Preparing Your Business for Events Like Banking System Outages

Impact of Banking System Outages on Businesses

Banking system outages can have a significant impact on small businesses that rely on these systems to process payments and manage their cash flow. A banking system outage can result in payment processing delays, cash flow disruptions, and lost revenue. For instance, if your business relies on a payment processing system that goes down during an outage, you may be unable to process payments, which can lead to lost revenue and financial losses.

Preparing Your Business for Banking System Outages

To prepare for a banking system outage or any other unexpected event, businesses must have a contingency plan in place. This plan should outline how to handle operations during an outage and include steps to reduce the impact of an outage on your business. Here are some steps to consider when preparing your business for unexpected events:

Establish a Business Continuity Plan (BCP)

Creating a BCP is essential to ensure your business can continue to operate during an outage or other disruptive event. A BCP is a plan that outlines how your business will continue to operate during an unexpected event. This plan should include a business impact analysis, risk assessment, and recovery strategies. It should also identify critical business functions, stakeholders, and team members responsible for implementing the plan.

Diversify Your Banking Relationships

Having accounts with multiple banks can help reduce the impact of a banking system outage. By diversifying your banking relationships, you can avoid the risk of having all your accounts with one bank. This can reduce the impact of an outage on your business and minimize financial losses.

In addition, make sure your lending programs are diversified in addition to the banks. Do you have a business line of credit available if an emergency causes a cash flow disruption? Is your working capital sufficient?

Prepare for Cash Flow Disruptions

During an outage, cash flow disruptions can occur, resulting in financial losses. To prepare for this, ensure your business has enough cash reserves to sustain operations during an outage. This will help ensure you can continue to pay bills, employees, and other expenses during downtime.

Some businesses, like construction companies, might naturally experience ebbs and flows in business as weather permits more or less construction. Making sure that your construction company has the ability to sustain operations during the low periods is key to long-term success.

Ensure Payment Processing Systems are Backed Up

To avoid payment delays or failures during an outage, ensure payment processing systems are backed up. This can be achieved by backing up data to an offsite location, automating payment processing systems, and ensuring data centers are secure.

Secure Backup Payment Methods

To ensure your business can continue to accept payments during an outage, have alternative payment methods, such as mobile payments, available for customers. While paperless payment is more environmentally friendly, if your liquor store is unable to take cash transactions during an internet outage, you’ve got a significant vulnerability.

Other Unexpected Events to Consider

While banking system outages are a significant risk for businesses, they’re not the only unexpected event to consider. Businesses must also prepare for other events like natural disasters, cyberattacks, power outages, supply chain disruptions, and the pandemic. Here are some additional tips to prepare for these events:

Conduct a Risk Assessment

Performing a risk assessment is essential for small businesses to identify potential vulnerabilities and mitigate the risk of unexpected events.

To perform a risk assessment, small businesses should start by identifying potential risks that could impact their operations, such as natural disasters, cyberattacks, and supply chain disruptions. Then, they should assess the likelihood and impact of these risks on their critical business functions and financial performance.

This can be done through interviews with employees, review of business processes, and analysis of historical data. Finally, small businesses should develop a risk management plan that outlines how to mitigate risks and respond to unexpected events. By performing a risk assessment, small businesses can better prepare for unexpected events and ensure their long-term success.

Create a Disaster Recovery Plan

Creating a disaster recovery plan (DRP) is essential for small businesses to ensure they can quickly restart normal operations after unexpected events like natural disasters, cyberattacks, and supply chain disruptions. Here are some steps small businesses can take to create a DRP:

1. Identify Critical Business Functions: Identify the critical business functions that need to be restored quickly in case of an unexpected event.

2. Identify Data and IT Systems: Identify the data and IT systems that support these critical business functions and assess their vulnerability to disruption.

3. Prioritize Recovery Strategies: Develop recovery strategies that prioritize the restoration of critical business functions and IT systems.

4. Establish Recovery Time Objectives (RTO): Establish the maximum allowable downtime for each critical business function and IT system.

5. Establish Recovery Point Objectives (RPO): Establish the maximum allowable data loss for each critical business function and IT system.

6. Develop Contingency Plans: Develop contingency plans that outline steps to take in case of an unexpected event, such as backup data centers, alternative suppliers, and emergency communication plans.

7. Train Employees: Train employees on the DRP and their roles and responsibilities during an unexpected event.

8. Test and Update the DRP: Test the DRP regularly to ensure it’s effective and update it as necessary to reflect changes in business operations or risks.

Diversify Suppliers

Diversifying suppliers can help ensure your business can continue to operate during a supply chain disruption. This can minimize the impact of an event on your business operations and ensure you have access to essential goods and services.

You can be as well-prepared as possible, but if the supplier of your retail company’s inventory isn’t as prepared, you can still experience serious issues. Make sure you’re not putting too many eggs into the same basket when it comes to suppliers.

Have Insurance

Having insurance can help protect your business from financial losses resulting from unexpected events. Consider getting insurance coverage that covers events like natural disasters, cyberattacks, and supply chain disruptions.

Create an Emergency Kit

Creating an emergency kit can help ensure your business has essential supplies during a disruptive event. This kit should include things like first aid kits, food, water, and other essential supplies.

Implementing Your BCP

Implementing your BCP involves ensuring your business is prepared for unexpected events. Here are some tips to help you implement your BCP:

• Train Team Members: Ensure team members are trained on the BCP and understand their roles and responsibilities during an unexpected event. Ensure everyone has access to the relevant stakeholders’ contact information to keep everyone informed at the worst of times and ensure everyone is as prepared as possible when disaster strikes.

• Communicate with Stakeholders: Communicate with stakeholders, such as customers, suppliers, and responders, about your BCP. This can help ensure everyone knows how your business will continue to operate during an unexpected event.

• Test Your BCP: Testing your BCP can help identify any potential gaps or issues in your plan. Testing your BCP regularly is essential to ensure it’s up-to-date and effective.

• Update Your BCP: Update your BCP regularly to ensure it’s current and reflects any changes in your business operations or risks.

Bottom Line

Unexpected events like banking system outages can have a significant impact on your business. Preparing your business for these events by implementing a BCP can help mitigate financial losses and minimize disruptions to operations. By conducting a risk assessment, creating a disaster recovery plan, and preparing for cash flow disruptions, your business can be better prepared for unexpected events.

By communicating with stakeholders, testing your BCP, and updating it regularly, you can ensure your business is ready to weather any storm. Remember, being prepared is essential for any business owner, and implementing a BCP can help ensure your business can quickly recover from unexpected events.