Sustainable Business: Business Interruption Insurance and Continuity

Hello, everyone. With the rising threat of business interruption, continuity planning is vital for countering the effects of crisis events. On behalf of McGriff, I would like to take this opportunity to thank each of you for joining us today as we discuss sustainable business, business interruption insurance, and business continuity.

My name is Lasonya Wilder, and I will be your host for the call today. There are just a couple of housekeeping points that I would like to share before we get started. This is a live session, and you are in listen mode only.

If you have any questions at any time during the presentation, feel free to utilize the chat box or q and a box to type in your questions, and we will address them during the q and a segment. If time doesn't permit us to answer the questions after the presentation, we will be sure to capture them and provide the responses afterwards.

Now it brings me great pleasure to introduce our speakers for the hour. We have with us today Jen Desco, assistant vice president and risk control consultant with McGriff. As an environmental consultant and insurance industry veteran since two thousand two, Jen has specialized in industrial hygiene, lean manufacturing principles, ergonomics, safety, cross functional team leadership, business continuity, and risk management. She's worked in several industries, including manufacturing, transportation, hospitality, and construction to achieve measurable loss reduction through consultation and focus service activities.

Jen earned her bachelor's degree in biology from Georgia Mason University and her master's in business administration degree from Walden University.

She holds a Virginia property and casualty agents license and the associate in risk management and associate professional disaster international. She also hosts a certified safety professional designation, meeting the experience and as the requirements mandated by the Board of Certified Safety Professionals. Jen is also an OSHA outreach trainer for the construction industry and a member of the American Society of Safety Professionals.

It also brings me great pleasure to introduce Doug Hall, a senior claims account executive also with McGriff.

Doug supports clients and producers by servicing clients enterprise wide. Doug manages and delivers assigned complex claim and coverage evaluations on all insurance lines with a focus on property. He delivers value added claim consulting services to clients and is involved with the new sales opportunities.

His extensive background in property claims give him a unique perspective that allows him to tailor solutions with successful outcomes for clients. Now he's a graduate of Clemson University with a bachelor's degree in management.

He also earned his associate in claims designation and holds an adjuster's license. His strengths include commercial and property lines, property coverage analysis, relationship management, and issue resolution.

His experience includes large loss claim handling, exact estimate, estimating, property technical training, and property claim leadership.

So without further ado, I will turn it over to Jen to kick off the presentation.

Thank you, Lasonya. Good afternoon, everyone. Thank you for joining myself and my colleague, Doug.

I'm excited to guide you through the critical aspects of business continuity planning and the role of business interruption insurance in ensuring operational resilience. We'll begin today by reviewing the need for business continuity planning, the business continuity plan, and income coverage.

And next, we'll discuss how properly valuing operations for coverage can lead to quick recovery. Throughout our, presentation here, we will review some real world claim examples and also business continuity plan application. And then finally, as Lasonya had mentioned, we're going to wrap up with, some takeaway questions.

Now let's review a high level definition of both business continuity plan or BCP and business income coverage.

A BCP, it is designed to prevent failure, while the business income coverage is designed for failure and only works if there is a loss. A BCP is risk inclusive, while business income coverage is risk specific.

BCP works to avoid losses. However, it doesn't guarantee that there will not be a loss, just improves our reaction time in the strategy identification.

So a business income coverage can be property, business interruption, and or contingent business interruption.

Components of our BCP will support our determination of our insurance need and while this business income coverage increases our business survival.

So now that a definition has been shared, I'd like to share some information on the need for business continuity planning. In twenty twenty four, several memorable weather and climate disasters occurred from hail and severe storms, drought and heat, wildfires, hurricanes to the east, tornadoes, and winter weather.

Many billion dollar disasters occurred.

According to the National Centers for Environmental Information, that's a division of NOAA, the billion dollar disaster events are increasing each year.

In twenty twenty four alone, twenty seven confirm confirmed events occurred, which totaled and costed the a hundred and eighty two point seven billion dollars.

The total cost of the last ten years from twenty fifteen to twenty twenty four exceeded one point four trillion dollars.

These costs include the ones depicted on this screen, include physical damage to residential, commercial, and municipal buildings and contents, time element losses that we talked about such as business interruption, loss of use, damage to vehicle boats, public assets, and those include roads, bridges, levees, the infrastructure, also agricultural assets such as crops, timber, livestock, and wildfires suppression costs. These estimates are conservative at best.

So the list really goes on and on. Any single of these events shown here can disrupt your business, which is why it's so important to take business continuity planning seriously.

While the climate based natural disasters are very prevalent and in the forefront of many of our minds, there are many additional threats to consider that may impact your business. Fire, theft, viral outbreak break, that's something we really didn't consider much in the US until COVID.

A mechanical failure, maybe your organization manufactures goods. Right? And you're heavily reliant on one machine or conveyor system. What's the lead time on that replacement? Those are things to consider. Cyberattacks, definitely the ransomware social engineering data breaches. Not represented on this graphic, but something to consider can be included.

Are those political, threats, supply chain disruptions, civil unrest, and workplace violence events.

So before we move on with our presentation, we would like to do a poll here of our audience just to share some information.

And you'll see this pop up on your screen. So after you choose your selection here, go ahead and hit submit and done. In this way, we'll share the results with everyone here. So which of the following do you consider the biggest threat to your organization for business continuity?

Are they cyber attacks, data breaches, natural disaster, power infrastructure failure, or workforce unavailability.

Give a couple seconds for a couple of folks to you'll see the results begin to populate in our, chat section.

So so far, most of everyone's most biggest concern or biggest threat here are cyberattacks, day breaches, or natural disasters.

Thank you all for participating.

So, unfortunately, a staggering forty percent of businesses do not reopen after a disaster, and another twenty five percent fail within one year. The impact of dis of a disaster is the greatest for small businesses.

The majority of our small businesses in the US never reopen.

Our small businesses are the lifeblood of our economy, and seventy five percent of these have no business continuity plan. Globally, businesses have or fifty one percent of all organizations have no business continuity plan.

So a few real world case studies demonstrate really the importance of business continuity plan planning and maintaining operations during those unexpected disruptions. Some examples include ransomware attacks, natural disasters, and physical security incident incidents.

Effective BCPs, like the one used by Carmack, allowed them to contain a ransomware attack and minimize disruption.

Other examples show the consequence of weak business continuity plans, such as the Irish Irish Health Service Executive, which experienced a similar ransomware attack that shut down services and disrupted payroll.

So let's explore these just a little bit more in-depth just for context and examples here.

Carmack is a technology solutions provider for the trucking industry. They successfully contained a ransomware attack by leveraging a detailed cyber attack response plan, employee training, and security monitoring tools.

In twenty eighteen, Marriott used its BCP to coordinate with law enforcement, communicate with affected customers, and implement security and security measures after a massive data breach.

And, finally, the success is a German telecom giant. When we talk about telecom, we're thinking, gosh, maybe they have a security event. Actually, their response was to a fire rapid they rapidly restored their service by effectively implementing an incident management solution.

They discovered that a dangerous fire was encroaching on a critical company facility, and this facility was a central switching center. So this housed their important telecom wiring and in equipment, and these were vital to providing service to millions. The company uses an incident management system which alerted the staff to fire, evaluated impact, and automatically activated their incident management system, which sent alerts to over sixteen hundred Germany based employees.

The fire, unfortunately, did reach the building, knocking out the entire switching system. But with their effective management system combined in place with a redundant network design, the company was able to full fully restore within six hours.

So here also are some failures that we'll highlight.

The health service executive in Ireland, this is a public health and social care provider.

They experienced a ransomware attack that forced them to shut down outpatient services and render their payroll system inaccessible.

This had an impact over on over a hundred and forty six thousand health care workers.

The city of Atlanta had a ransom attack that demanded a ransom and caused significant disruption to the city services.

The attack devastated the city's government computer systems, disrupting numerous city services, including its police records, courts, utilities, parking services, and many other programs.

These systems were shut down for five days, forcing many of these departments to complete essential paperwork by hand.

So these services were slowly brought on later, and the full recovery, though, took months. The attackers, interestingly enough, only demanded a fifty two thousand dollars ransom plane payment.

But when it was all said and done, the full impact of the attack was projected to cost more than seventeen million dollars with three million dollars alone spent on the contracts for emergency IT consultants and crisis management firms.

This ransomware attack is a lesson in inadequate business continuity planning and the fact that they were woefully unprepared.

The NHS Foundation Trust, finally, in this category of the failures is the National Health Service in England. This experienced a ransomware attack on their major software provider, and it resulted in significant delays and restoration due to legacy systems and lack of proper oversight, forcing the frontline staff to revert to paper and pen.

All these case studies highlight the importance of proactive business continuity planning and consequences of neglecting it.

Now more recent examples in the news, ones that you may be aware of and may be more familiar to you, the outage of, AT and T in twenty twenty four, was due to misconfigured network element and failure to follow routine maintenance window. The outage had an impact on nine one one services, and over ninety two million calls were prevented. So the redundant systems and a backup infrastructure maintained customer service and data protection during the outage while they work to get back up to a hundred percent.

March of twenty twenty one, one of the OV Cloud providers' data centers caught fire, and the fire suppression measures just were not up to the job. Many of the clients woke up to find rented servers offline. And to make things worse, the backup array was completely destroyed in the fire. And the service provider could have used that backup array to recover the customer data. The crisis didn't only affect immediate business functions, It also suffered the rep excuse me. The reputation also suffered, and it was a subject of a ten million dollar class action lawsuit.

COVID nineteen is something most of our businesses experience worldwide, and we reacted quickly. Many of us without a plan in place, many of us pivoting just with little time frames. Right? And many businesses closed because of our inability to pivot. This was a learning lesson to many of us.

In two thousand and sixteen, lightning struck an office building in Mount Pleasant, South Carolina causing a fire to break out.

These offices were home to K and T Technology, an IT company that hosts servers for more than two hundred clients.

The fire torched their network, melting cables, burning hardware.

The equipment was destroyed beyond repair, and the office was unusable.

For a company whose core service is hosting servers for other companies, situation looked pretty bleak.

But their entire infrastructure, while it was destroyed, the clients that they had never knew the difference. Their continuity plan, as a part of their continuity plan, Canty already moved all of its client servers to a remote data center where continual backups were stored.

So even though their staff were forced to move to another temporary office, their clients never knew the difference.

In twenty seventeen, hurricane Harvey slammed into Southeast Texas, ravaging homes and businesses across the region.

In over four days, some areas received more than forty inches of rain. And by the time the storm cleared, it caused more than a hundred and twenty five billion dollars in damage. Countless small businesses were devastated by the hurricane.

Yol Media, a small Internet marketing agency, was almost one of them. Despite being located on the second floor of an office building, their offices were flooded when Lake Houston overflowed. Flooding was so severe, no one could enter the building for three months.

And when the staff finally were able to enter the space after the water levels receded, any hopes for recovering the space were quickly crushed. The office was destroyed. Mold was rampant. They never returned to the office.

However, the operations were hardly affected. They kept most of the data stored in the cloud and allowed staff to work remotely. And even today, most of the staff now work remotely.

So Buffalo Trace, as we've got depicted here, in twenty twenty five of April, they experienced rain in Frankfort, Kentucky, which was the second highest amount of rain ever recorded for the city. And that was second to the great flood of nineteen thirty seven, which was the flood of all floods. But nearly after one week after the floodwaters reached their peak, there were much more signs of normalcy.

The this was supported really by the cleanup and restoration efforts by hundreds of professionals, review of removal of floodwater, debris, and damage that was more than seventy five percent complete only seven days post flooding. Power was destroy destroyed, excuse me, which allowed them to get back to bottling inside the Blanton's bottling home and the main bottling home. The CEO and president cited the tireless efforts of contractors and dedicated teams and the distillery's flood recovery plan as the reason for the quick recovery.

Oh, I was alright. So proactive planning really is crucial here. Here's our lessons that we've learned, right, over these. Having a well defined business continuity plan and regularly testing it is essential for effective response to disruptions.

Cybersecurity is a major concern for most businesses, and, you know, we can cite the poll that we just completed.

Ransomware attacks and data breaches are increasingly common threats that require robust business continuity plans. Cyber insurance coverage is needed and can assist with those cyber related business income business interruption incident.

But within IT, data loss is often the primary focus of business continuity, and for very good reason. Right? We send emails, files, software, operating systems. Many of our customers and ourselves rely on data and IT.

Our legacy systems pose risks. Our organizations need to be aware of the potential vulnerabilities associated with those older systems and implement measures to mitigate them or get them up to speed. Employee training is very important. Employees need to be trained on how to respond to different types of business disruptions and understand the roles in business continuity planning.

Our clear communication is key. Effective communication with our customers and stakeholders is crucial after a disruption.

So let's explore business continuity plans further. What are they? Do we really need them? How do we create one?

Besides all of the lessons learned and statistics, there are many reasons to establish a business continuity plan. Depending on your organization, you may have legal and or regulatory requirements if you are in the financial services, energy, health care, or international commerce.

Remembering that failure to plan as well as failure to prepare are grounds for negligence, and this is really key if communities depend on an organization service.

Think on utility providers, those things.

Demands by organizations for their vendors.

Is your product a key component of another product for a vendor or another organization?

Another thing that really would help if you established a business continuity plan is to maximize the insurance coverage.

BCPs help to strengthen and sharpen an organization's resilience and risk management planning. Our reputation and resilience management is key, and this is the perception of how a disruption is handled. Some other standards applicable in global commerce and nationally can apply and beside it. And so, a couple of those, for example, which we'll pull out a little bit more are ISO two two three zero one and f p a sixteen hundred sixteen sixty and FDIC. FDIC is a role in business, specifically within the banking sector to ensure the stability and resilience of our financial institutions.

Here are some of the definitions of business continuity plan by some well known associations.

Our National Fire Protection Agency standard on mass evacuation, sheltering, and reentry programs and standard for pre incident planning has a definition, as well as Business Continuity Institute, the Disaster Recovery Journal, and the International Organization for Standardization has an has all standards and definitions for business continuity planning. But best summarized for all three of these, a business continuity plan is an ongoing process that has developed prior arrangements and procedures that enable an organization to respond to an event and continue to deliver products and services at an acceptable level and within time frames at predefined capacity during just a disruption.

So this sounds like a great concept. Right? But where do you start?

Your organization may have many of the components already in place.

A business continuity plan can be thought of as a compilation of several plans.

Business continuity focuses on the organization as a whole and focuses on keeping the business running. Disaster recovery or the ITDR is specific to the recovery of technology systems and data after a disruption and focuses on keeping technology and your data in place to support.

Crisis management is the overall coordination of an organization's response to a crisis to minimize damage and protect its profitability, reputation, and ability to operate. This really focuses on our public relations.

And finally, the emergency response component.

This is the plan that reviews immediate actions taken to protect human life and key organizational assets during an emergency or an incident. So many of you may have an EAP in place or emergency action plan. That's what this can be. So each of these plans match in complexity to an organization's operation and exposures and helps to identify strategies for sustainability, which we'll talk about later in our presentation.

You may have some of the components reviewed on the prior slide in place. However, to further formalize the overall business continuity plan, there's a few steps to take.

First step and most important step is to get leadership support.

You wanna share the need for the plan, review key concepts, really getting their support. This ensures the plan gets off the ground and it remains in place.

Next, you would want to conduct a business impact analysis.

This helps to identify some critical business functions and processes, assess the potential impact of disruptions on these functions, and then determine acceptable downtime for each each function.

We would move into identifying risks and threats, and during this step, an organization would analyze those potential risks. Any of those things that we mentioned earlier, you know, those risks and threats, natural disasters that would apply your business based based on your location, cyber attacks, supply chain disruptions, and evaluate the likelihood and impact of each.

You would want to develop some recovery strategies in the next step for maintaining and restoring those critical functions.

This helps to consider options such as remote work, alternative suppliers, backup systems. We'll we'll kind of pull out a few of those, strategies that are common in businesses today in the following slide.

Create the business continuity plan document.

So this really is the formalization of your plan and outlines the purpose and scope, includes the roles and responsibilities of your team. This is like the playbook for your business continuity plan, and this is something that you would want to store somewhere off-site so you could, or on a cloud, so then you could pull this down in the event of a disaster just so you could follow it for quicker decision making.

Next, you would establish those communication plans. This is developing those internal and external communication strategies, and be certain to identify those key stakeholders to establish protocols for notifying them during a disruption.

You would implement some training and awareness programs to train employees on their roles in the business continuity plan and create awareness and understanding of this plan. You wanna test and exercise this plan. This most simply is drills or simulations to test the effectiveness of the plan. This helps to learn more about the plan, and you may use this right before you would review or update the plan.

Finally, you're gonna review and update the plan, but this would be as things changes to the business environment, to technology, or personnel. After the initial plan is documented, exercises take place. Right? This becomes cyclical, so this is kind of a living cycle for your business continuity process.

I'd mentioned strategies, right, that the business impact analysis and evaluation or analysis of risks, you would identify some strategies. Here are just some of the strategies that I'd I'd like to highlight that you can include within a business continuity plan.

And common examples include those hot and cold sites. This really is designing redundant operations at another location that can be turned on as needed. So we've talked many examples of cloud servers, off location servers, but this could be if you're in a man a manufacturer.

This could be maintaining, you know, another location that you have some operational capacity to complete operations if your operations were down at one location, or you can contract another organization that has similar products to you.

Data backups, mention that. This is a common practice. Right? Vendor agreements should be implemented in in advance.

Right? So things like that you would implement in advance, maybe backup generators to be brought on-site and fuel providers. Right? Those go hand in hand. So having those in place would ensure that you're first in line in a disaster.

Having some temporary staffing and labor agreements in place in case you needed to up some folks if you had someone else down or contract at those other facilities. Right?

Regulatory requirements really may deem that your location be up and running as a part of, community resilience plan, so knowing that that is a strategy as well.

Finally, a strategy to include would be business interruption insurance.

And having no plan, that's a strategy as well.

So we've talked about the need. We know that there's some issues here. We've got climate, cyber, workplace violence, all of these threats to our in events that have happened that threaten our organization and our continuity.

We know that this is needed. However, we've got plenty of barriers to the implementation that we know about. Our lack of leadership support, that's number one. If senior management doesn't care, it's not gonna go very far. Lack of resources, you know, time, personnel, finances.

The we never had it happen to us, and it isn't likely to happen experience.

Right? Lack of experience, that's a common common excuse or a barrier here. Perception of only small gains, thinking that we'll trade risk for the cost savings.

And finally, really, the inability to properly value our business and business operations.

So we may not financially appear to support the need for business continuity, and there may be that overreliance on our insurance thinking that the amount of our insurance is sufficient to cover any of these losses.

Next, I'm gonna hand it over to Doug for our claims perspective here.

Okay. Thanks, Jen, and good afternoon, everybody.

So Jen's talked a lot about what to do to prepare yourselves for a possible loss. I'm gonna get into what, happens when you have had a loss. So over the next few minutes, I'll break down what, business income coverage is all about, why it matters, and how it can help you protect, the business you've worked so hard to build.

Okay. So when we're talking about keeping your business safe from disruptions, there are two big pieces to the puzzle, a business continuity plan, as Jen has been discussing, and a business income coverage.

So think of your business continuity plan like your game plan. It's all about being proactive and trying to prevent problems before they happen. You wanna have the strategies in place to handle a crisis when it's hit when it hits. But let's be real. No plan is perfect, and sometimes things do go sideways.

That's where business income coverage comes in. Think of it as your safety net when things don't go as planned.

The insurance kicks in when you have losses from covered events that interrupt your business operations, and so a reactive measure that can really help you bounce back after a disaster.

So while your continuity plan helps you figure out the how, business interruption coverage helps you deal with the financial what if.

Now let's break down, what business income coverage really means. So here are some key points to keep in mind.

And the coverage is specifically created to protect your business when things go wrong. It acknowledges that failures can happen, but there's help to, to get you recovered financially when they do.

It's not about preventing losses, it's about having a safety net in place when they do occur.

So business income coverage is tailored to address specific risks that could impact your operations. This means it's important to understand the particular risks your businesses face, like natural disasters, fires, or other properly property related events and to ensure your policy covers those scenarios.

The coverage is directly linked to your property. So if your business operations are interrupted due to damage to your physical locations or your assets, this insurance will kick in.

It's essential to have a clear understanding of what property is covered under your policy.

Business income coverage is often referred to as business interruption insurance. It compensates you for lost income during the time that your business is unable to operate due to a covered event.

This helps you maintain cash flow and to meet ongoing expenses even when you're not generating revenue.

Contingent business interruption is a specific type of coverage that protects you if your business is affected by disruptions at a supplier or a key partner's location. For example, if a supply facility is damaged and they can't provide you with the materials you need, this coverage can help compensate for income you lose as a result.

It's important to remember that business income coverage only comes into play when there's an actual loss. If your business is operating smoothly, this insurance will provide you benefits. It's designed to respond to specific incidents that disrupt your operations.

Ultimately, having business income coverage significantly increases your chance of surviving a disaster.

It provides the financial support you need to recover, allowing you to focus on getting back to business rather than worrying about how to pay your bills or keep your employees on the payroll.

So by understanding these key aspects of business income coverage, you can better appreciate its role in protecting your business and ensuring its long term viability.

So before we dive deeper, we'll chat about some important things to think about when it comes to business income insurance.

First off, you need to know what coverages are out there, where the gaps might be, and how to reduce your risk. Every business is different, and so are their insurance needs.

Next, make sure your policy limits are enough to get you through the tough rebuilding period.

Think about it. If the worst happens, how long would it realistically take to get back on your feet?

Also, keep in mind that the cost of the coverage is tied to the risk of a disaster hitting your business.

We can help you figure that out.

And remember, business income insurance isn't usually a standalone policy. It's often added to property insurance policy or included in a business owner's policy.

Finally, policies can vary a lot. It's super important to understand the specific specific terms like exclusions, coverage limits, and especially the waiting period deductible.

That's the time you have to wait before your coverage kicks in, and it's a big deal for your business continuity strategy.

So what exactly is business income coverage?

At its heart, the insurance is designed to help your business recover lost income when interruptions occur occur due to covered events. So let's break it down a little bit more. When we talk about covered events, we're referring to specific incidents that can disrupt your operations. This can include things like fire, floods, severe storms, or even vandalism, Things that could cause physical damage to your property, making it impossible for you to operate as usual.

Now when your your business is interrupted, it doesn't just mean you're not making sales. It also means you're still facing ongoing expenses like rent, utilities, and payroll. Those things don't stop just because your doors are closed.

That's where business interruption coverage steps in.

It compensates you for the income you would have earned during the downtime, helping to bridge the gap until you can get back on your feet.

So think of it this way, if a fire breaks out and forces you to close your shop for a month, business income coverage can help replace the revenue you would have generated during that time.

This financial support is crucial for maintaining cash flow and ensuring that you can continue to pay your employees and cover your bills even when you're not bringing in any money.

Additionally, it's important to note that business income coverage is not just about replacing lost revenue. It can also cover extra expenses you might incur while trying to get back to normal operate operations. For example, if you need to rent temporary space or equipment to keep your business running, this coverage can help with those costs too.

So in summary, business income coverage is a vital part of your insurance portfolio.

It's designed to protect your business from the financial fallout of unexpected interruptions, allowing you to focus on recovery and getting back to what you do best. By having this coverage in place, you're not just protecting your income, but you're safeguarding the future of your business.

When a covered event forces you to close-up shop for a bit, so how does the coverage actually help? Well, it provides financial support for lost income, replacing the revenue you would have earned if the disaster hadn't happened.

It helps cover ongoing expenses like rent, utilities, and loan payments that don't just stop because your business does, and it can even cover payroll expenses so you can keep your valuable employees on the books during the showdown or during the shutdown. I'm sorry. That's crucial for smooth reopening.

And now I know navigating an insurance policy can feel like learning a new language. I've been doing it for thirty years, and it still feels like that to me sometimes. So as a business owner, it's important to get familiar with a few key terms.

Two big ones are period of restoration and actual loss sustained.

The period of restoration is the time frame when, your lost income and extra expenses are covered. It's usually it start shortly after the damage happens and then ends when your property is or should be repaired.

Actual loss sustained refers to the real measurable loss your business experiences.

Knowing these terms and others is key to understanding how your coverage will respond when you need it the most.

So let's talk a little bit more about extra expense coverage.

This is closely related to business income.

While business income covers the revenue you've lost, extra expense coverage takes care of those extra costs you might incur to keep your business running after a disaster.

This could mean the cost of setting up in a temporary location so you can keep serving your customers. It's a vital part of your business continuity plan and helps show your customers that you're resilient and reliable even when the going gets tough.

Let's talk about, a couple of real world claims examples.

Examining real world claims helps illustrate the importance of business income coverage. We'll look at instances where businesses face significant losses due to unexpected events and the absence of a business continuity plan.

Businesses often experience significant financial losses due to unforeseen, events like natural disasters or economic downturns.

Having a business interruption insurance policy is crucial for protecting against potential income loss during those unexpected events.

Without a business continuity plan, companies might struggle to recover from incidents leading to prolonged financial instability.

So theory is one thing, but the real world impact is what really counts.

So looking at these, claims exam examples, they'll highlight the significant business losses that can happen and show why having insurance in a solid continuity plan is important.

Okay. Our first case study is about a restaurant that suffered a suffered a devastating fire.

This wasn't just a small incident. It was a full blown fire that caused extensive damage to the kitchen, dining area, and equipment. As a result, the restaurant was shut down for several months, which hit its operations and finances pretty hard.

So let's think about what that really means. During those months of closure, the restaurant wasn't bringing in any revenue. The owner had to continue paying fixed costs like rent, utilities, and importantly, wages owed to employees.

Without business interruption insurance, the owner faced major losses, not just in revenue, but also in the ability to keep their staff employed.

The financial strain was so severe that it nearly pushed the restaurant into bankruptcy.

The owner had to make tough decisions, including laying off staff and cutting back on expenses, which further hurt the business's reputation and customer loyalty.

This situation really drives home how one event can put everything at risk without the right protection in place.

This case highlights the importance of having business interruption insurance. If the owner had this coverage, they could have received compensation for lost income during the downtime, helping them recover ongoing expenses and retain their employees.

It's a stark reminder that preparation and the right insurance can make all the difference in a crisis.

Okay. So we'll talk about a retail store that got flooded.

This wasn't just a minor inconvenience. The floodwaters caused significant damage to both the store's inventory and its structure.

Shells were ruined, merchandise was damaged, and the store had to close its doors for an extended period to deal with the repairs.

So the business didn't have a solid business continuity plan, which left it vulnerable to this kind of disaster.

Without a plan in place, the owner was caught off guard and didn't know how to respond effectively.

The lack of preparation meant that when the flood hit, they were scrambling to figure out how to recover.

To make matters worse, without business interruption insurance, the owner faced serial serious financial challenges that threatened the future of the store. They had to deal with the cost of repairs while also facing a complete halt in sales.

This situation reveals or illustrates how unprepared for disaster can have serious consequences, not just for the business itself, but also for the employees and the community that relies on it.

At McGriff, we've seen first firsthand how the right insurance can turn potential catastrophe into something manageable. With the right coverage, the store could have received financial support during the downtime, allowing them to focus on recovery rather than worrying about how to pay the bills.

Okay. So to recap a bit, financial financial health protection. Business income coverage is designed to safeguard a company's financial stability when unforeseen events occur like natural disasters, fires, or other disruptions.

By ensuring operational continuity, this insurance allows businesses to maintain their revenue streams and meet their financial obligations even when they're unable to operate normally. This protection is essential for preserving the long term viability of any business.

It's crucial crucial for businesses to comprehend the language used in their insurance policies.

This understanding empowers them to make informed decisions regarding their coverage needs. Without a clear grasp of the terms and conditions, businesses might find themselves underinsured or facing unexpected gaps in coverage. Therefore, taking the time to review and understand policy language is a key step in effective risk management.

A robust business continuity plan can significantly reduce losses and facilitate quicker recovery from disruptions.

By having a well thought out strategy in place, businesses can respond more effectively to crises, minimizing downtime and ensuring a smoother transition back to normal operations.

This proactive approach not only protects income, but also enhances overall resilience.

So in conclusion, business interruption insurance is not just a safety net, it's a fundamental component of comprehensive risk management strategy. By safeguarding financial health, understanding policy language, and implementing a solid, solid business continuity plan, companies can better navigate the uncertainties of the business landscape.

So thanks for your attention, and, we'll turn it back over to Jen.

Thank you, Doug.

Now, how much would an organization lose per day if they had a loss of use to their property? How about loss of technology?

Loss of staff? Multiple location losses?

Properly valuing operations can assist in an organization applying these risk management decision making strategies to determine also their coverage needs and also the best strategies to fit their business.

So when applying for business income insurance, underwriters may require that our business income worksheet may be completed, right, or should be completed.

Additionally, some commercial mortgage companies are requesting business income coverage limits relative to the loans so that payments are covered covered in the event of loss of use. Like Doug had mentioned, just because our business is shut down doesn't mean that our mortgage won't need to be paid or the other some of the other normal operating expenses would be paid during that time when we're shut down. So this may be really the starting point, but completing a worksheet really will assist your organization in understanding their needs and strategies. There's many of general forms that are widely accepted by ISO AKA, the Insurance Services Office.

Some carriers even have some worksheets that are specific to some industries. Unfortunately, they're not available for every specific industry, but there's some basic ones. But to complete the valuations, essentially, you need the recent twelve month year end and projected twelve month data to include your sales revenues, operating expenses, payroll, cost of goods and services, and the period of restoration, you would estimate that.

So the income worksheet not only determines the coverage, right, but can really be a reality check for your period of operation.

Maybe you could sustain more of a period of operation. Maybe you couldn't. Following a major loss, revenue is a thing that businesses cannot really do without.

Most businesses really underestimate the time it takes to return to normal or pre loss operations.

For example, here are some of the time frames just done as an example, cause and origin investigations.

So if you had a fire, where did that happen?

Debris removal, those can take about one to two months. Permits, depending on your local authorities, two to three months. Reconstruction.

If it was a total loss, maybe that's twelve months or maybe that's even years. Machinery or equipment replacement.

And this is a short estimate here, two to eighteen months depending on where it's coming from, additional testing, troubleshooting, you know, may be needed. The EPA and other regulatory agencies, they might create some further delays.

So properly valuing your business and utilizing those business income worksheets. They're not only for the applications, right, but they assist in business continuity planning. Maintaining the adequate coverage for your ordinary payroll system, retention of your valued employees during that period of restoration. If you have any seasonal variation of revenue, that's identified and can support different decision making, like retention of temporary staffing firm contract, dependent business income sources. This can be identified for any duplication or redundancy strategies that you can identify in your business continuity plan, such as backup operations.

Finally, that extra expense section that identifies expenses that can be or maybe insured, but you may not have otherwise considered.

So as we had just reviewed, proper evaluation is a critical step, first step to support business continuity strategies, including interruption insurance decision making. As our very own claims executive Doug had mentioned, we'll review those coverage gaps, policy limits. He reviewed those real world claims plus the importance of purchasing business interruption insurance. A business continuity plan will support improved decision makings, reduce lost time, protect your profits, and maintain critical business operations in the event of a disaster. We know that disasters and interruptions will occur to your business. Cybersecurity is crucial more than ever, and then finally, having no plan is a plan, but it can be the difference in survival or not.

Thank you so much for your time today. I'll turn it back over to Lasonya for any questions.

Alright. Thank you so much, Jen and Doug, for this wonderful information, and a wonderful presentation.

So at this time, if anyone has any questions, you can definitely submit them to the chat or the Q and A box. Just as a reminder, everyone will receive a copy of the presentation, as well as a recording of this presentation. So if you don't have any questions now and you want to reach out to them at another time, you will have their contact information.

So again, on behalf of McGriff, we would like to thank each of you for joining us today. And, again, thank you, Jen and Doug for a wonderful presentation. So thank you for your participation, and everyone have a wonderful rest of your day.

Thank you.