North Carolina is among the top four states in the country with the most billion-dollar weather-related disasters since 1980. Here in Wilmington, we know all too well how quickly a tropical storm or hurricane can increase in intensity or change direction without allowing much time to prepare. We often wait until the last minute to prepare for these events, but really, a natural disaster like a wildfire, tornado or flood can strike at any time with little to no warning. As we creep further into hurricane season, it’s a perfect time to assess and update our disaster recovery plans.

About 40 percent of businesses never reopen after a major disaster. Many business owners procrastinate their planning or think a disaster can’t happen to them. The planning can seem overwhelming, but we all can take simple steps to ensure a business is on the positive side of that statistic and will be prepared to handle any unexpected disaster that may come its way.

Determine Your Weaknesses 
The first step is to think through what types of disasters are possible, even if they are improbable, and how each scenario could affect your business operations. Create a document that outlines these situations and a response plan that includes the recommended items below. 

Create a Preparedness Policy
Write a formal policy outlining roles and responsibilities in the event of a disaster, and distribute this policy to all managers within your firm. Determine who will contact key customers and suppliers, how you will communicate with employees, what is expected of employees, and what employees should expect from you. 

Protect Vital Business Information
Determine your storage and back-up method for securing vital business information such as financial and insurance records, contracts, permits, presentations and customer data. Since a disaster or other major event can happen at any time, schedule daily backups of critical data. Back-up services based on cloud or Internet-based computing can be a relatively low-cost way to make sure you have almost immediate access to your data from anywhere. 

Review Your Insurance Policy 
In the event of a true disaster, you may still suffer business losses no matter how much you have prepared. It’s a good idea to review your insurance policy to see if it covers loss of income, or equipment and software rental, while you get your firm up and running again. Most policies don’t cover all of these contingencies, so you may want to consider adding riders to policies to cover these costs. Create an inventory list with photos of important and expensive equipment and store a copy on your remote or off-site storage service.

Enroll in Online and Mobile Banking
Online and mobile banking gives you access to your company’s finances from anywhere. In the case of short-term business closure, you’ll still need the ability to pay your bills and vendors, as well as monitor your cash flow. New financial tools even allow you to make projections based on hypothetical scenarios, such as cash-flow impact from lost revenue if you close for a few days.

Establish a Contingency Fund
A contingency fund is an important safeguard for any kind of unexpected occurrence that may affect your business’s finances. This fund might hold three to six months of operating cash, calculated as your daily operating capital multiplied by 90 days to 180 days. Your contingency account can serve not only as a safety net, but also as an investment. Consider placing the funds in an interest-bearing account such as a money market fund. 

Seek Advice
Talk to your banker and other trusted advisors about your disaster recovery plan. They may present ideas and solutions you had not considered. Acknowledge that your disaster recovery plan, much like your business plan, is an ever-evolving document that requires regular review and updates to meet your changing business needs. 

For more ideas on preparing your business for a disaster, visit Ready.gov.

Chris George is senior vice president at PNC Bank and longtime Wilmington resident. He has served PNC and its predecessors for more than 20 years in various leadership roles. PNC Bank, N.A., a member of The PNC Financial Services Group, Inc., is one of the United States’ largest diversified financial services organizations, providing retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management.

These articles are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. PNC urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.