Saturday, August 04, 2007

Stats to Make you go hmmmmm

How does your company evaluate and manage risk?

Managing risk is something I have done all of my professional life. You can't remove risk entirely BUT you can eliminate it in great part by limiting the downside or by vastly increasing the odds in your favor through a mitigating action.

I have dealt with cases where my clients assets, or possibly their life is on the line. I more importantly have dealt with risk where my life was on the line.

If a risk had a high danger level and had a moderate to high level of occurrence, I took action in my planning to mitigate that risk, while still going about my life, or my client going about their business.

Lets look at some stats surrounding risk to your business. ( I know very well people can lie with stats, you have to analyze the risks correctly - see my earlier posting on bird flu, that being said though have you analyzed your business in relation to these stats?)

A 2005 study of 1,200 businesses found that 33% had no continuity plan in place. (what some peoples idea of a continuity plan is would make me believe that the realistic number is much higher, in fact I would double it at least)

2/3 rds of the businesses experiencing some sort of serious business interuption reported losing business because of it.

16% of those reporting had losses between $100,000 and $500,000.

26% of those reporting lost business had "no idea" what it had cost them per day.

(eventually someone in the company will know - the CFO, but how those numbers are accounted for is another issue)

93% of businesses who lose their data for 10 days or more file for bankruptcy within a year of the event. This is perhaps the most sobering stat. If you cannot recover within ten will not recover. This is why it is crucial to have a response plan in place and you do not waste precious time in your recovery.

After Hurricane Floyd in 1999, 43% of businesses that closed temporarily - NEVER OPENED FOR BUSINESS AGAIN.

For small businesses of 100 employees or less, only 5% have any form of business interruption insurance.

J. Paul Getty once said "decide what is the worst thing that can happen to your business, then, take all the steps you need to take to ensure that it does not happen."

All the stats in the world don't matter when your business is the one that is affected, plan to make your business, not one of the ones that folds. It's good risk management.

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