Strategic Management question

timer Asked: Jul 22nd, 2015

Question Description

What steps can be taken by Sr. managers to minimize down time when unexpected events disrupt operations?


THE REPORT Business Continuity Issues Prepare for Unexpected and Planned Transitions By David L Lawrence. AIF" planning and retirement (and/or ownership transition), each of these should be explored within the context of advance strategic business planning. Interruption of normal business operations can occur as a result of many factors. One of these might be a sudden, unexpected illness, injury, or even death. In such cases, having a plan in place to transition control of business operations for even a brief period of time can save thousands of dollars of unnecessary expense (not to mention aggravation). Carrying the correct types and appropriate amounts of insurance to cover situations such as these is only the beginning of planning. Another issue is deciding, in advance, who makes the decisions, and/or who handles the money. If there is staff involved, there is payroll to consider, bills to be paid, and client service responsibility to assign. Clients need to be assured of the continuity of the practice and of the safety and security of their investments and information. \ W ith attention given to an aging profession, financial planners should realize that the issue of business continuity is an important part of their business planning. Financial planners spend a great deal of time preparing their clients for the unexpected, yet often, they neglect such concerns with respect to their own practices. Business continuity is a broad subject that encompasses many important aspects. From unexpected illness or death to disaster 18 BROKER/DEALEfi 200B If a planner works with a broker-dealer, it is possible that the B-D has programs to ensure client service continuarea in the United ity. If the planner is an States is immune from the independent Registered Investment Advipossibility of a disaster, and a sor (RIA), the situation could be more difficomprehensive disaster cult. With a practice plan to protect the firm and that has only one person, assigning conits clients is a necessity.JJ trol of client service to another party not listed on the firm's ADV might violate certain state or federal laws. Care should be taken to ensure that any plans include a review of applicable laws, rules and regulations. Another possible cause of interruption to normal business operations could be a natural or man-made disaster. We are all familiar with such catastrophic events as Hurricane Katrina or devastation by tornados in Tennessee and nearby states in February. But disasters can occur in many forms, including flooding, power outages, fires, vandalism and theft. No area in the United States is immune from the possibility of a disaster, and a comprehensive disaster plan to protect the firm and its clients is a necessity. Prime areas to focus on within your firm are: technology, business documentation and office issues. THE REPORT Technology In the realm of electronic data recovery, there are a lot of options available to protect a practice. Backup systems, such as tape drives, external removable hard drives and similar devices are simply not effective if that data is not protected offsite. Having said this, there are disaster-proof hard drives now available that can withstand up to 1,700 degrees Fahrenheit for one hour and could be waterproof to 30 feet, {www.klsecurit/.com). Two-hour rated fireproof file cabinets are available as well ( Not every fire goes out within two hours, and flood- coupons, corporate documents and original software discs), consider a grab-and-go container. It can be small enough to fit in an office safe, yet easy enough to grab in the event of a disaster. To determine what might go into such a container, you may consider creating an important documents checklist (free template available at Office Issues Training your employees is critical to the smooth transition and continuous operation of a practice during and after a disaster. Having a training program in place and every fire goes out within two hours, and flooding can last for days or weeks. Having an offsite plan to protect your firm's and your clients' data is essential. J J ing can last for days or weeks. Having an offsite plan to protect your firm's and your clients' data is essential. Fortunately, there are a lot of choices available (including v/ww.hdsbackup, com;; www.remote; and If your Web site hosting service offers a secure lockbox technology (www.advisor and www.Lightportcom, for instance), this could be a low-cost depository of current and historical client information that qualifies as an offsite location. For onsite purposes, consider using software and hardware that permits mirroring of your main hard drive, server hard drives, or locations where client information is stored (one example is v/ Business Documentation For information that does not get stored on computers (bank deposits, bank checks, tax written procedures to follow that can be accessed remotely is vital. Consider creating an office shutdown procedure in the event of any emergency or disaster. Prepare an evacuation plan, and train your employees to know it. If it is necessary to use your employees remotely, have a plan in place that permits you to communicate and work with them on doing business. To address some of the other office issues, consider the following questions: • Does your office have emergency lighting? Do you have flashlights and fresh batteries on hand? • Does your office have a sprinkler system? Are your paperfilesprotected in the event the sprinkler system goes off? • Does your office have emergency power (a generator) available? • Have you developed a plan to use alternate facilities (such as an executive office suite) if needed? • Do you have a client communication plan in place? Your clients will need to know that you are safe and that their information and their investments are safe. TransJtionlng Ownership One other issue with respect to business continuity involves the possibility of retirement and/or selling (transitioning ownership of) a practice. One question most planners are eventually asked by their clients is, "What happens to my money if you decide to quit or retire?" Preparing your clients for such a transition can greatly ease the anxiety they might feel over such a situation. It can also go a long way toward preserving client relationships for those who take over after you are gone. Therefore, creating a comprehensive succession plan is important. A succession plan could include plans for selling the business or transitioning to other partners in the firm. The succession plan should contain protection provisions, such as funded buy/sell agreements to protect the interests of all parties (including the families of partners in an agreement) in the event of an unexpected death or disability. The financial arrangements of a succession plan can be quite complex and highly customized to the situation. Therefore, it is a good idea to seek the advice of professionals, such as attorneys and specialists who broker the sale/purchase of financial practices (v/ww.fptransitions,com is one such source). In the words of George Bernard Shaw, "Take care to get what you like or you will be forced to like what you get." David I. Lawrence, AIF*, is a practice efficiency comultant and president of David tawrence and Associates ( based in Lulz, Fla. He currently serves as chair of the Fiiianciaf Planning Association's National Leadership Council. 2008 IROKER/DEAUEB 19

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