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.
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