Business Continuity Management (BCM) Vs. Insurance
Insurance gives businesses the comfort of knowing that, in the event of loss or damage due to an insured peril, it will be able to replace or repair material items. Additionally business interruption insurance gives cover, typically, for the shortfall in gross profits for a specified period following the incident.
However, no matter how effectively a business protects itself through insurance, there are always some risks that cannot be anticipated or insured against. For instance insurance can never provide cost- effective security against the long term or permanent loss of customers, market, quality, reputation and employee loyalty.
The only effective protection against serious disruption to your Business BCM. BCM can be most simply described as “understanding and controlling risk and being best able to recover your business, regardless of the causes of interruption”. Insurance companies recognize the mutual benefit to be gained from BCM;
- · BCM is seen by insurers as a means to improve the quality of the business they are underwriting and confirm that BCM helps organisations mitigate impact, recover faster and minimize losses.
- · BCM can be used to protect against losses incurred through traditionally non-insurable such as Supplier insolvency or pandemic influenza
- · BCM can be used to better understand the requirement for Business Interruption Cover
BCM plays a vital role, during negotiations most insurers will want to see clear evidence of the fact that the company seeking a business interruption over is managing its potential loss exposures effectively and taking the necessary mitigation steps. This is where the BC Plan can play a valuable role in demonstrating that the organization has implemented measures to limit any possible risks. The underwriter will also expect to see evidence of processes in place to ensure that the business can return to full operation as quickly as possible after the event.