Slideshow 10 Steps to a Disaster Recovery Plan for Advisory Firms

  • November 22 2011, 10:24am EST
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10 Steps to a Disaster Recovery Plan for Advisory Firms

It seems more and more common lately that when you turn on the T.V. or open your Internet browser there is breaking news of some sort of disaster. From direct financial disasters such as market volatilities to weather related disasters like floods, tornados and fires, to even more large-scale disasters like earthquakes, tsunamis and nuclear crisis; disasters are unavoidable.
But how prepared are you to deal with a major disaster, or other unexpected events that can trigger change?
Here are 10 steps that should help you and your firm build a disaster recovery plan so you can be prepared should the unimaginable arise:

1. Assess your risk – both internally and externally.

Evaluate the types of emergencies that have occurred in the past. Is there precedence for theft or severe weather threats? If your business is located in an area subject to specific weather patterns, such as Tornado Alley, or on the coasts, discuss what could happen if your building were to be damaged. Is there another location you can move to?

Does your building or area have a history of power outages? Assess the design and construction of your facility. If another office in your building were to have an extreme issue such as a flood or fire, would that interrupt your business?

What could result from a process of system failure if your computers are compromised? Hullet advises firms to make a list of all the possible scenarios, including smaller “what-ifs” such as vandalism, toilet overflows and power outages.

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2. Assess your critical business functions.

What functions are critical to your day-to-day operations? Consider trading, customer service and other operational tasks.

How long can you withstand an interruption to those critical functions? Less than 24 hours? Twenty-four to 48 hours? Seventy-two hours? What employees are essential to your business?

Are there any employees who are not cross-trained? Can work be done by another employee if one is missing for a day, or a week? How about a month?

3. Prepare your supply chain.

Talk to your vendors and suppliers about their recovery plans. Ask yourself if it has been tested. Find out what their response time to you is. They may have you segmented just like you have your clients segmented.

Develop a relationship with alternate vendors to eliminate single points of failure. Does your insurance policy cover leased property? Make sure to insure what can’t be protected, and keep copies of your insurance policies stored offsite or electronically.

Also, make a list of all your personal property with serial numbers, model numbers, etc., and estimated value.

4. Create an emergency management plan.

An emergency management plan minimizes the impact of a disaster, protects and reassures stakeholders and prepares you for a recovery. Having a plan in place will facilitate the transition between normal business operations and a catastrophe response.

Have a plan outlining where the office will meet and who will need to meet. Also, have a calling tree so the responsibility of initial phone calls is spread out. Also, consider using services like Log Me In or Go To My PC to have remote access to your office. Include notifications to employees, clients, vendors, suppliers and your broker-dealer.

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5. Back-up your data.

You never know when or where disaster will strike and when it comes to technology, it can happen on a bright sunshiny day. Daily backups of data should be a must with any business. Backups that are kept offsite, possibly in multiple locations and tested monthly are best.

Consider having a backup generator as well in case of a power outage.

6. Create a crisis communication plan.

This is a crucial step in your disaster recovery plan. To create a crisis communication plan you will need to determine who needs to be communicated to, how you will relay any necessary information and who will be responsible for executing the communication plan.

7. Assemble an emergency kit.

Your emergency kit should include your recovery plan, important records, insurance policies, fixed asset inventory, contracts, operating system install disks, office supplies and a list of important passwords, phone numbers, key codes, etc., to the phone company, tech provider, software companies, insurance companies and your clients.

If possible, try to keep two emergency kits: one in the office and one at a remote location should something happen to the building.

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8. Review your insurance coverage.

Just because your office isn’t in a flood plain doesn’t mean it will never flood. Assure you are insured for all potential risks. Also, consider business interruption insurance and added expense insurance. Keep photos of your building, equipment lists and policy information stored in a safe and secure offsite location.

9. Plan for an alternate location.

If you can no longer go to the office, where will you go? Is there enough room at the advisor’s house? Will all employees work remotely? Are they set up to be able to do so?

Plan A might be to stay at an advisor’s house for short term interruptions, but you should also have Plan B if you will be displaced for a longer period of time.

10. Test your plan.

It’s really important once you have a plan in writing to test it annually and update it as necessary. There is no pass or fail for a plan, and you can never be 100 percent sure it will work until you need it, but it is still better to have a plan in place than to face a disaster blind. Make sure you re-educate all employees when any changes to the plan are made. Remember, too, that testing is a process, not a project.

There are many benefits of planning ahead. You can minimize damages and loss caused by a natural, market or man-made disaster; you improve your ability to cope with the unexpected; and you reduce the need for decision making when disaster happens. If the past couple months have taught us anything, it should be to act like a Boy Scout – always be prepared.