The common thread between these two concepts? In both cases, you assume that you have everything in place and find out you are wrong when hit with a major failure.
Most of the good companies I am associated with have a computer backup plan in place. Some do this daily, some weekly and some monthly. And I have a copy of clients that are doing on-going incremental back-ups. Here’s the problem. Not one of these companies tests their back-ups to see if the process will allow a restore if there is a computer crash.
In the same way, all my clients have business insurance. But only one has scheduled annual reviews to not only make sure that the premiums are fair but to also make sure that coverage is adequate and proper.
What happens when you replace a light bulb in a lamp? You turn it on to see if it works. What happens when you buy a new pair of pants? You try them on to make sure they fit. In other words you validate your actions. In exactly the same way, you need to do this for both your insurance coverage and your computer back-ups.
You are all working hard to make sure your business is successful and growing. When a problem comes up, you address it and probably solve the problem. But you are setting yourself up for failure if you don’t validate your assumptions – in this case that you have adequate insurance and your backups will restore your computer system in the event of a crash.
So here are two new best practices:
- Your top accounting person needs to schedule an annual review of your corporate business insurance. Sometime between 30 days and 60 days prior to renewal, he needs to have your insurance company submit a written review to you discussing a) adequacy of current coverage, b) things you can do to reduce premiums and c) potential threats/exposure if xxxx happens. You should also ask 1-2 outside insurance companies to give you a proposal with the same information.
- Your top IT person must test the system backup once per month. As a minimum, he should restore 1 test file and include the results in his monthly report to you (you get monthly reports, right?). Please note this is an additional IT process that is not being done and needs to. There are many other duties that I am assuming are working OK (what data is backed up, are all software packages on the same release, is anti-virus up to date and working, etc).
Success is the removal of all obstacles.
Have a great day,