It’s impossible to deny that we are witnessing the largest military attack in Europe since World War II. The start of this war is leaving many Americans, and American business owners, wondering what to expect and how to prepare. There is a significant risk to the global economy, especially as oil shortages start to make an impact. Plus, we are still recovering from supply issues due to the lingering effects of COVID-19. Let’s talk about how this might impact business, and how to keep your business prepared with a business continuity plan.
The first question you may be thinking is, how might this conflict affect your business as a CEO? Whenever a war happens, there is a trickle-down effect that reaches everyone on a global scale. And when business is disrupted, it can cost money. To prepare for the risks, every business should draw up a business continuity plan.
Whether it’s war, disaster, or economic shifts, businesses with continuity plans are better able to handle, and make it through, tough times. And if the pandemic taught us anything, it’s to prepare for the unexpected. A 2020 survey found that 51% of companies worldwide do not have a business continuity plan. It’s impossible to prepare for every emergency, but putting a plan in place will give your business a better chance to survive and thrive during difficult times.
The Basics of a Business Continuity Plan
A Business Continuity Plan (BCP) is basically the process of creating a system of prevention and/or recovery from potential threats to a company. The main objective of a BCP is to ensure that assets and personnel are protected and able to respond quickly in the event of an emergency. According to ready.gov, the development of a BCP includes four steps:
- Business Impact Analysis – identify critical business functions and the processes/resources needed to support those functions.
- Also, use this time to identify any and all risks that might affect the company’s operations. Think about the physical threats (fire, flood, etc.) and digital threats (cyber attacks, hacking, etc.).
- Document and implement a BCP that maintains and/or recovers critical business functions and processes in case of an emergency.
- Organize a team to test BCP procedures to mitigate business disruption.
- Train personnel when/how to implement the plan, make adjustments when needed, and keep up-to-date.
When creating or updating your BCP to reflect the risks from the war in Ukraine, it’s important to understand how the war might impact your business today and in the future. Two major concerns include the spikes in fuel prices and further disruption to the global supply chain. Keep the following tips in mind when updating your BCP in 2022.
Effects of the War in Ukraine on Your BCP
#1 Higher Fuel Costs
It is no secret that gas prices are skyrocketing at alarming rates. In fact, the average price of gas just hit an all-time high on Friday, March 11, 2022, at $4.33 per gallon. It seems like the oil crisis is only just getting started, so what can you do to prepare? For one, prepare for higher overhead prices. Things like heating, transportation, food, and the overall cost of living could rise as much as 10%, according to some economists. But that prediction is also accounting for the ever-growing list of supply chain backups.
#2 Supply Chain Issues
We can’t talk about the impact of inflation and the Russian-Ukraine crisis without talking about the supply chain problems. Mass sanctions have been placed on Russia’s financial institutions, technology imports, oil, etc., and even more are expected if Russia continues to escalate the conflict. Supply chains were already in disarray due to the COVID-19 pandemic, and now the problem is being exacerbated with the current war—the result: mass shortages.
Before everyone starts stocking up on supplies, remember that Russia accounts for less than 2% of global GDP, while Ukraine accounts for only 0.14% of global GDP. Russia is the world’s biggest exporter of oil to global markets, meaning that everything that requires oil is affected (such as transportation, manufacturing, and heating). When oil prices increase, the cost of production also increases, resulting in a potential decrease in company growth projections, earning expectations, and potential stock value. Keep all of this in mind when reviewing your 2022 numbers and BCP.
Prepare Now with a Business Continuity Plan
The Russian-Ukraine war has already begun the inflation ripple effect. Don’t wait until the conflict hits your doorstep to take the necessary steps. To ensure your company is set up to handle the potential risks, plan now.
Do you have more questions about how to cultivate a strong business continuity plan? Contact BOAR today to get connected to other business owners, CEOs, and community leaders and start working on strategic action that grows your business in all the right ways. Expand your knowledge and get more business advice and workplace strategies here.