Ugh. Lawyers. I was invited to write a journal article about the legal issues of business continuity for the Journal of Business Continuity and Emergency Planning. It’s coming out this month. I’m giving you the highlights here.
Do you know that officers, directors and board members have a duty of care they owe the company they work for? It’s essentially to make decisions that are in the best interest of the company, not themselves. One of the frequent problems is how much are they investing in business continuity, especially cybersecurity.
Businesses of all sizes have to worry about budgets and what gets spent where and when. Bigger businesses can do some things more easily as they know without a business continuity plan, they will lose thousands of dollars by the second (think Visa or Mastercard) if they have a disruption.
The monetary stakes are smaller but no less disastrous for a small business. In any case, if the company has shareholders or members who expect dividends or payments, expect a lawsuit when the value of the business degrades when the market share plummets, or it has to close due to poor (or no) business continuity practices.
Another issue is breach of contract lawsuits. If you rely on the supply chain for your product, you might encounter an issue with delivery of items or coordination of production. If you haven’t planned for this with back-up suppliers/vendors --- and further insured that suppliers have the ability to deliver during a disaster or disruption themselves – there is a great risk that a business won’t be able to deliver on time or as promised.
That makes clients mad. That also makes you mad you have to alert your client to the possiblity you will fail to meet their expectations.
Speaking of contracts, everyone, read your vendor/supplier contracts thoroughly for the force majeur clause. It is the get out of jail free clause. It allows the business you contracted with to not have to deliver in the event of whatever they spell out in the clause happens…because if you sign it, you agree to it. This clause can be negotiated.
Most of the items in a force majeur clause are natural disasters and manmade disasters. However, if you are paying attention, it also includes things that third party providers have issues with. Everything can be hunky-dory with the business but one of their suppliers is having an issue, which they are then using to shield themselves from having to do anything special or extra to make sure you get your end of the deal.
I like to say I’m a recovering lawyer but it helps a lot with business continuity because I am both vastly aware of the issues and educated/experienced to talk about them after being a practicing lawyer for nearly 20 years. What helps, though, is for businesses to be aware and for continuity professionals to work alongside legal professionals in advance of issues so no one is taken by surprise…which is the exact thing both of the professions want to avoid.