E-Business
Issue No. 23 - June/Nuly 2005
prepared for disaster
Sound risk management advice that will be worth having when you’ve acted on it.
by David Twiss
“Be Prepared” is the motto of Scouting, and dates back to the 1908 writings of Robert Baden-Powell, hero of the Boer war siege of Mafeking and founder of the Scout movement.
Baden-Powel went on to explain that “... a scout must prepare himself by previous thinking out and practicing how to act on any accident or emergency so that he is never taken by surprise.” It turns out that this is really quite good advice for all of us and our businesses, scouts or otherwise.
In the equity investment business, it is common for Playford Capital to see business plans, forecasts and budgets based on spectacularly optimistic projections. A common response to such optimism from a professional investor is “what about Plan B; when revenue growth is slower than expected?”
This scepticism is closely related to the scars shared by seasoned investors, from having believed projections subsequently not met, and having not insisted on the consideration of contingency plans.
Contingency planning can be considered as part of Risk Management; this is all about planning for the unexpected. Fire, theft and loss of key employees are things many companies seek insurance cover for, but what about the companies information infrastructure? What could go wrong there and what can be done about it?
How about the national company, with branches in each State, operating an order entry management and processing system in their head office, and providing that capability to all their other sites using encrypted links through the internet. They had made provision for power outages at each site by installing a UPS (Uninterruptible Power Supply), but when there was a prolonged power outage in their head office city, and the battery in their UPS went flat, the entire operation nationally ground to a halt.
This company was completely unable to receive or process customer orders anywhere in Australia because of a power outage in one city. They have annual revenue...
