You’ll need to determine just how much the loss will cost your business. If you’re not properly insured, you may be on the hook for the entire amount. “Insurance is often placed on low priority for small business owners due to time, resources and money. Unfortunately companies without a plan are left unprepared in emergency situations, which can cost them both time and money. Having insurance coverage is a central part of an effective business continuity strategy,” Fred explains.

You’ll also need to figure out how to keep your operations going to avoid any further financial loss. Business interruption insurance is especially important in these types of situations as it’s designed to help you continue to operate following a crisis. Finally, you’ll need to develop a proactive marketing plan to ensure your reputation isn’t damaged to avoid losing the trust and loyalty of your customers. “Business owners should always have a draft communication statement ready for customers in case they are unable to meet commitments,” Fred suggests.

Top risks for small businesses

Did you know that 2016 was deemed Canada’s most costly year in insurable damage? Disasters can happen anywhere and without warning. Don’t let this coming year be the most costly year for your small business—make sure you’re both aware and prepared for the top risks you may be facing.


One of the reasons that 2016 was such an expensive year for insurable damage was due to the Alberta wildfires. Many individuals and businesses suffered major losses from this devastating disaster and are still recovering from its effects. Start by asking yourself:

  • Are your employees properly trained on handling and operating equipment and fuel that may cause fires, property damage and/or serious injury?
  • Do you have fire protection equipment, such as fire extinguishers and smoke alarms, installed on your property?

Natural disasters

“I often put natural disasters near the top of the list because they’re seen as the least likely to happen, but that is not always the case and it needs to be on business owners’ radar,” says Fred. Fire is not the only natural disaster that can cause significant damage to your business. Others include:

  • Flood
  • Wildfire
  • Earthquake
  • Tornado
  • Hurricane
  • Avalanche

Each of these possible disasters will depend on your proximity to the elements that cause them. Make sure you have a plan in place for the ones that could cause a loss to your business. If you do have insurance coverage for your small business, check if the items on this list are covered through your current policy. If not, it may be time to update your coverage. Some other key points to consider:

  • If you can’t return to your business facility, where could you temporarily set up?
  • Is your staff trained on the proper protocol for a natural disaster?
  • Do you have a communications statement ready for your customers if you’re unable to fulfil commitments?

Electrical power outages

This is one of the more common risks that small businesses face. A really bad storm could knock out the power for a few hours. In more severe cases, you could be without electricity for a few days. One harsh wind storm can leave many homes and businesses without power for quite a while. This can cause a few problems including:

  • Loss of heating or central air conditioning
  • Issues with electrical panel or meter
  • Breakdown of all electronics including machinery, cash registers, elevators, diagnostic systems, boiler, compressor, freezers, ovens and other important devices

If your business depends on electricity—as many do—investing in a back-up generator would be wise as part of your business continuity plan. “Always keep your staff trained on the proper procedures during a power outage and ensure you have the contact information for a designated electrician on hand,” Fred elaborates.

Cyber attacks

Cyber attacks on small businesses are continuing to rise as hackers get savvier than ever in their techniques. It’s becoming increasingly difficult to combat these attempts, so it’s even more important to make sure you’re prepared in case you’re the victim of a cyber breach. Cyber losses can be caused by:

  • Virus or malware attacks
  • Hardware theft
  • IT system or communication system failures
  • Server room issues
  • Unexpected patches and updates

With the increasing popularity of mobile devices in the workplace, Fred warns that this is another area of cyber concern. “We often think about phishing, viruses and malware and how they affect our laptops and desktop computers, but mobile devices are a threat for cyber security now as well. Employees often connect to their company’s internal servers and networks from their phones or tablets turning them into outlets hackers may use to infiltrate your small business,” Fred explains.

Should you suffer a data breach or hack of any kind, there are steps you can take to recover. While developing your business continuity and disaster recovery plan, Fred recommends asking the following questions:

  • Do you know what your warranty or insurance covers regarding broken or stolen equipment?
  • Do you know what kind of cyber insurance coverage you have?
  • Do you have a list of specific models and brands of the equipment and technology your business needs?
  • Have you backed up all important information on a company server, share drive, cloud or external hard drive?


This may seem like an obvious risk for business owners, but it is still very important to consider while planning for business continuity in 2017. Crime can take many forms and affect businesses in different ways. Theft is a major one. If the equipment you rely on is stolen, how would you continue operations? How quickly could it be replaced? Is replacement cost covered in your insurance policy? Some other items to consider:

  • Is your staff trained on how to deal with and protect themselves from unauthorized personnel?
  • Do you have a security system in place, such as surveillance cameras, alarms, locked areas and security guards?
  • If a computer is stolen, are you able to remotely shut down/ erase sensitive information?

These are only a few of the risks that small business owners deal with on a daily basis. Every small business is different and faces its own unique set of risks. Ensuring you’ve developed a detailed and comprehensive business continuity and disaster recovery plan will help you get back on your feet if you suffer a loss this year. Proper insurance coverage including business interruption insurance can also be an asset in the face of a loss.

As a TruShield customer, you also have access to Risk Management Assist*. This resource allows you to talk to our team of dedicated Risk Services Specialists who, like Fred, have a great deal of experience, knowledge, and insight to share how to protect your business from risk.

“One of the risks that I see for small businesses owners is that they are often wearing multiple hats. They’re the accountant, the salesperson, the inventory control manager, etc. They don’t have a lot of time to sit down and plan for risks and business continuity. Risk Management Assist* can help answer the questions they have and guide them through this process,” explains Fred.

This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.

*Services provided by our Risk Services specialists and are intended to augment your internal safety, compliance and risk management practices, and are not a substitute for professional advice. Services are not an insurance policy or legal advice. Not all policies are eligible, contact us for details.