Back in September, the Hartford insurance company polled about 500 owners and executives of U.S. midsize businesses – companies with annual sales or revenues ranging between $10 million and $1 billion – and found something I find surprising; while most of those firms maintain “continuity plans” to guide operations in case something goes wrong, most haven’t tested them.
On top of that, the Hartford’s survey found most of those plans don’t account for several major risk factors facing businesses today – especially when it comes to lawsuits.
“Weather-related events, fires, thefts and supplier interruptions are just a few of the issues that can impact a business,” noted Eric Cannon, the Hartford’s assistant VP of property underwriting, in the study.
“While many midsize businesses have taken the important step of developing a formal continuity plan, testing and updating that plan on a regular basis can mean the difference between a business’s ability to recover quickly versus being unable to meet client needs,” he stressed.
Here are some of the survey’s main findings:
- While the majority of midsize businesses (59%) polled maintain a formal, documented continuity plan, one-third (33%) maintained only an “informal, verbal plan,” while 8% reported having no plan at all.
- Only 19% of the businesses polled said they had tested their plan.
- More than one-third (36%) of midsize businesses in the survey said they’d been unable to meet a client need due to an interruption in their operations, putting their relationship with that client at risk.
- Midsize business leaders are most likely to view healthcare costs (53%) and slow economic growth (51%) as posing a major risk to their business.
- Yet out of the top five risks facing businesses today, only one of them – a data breach/loss – can be directly addressed by the executives themselves, the Hartford noted; the rest are mainly out of their control.
- For many businesses, liability risk remains a hidden danger that is often overlooked. One-third (33%) of midsize businesses in the survey said they had been sued in the prior five years, and 29% had been notified of a potential claim or legal action against their business, with such lawsuits almost invariably negatively affecting expenses.
That’s not all, either, as the Hartford also looked at how the continuity risks associated with suppliers can impact midsize businesses as well.
Cannon noted that most midsize businesses in the survey (84%) rely on suppliers, vendors or consultants, yet four in 10 had suffered a supplier interruption and almost one-third (32%) had lost revenue due to a supplier problem – a situation I am sure many trucking companies can relate to all too well.
“Even the smallest vendor or that vendor’s supplier can impact a business’s ability to meet its customers’ needs,” Cannon added. “The savvy business owner must take the time to understand the continuity plans of its suppliers and their suppliers in order to fully know who is at the table and who can step in when back-ups are needed.”
Yet another piece of information trucking executives need to keep on their strategic planning tables.