BUSINESS INTERRUPTION RISK FEATURES

1. BUSINESS INTERRUPTIONRISK FEATURES PETE HOLMES BUSINESS RESILIENCE FORUM APRIL 2015

2. Financial • Discussion in this area to detail the Income streams for the business, and associated aspects: • Protected Income • Inter-company/ group Trading • Committed Costs • Previous years performance • Coming years budget

3. Financial • The most important detail to obtain is: • SUM INSURED CALCULATION • Does policy SI accurately represent what should be covered, over the Maximum Indemnity Period?

4. Financial • Maximum Indemnity Period • Is it adequate? • 12 Months is nearly always inadequate! • Has rebuilding the business, and not just the premises been taken into account?

5. Business trend Customers and market place Seasonality Buildings Machinery Supplies Alternative temporary premises Computer dependency Data storage Recovery assistance Business Continuity Planning Dominant trade features Business Interruption Risk Features

6. Business Trend • Indicators include: • Investment • Sales growth / Budget • Overtime working • Staff morale • Redundancies • General level of activity

7. Customers & Market Place • Who the major customers are • Who the major competitors are • How many customers there are? • How reliant is the business on the largest customers? • Are the biggest customers tied in any way? • Is there a good degree of customer loyalty? • How competitive is the market? • Can new customers be “easily” found?

8. Seasonality • The extent of a loss and the speed of recovery can be influenced by how seasonal the sales of the business are. • Typical factors that may influence sales include: • Christmas • Easter • Summer holidays • Fashion seasons • Sports seasons • School Terms/ Years

9. Seasonality • Consider the effect if damage occurred at the beginning of Q2 and the interruption lasted 6 months • Avoid 18 Month MIPs • Businesses need to consider recovering the income and customer base, to expected levels. Not just rebuilding the premises.

10. Buildings • Location • Construction • Size • Floor layout • We also need to consider the rebuilding period

11. Construction materials Size Design complexity Installed Machinery Congested location Site access problems Local construction market Site pollution Asbestos contamination Planning problems Listed status / Heritage considerations Authority controls / regulation and licence issues Factors influencing a Rebuilding Period

12. Machinery • Age • Value • Manufacturer • Process use • Machinery availability • Machinery replacement alternatives

13. Machinery Replacement Issues • Susceptibility to damage • Supporting equipment – e.g. conveyors & cranes • Protections in place • Bottlenecks • Patterns, moulds & tooling

14. Machinery Replacement Issues • Machinery replacement time is also influenced by : • Specialist or bespoke machinery • Relationship with machinery suppliers • Obsolescence • Is it modified for the Insured? • Is it made in the UK, Europe, USA, Far East? • Does it require extended on site installation and commissioning times?

15. Machinery Replacement Alternatives • Can the process be subcontracted? • Is suitable second hand machinery normally available? • Availability of hired in machinery

16. Supplies/ Suppliers • Are they single sourced? • Are similar supplies available from a different supplier? • Are supplies available immediately or would there be a delay? • Are the supplies seasonal or fashion related and not replaceable? • Is there a Buffer Stock elsewhere?

17. Alternative Temporary Premises • Factors to consider: • contracted workplace recovery facility • use of portable buildings • use of multiple buildings • use of buildings in the wider area • modifications that may have to be made to the building • would enhanced utility supplies be required? • is the location essential for the business? • regulatory needs / licences • Trading from temporary premises may not be viable

18. Computer Dependency • To what extent would the non availability of computers interrupt the business? • What recovery measures are in place?

19. IT Developments: Cloud Computing • Computing as a utility • Cloud comms • Cloud storage • Cloud applications • Cloud processing • UK Based Clouds

20. Computer Dependency Factors • Is production machinery controlled by computers? • Are key business processes dependent on computers? • Office risks - how long can the business continue without computers? • Are there links into suppliers and customers for order data and/or billing data?

21. Computer Dependency Recovery Factors • Tested manual work rounds • Computer / office recovery contracts • “Hot start” agreements • Excellent data storage arrangements • Off site server duplication / telecomms duplication • Active fire protection of server suites

22. Daily backup/ GFS Duplicate copies of backups Offsite data storage/ Hosting Use of approved Data cabinets Mirroring of data Data Storage – Good Features

23. INTERNAL Reorganising undamaged portions of premises Help from other sites operated by the Insured Redeploying staff to different roles EXTERNAL Using third party storage locations Subcontracting part / all of process Buying in alternative finished goods Reciprocal agreements Recovery Assistance

24. Business Continuity Planning • A process designed to • MINIMISE the risk of a disaster befalling the organisation • MAXIMISE the ability of the organisation to recover from a disaster

25. BCP Key Questions • What is the coverage of the plan? • Does it include Business Impact Analysis? • Does it provide for the long term recovery of the business as well as Emergency action? • Is the plan tested in any way?

26. One Final Thought • Most businesses are completely dominated by one factor that outweighs all others in importance • Building • Location • Machinery • Seasonality • Supplier • Time

27. Business • Trend • Customers • Recovery • Assistance • Market Place • Business • Continuity • Planning • BI • Risk Features / • Data Storage • Seasonality • Building • Reinstatement • Computer • Dependency • Supplies • Machinery • Replacement • Alternative • Premises

28. Any Questions?