NU Online News Service, June 7, 11:06 a.m.EDT

Nearly 44 percent of small firms are operating without abusiness continuity strategy in case of disaster, and almosttwo-thirds have never even spoken to their insurance agents aboutcontingency planning, a survey by Travelers revealed.

The survey--conducted last month at the U.S. Chamber of CommerceAmerica's Small Business Summit 2010, in Washington, D.C.--foundthat risk prevention is often not "top of mind" among the 101small-business owners queried, who are instead focused on sales andmarketing opportunities, explained Robyn Hahn, vice president ofmarketing research and development with Travelers.

"Fifty-five percent of small-business owners spend less than 10percent of their time" on risk management, she noted, although 60percent felt they were able to make the time, if necessary.

"It is concerning when you look at the small amount of timesmall-business owners are spending on identifying and preventingrisk. Perhaps the question really is, do they have a good, solidunderstanding to assess business risks, and is there an opportunityto educate," Ms. Hahn said.

She pointed out that this gives agents and brokers a chance tooffer their services in lieu of the chief risk officer positionlacking at most small businesses.

Instead of "just considering that their policies will be thereshould something happen," this presents an opportunity for agentsand brokers to be a professional partner "and establish themselveswith a different value proposition." she said, adding that it's achance to remind clients that "advice is a policyholderbenefit."

Ms. Hahn also noted that agents in turn look to carriers to"assist with that value proposition"--a role that presentsopportunities to carriers as well.

In studying the results, she said, another statistic showed thatsmall-business owners who aren't looking to their insurance agentand broker as a risk management source turn to their attorneys andpeers, and also rely on their own experience.

John P. O'Connor, vice president of product and underwriting forTravelers, told National Underwriter that small businessesare most vulnerable to disaster because larger companies have riskmanagers and sometimes a redundancy of operations. Owners ofsmaller firms, on the other hand, "wear a lot of hats and getinformation from a couple of different sources."

He said that 10 years ago a business suffering a disaster couldshut down for a week or even a month and retain the same customerswhen they open up--and survive.

"In today's world," he added, however, "there's an expectationof continuity. So if you shut down for a period of time and you'renot able to contact customers, or maintain service with a customer,there's a good likelihood that even after you rebuild or getoperations up and running again, those customers won't bethere."

He said "that's what business continuity planning isabout--helping them bring continuity to their operations so theycan maintain services through this process."

Nim Traeger, second vice president, casualty services, atTravelers Risk Control, observed that small businesses are often ina single location, making them dependent on their community. Alarge organization may have another site where they can shiftoperations temporarily, if needed.

"The loss doesn't have to be that significant for a smallbusiness to perceive it as significant," she said.

Among the key points revealed by a Travelers survey of 101small-business owners:

o Sixty-four percent have never spoken with their insuranceagents about developing a business continuity plan.

o Only 10 percent cite their insurance agents as a primaryresource for help in identifying and managing business risk. Mostrely primarily on attorneys (28 percent), their own experience (23percent) or their peers (25 percent).

o Nearly half (44 percent) are operating without a businesscontinuity plan--despite American Red Cross data that as many as 40percent of small businesses do not reopen after a disaster.

o More than half (55 percent) spend less than 10 percent oftheir time identifying and preventing business/operationalrisks.

http://www.disastersafety.org/http://www.disastersafety.org/text.asp?id=ofb_main