With hurricane season upon us, mortgage lenders face the harsh reality that their business may soon be in the middle of a storm’s path. However, a business interruption is not necessarily defined by a natural disaster. A business interruption can be defined as anything interfering with the way an organization normally runs.
Power failure is the leading cause of major business disruptions, while natural disasters come in a close second. Man-made interruptions such as internal fires, gas leaks and hardware outages also put mortgage bankers at risk for business downtime. While the spectrum of business interruptions is wide, the impact these incidents have is even greater.
Every company calculates the cost of downtime differently. eWeek noted in its “Unplanned IT Downtime Can Cost $5K Per Minute” article that businesses lose an average of $5,000 per minute without proper information technology equipment.
Mortgage lenders should also think about their customers and competitors in the midst of a crisis. If it comes down to a customer choosing between you and your competitor during a business interruption, it is important to be able to recover properly. One great advantage to recovering from a disruption quickly is that you have an opportunity for gaining new business. If your business is up, running and functioning while your competitor’s are not, you have the ability to assist customers that others cannot.
What about important information? Another impact to consider is the expense of replicating information that was lost. Critical data, loan documents and forms are at risk of being lost without a proper recovery plan.
In order to best prepare for a business interruption, first create a business impact analysis and a disaster recovery/business continuity plan. Ask yourself what this plan should entail. Will you need mobile recovery to create a temporary branch in the event that your building is destroyed? What IT hardware will the company need? If the building is inaccessible, will you need co-location or a hot site? Remember that phones are critical as well; you may need voice and network recovery in addition to data backup.
When creating your recovery plan, be sure to appoint a recovery team, which is responsible for preparing the business continuity plan prior to a disaster, as well as department leaders to schedule recovery meetings and communicate updates to the company.
Assess the risks your company could face and prioritize each risk as high, medium or low. Then, determine the minimum resources it would take to keep each department running. To prepare for the safety of all employees, assemble an emergency preparedness kit with items such as employee information, supplier and vendor information, flashlight, first aid kit and a battery operated radio.
The next step to prepare for a business interruption is to regularly test your disaster recovery plan. Be sure to schedule tests at least once a year and ask for employee feedback following the test. This will enable you to revise the plan and make the proper changes. From there, communicate the changes to the disaster recovery team.
Mortgage lenders are no exception to disasters. Prepare for business interruptions now to avoid headaches later.
