In the first part of this series, I introduced the importance of business continuity and succession planning within the South African insurance landscape, highlighting the growing gaps across brokers, UMAs, and insurers. The focus was on raising awareness – that many businesses, while operationally strong, remain vulnerable due to an over-reliance on key individuals and a lack of intentional long-term planning
Succession Planning is concerned with identifying future leaders, developing them, and preparing them for succession. Succession Planning seeks to make transition (change) less painful. Business Continuity Planning identifies and develops the strategies and tactics required to ensure that no matter what happens, your organization will continue to provide value to your customers, partners and employees.
The terms ‘business continuity’ and ‘disaster recovery’ are often used interchangeably. However, true business continuity encompasses much more than simply having backup files of your computer systems. A good business continuity program provides an outline of how your organization will recover from disruptions to its normal course of business. These may include disruptions caused by natural disasters (e.g. floods), terrorism, fire, loss of key personnel, etc.
A good business continuity program will answer the question:
Can my organization continue to serve my stakeholders even when things change?
With increasing frequency in recent years, organizations face a wide variety of potential disruptors (i.e., load-shedding, cyber risks, climate-related disasters and mergers & acquisitions). Therefore, being able to respond rapidly and effectively to change is becoming increasingly important in order for organizations to remain competitive in today’s fast-paced global marketplace.
Business Continuity is NOT solely the responsibility of the Compliance Department. Business Continuity is a Leadership Imperative. While it is true that Disaster Recovery Plans and Risk Registers typically reside with Compliance Teams, it is ultimately the responsibility of senior leaders to create the environment that encourages all critical functions of an organization to have a plan for continuity (e.g. Underwriting, Claims, Customer Service).
This involves providing clarity regarding:
- Critical Processes: What MUST continue uninterrupted?
- Dependencies: Who/what does our organization depend upon to operate?
- Alternative Methods: How quickly can we pivot and adapt if there is failure?
When senior leaders prioritize Business Continuity, it creates an Organizational Culture that anticipates disruption rather than reacts after it occurs. Additionally, this type of preparation builds Trust (Internally and Externally) as Stakeholders come to realize that the Organization is prepared to meet the demands placed upon it.
While creating a Business Continuity Plan can be complex, implementing it depends heavily on People who understand their roles and responsibilities during periods of disruption. The best continuity plan in the world cannot prevent an employee from taking action during an emergency if they do not understand what actions to take or why.
Therefore, training, cross-training, communication are all essential components to an effective Business Continuity Program. When Employees fully understand their role and purpose in maintaining continuity during periods of disruption, they become Partners in Resilience and not mere Passengers in Crisis Management.
Ultimately, Business Continuity represents a concept of Collective Responsibility that each Employee’s contributions collectively help ensure that the entire organization remains resilient.
It is not necessary for an organization to achieve perfection in Business Continuity; however, it is absolutely necessary for an organization to demonstrate preparedness.
Insurers, UMAs and Brokers should consider developing a comprehensive Business Continuity Plan across four primary layers:
Layer One: Governance and Accountability. Ultimately, it is the Board and Executive Teams that must define Ownership for Business Continuity. Clearly defined Roles will establish clear lines of Accountable Parties during periods of Disruption.
Layer Two: Operational Resiliency. Examples of elements included here are System Redundancy, Data Security, Process Documentation and Supplier Continuity. Organizations should regularly conduct testing of how long they can maintain Operations without reliance on key Systems or Suppliers.
Layer Three: Communication with Clients/Stakeholders. Silence breeds Anxiety during periods of Uncertainty. Organizations should clearly communicate with Clients/Stakeholders so as to Reassure them that their Policies and Claims remain secure.
Layer Four: Cultural Resiliency. Beyond Processes, an Organization Cultivating Adaptability which includes the Ability of Teams to Innovate and Collaborate under Pressure, is Essential. Such an organizational culture is difficult to establish overnight and is developed over time through Empowerment, Trust and Consistent Leadership
Lessons Learned from Recent Disruptions
We learned during the pandemic, that continuity is not a “nice-to-have”, it’s a requirement. Companies that had developed contingency plans, remote working infrastructures and flexible teams suffered the least amount of disruption; companies without such structures were unable to get back on track after the crisis.
Further lessons regarding continuity came through in terms of the increased frequency of cyber-attacks. The insurance industry learned again that continuity is as digital as it is operational. Insurers should regularly run tests of their continuity plans, simulate cyberattacks, and conduct regular third-party risk assessments. These are no longer discretionary activities, but rather essential components of any continuity program.
Lastly, load-shedding, changes in regulation, and the continued trend towards consolidation of smaller brokers into larger broker networks serve to reinforce the need for formalized continuity planning by leadership. The leadership team’s question shouldn’t be “Will this happen?”, but “When will it happen?” And How Prepared Will We Be?”
Principle of Foresight
At its most basic level, the concept of “Foresight” (planning for tomorrow while managing today) underlies each successful continuity program. This represents the mindset of disciplined leadership who consider issues that may impact the organization over time and develop strategies accordingly. Just like good leaders identify and nurture future generations of leaders within the organization; so do they identify and nurture systems that endure. Continuity represents an act of caring for employees, for customers, and for the organization’s purpose. Continuity is an assurance that the work we create, doesn’t fall apart when unexpected things occur.
Building Culture Around Continuity
To embed continuity into your organizational culture you must move away from simply reacting to events and start proactively designing responses.
Here are a few ways to build continuity into your culture:
- Develop and regularly test recovery and communication plans.
- Identify single points of failure throughout various departments.
- Train employees to support critical functions if needed.
- Evaluate reliance upon external vendors or partners.
- Make continuity planning part of your Board and Management agendas.
These behaviours transition continuity planning from a check box in your compliance program into a way of thinking/operating at an organizational level.
Final Thoughts
Continuity Planning is not about fear of what could go wrong, it is about preparing for whatever happens. Continuity Planning is a sign of leadership maturity which implies that our services, our customers and our people are important enough to protect against disaster.
Once you have embedded continuity into the culture of your organization, it reduces the likelihood that disaster will disrupt progress. Your company will become both reactive, responding quickly to an event and resilient, standing firm even after a significant event occurs.
Looking Ahead
In my next article in this series, I’ll describe how building the right culture ensures that your organization endures, how attitudes, behaviour, and values help ensure that continuity planning takes hold.
Remember, no matter how complete a plan might be, a poor culture will always undermine the effectiveness of any plan.
Claude Soobramoney – Broker Distribution – Auto & General Insurance
