How should we prepare a business continuity plan for disasters and accidents?
Build a continuity plan around lost premises, staff, IT or supplies. Use Korean disaster-management standards to identify critical work, arrange alternatives and test recovery.
Where should a business continuity plan begin?
A business continuity plan is more useful when organized around consequences, such as an unusable workplace, a shortage of staff, an IT outage or the loss of critical supplies, rather than causes such as fires, floods or infectious disease. First identify the work that must not stop and how long each activity can tolerate interruption. Arrange alternatives for each activity, then test them under realistic conditions at least once a year.
How does the law address business continuity planning?
The Act on Assistance to the Autonomous Activities of Enterprises for Disaster Mitigation defines a disaster mitigation activity plan as a strategic plan, mitigation plan, business continuity plan, response plan or recovery plan prepared by an enterprise to minimize disaster losses. Enterprises are to make efforts to reduce disaster damage in accordance with disaster-management standards announced by the Minister of the Interior and Safety, so that their businesses can remain stable through disasters.
Article 5 of the same Act specifies what those standards should cover. The subjects include the organization and systems for disaster mitigation activities, compliance with applicable laws, identification of hazards and risk assessment and impact analysis, resource management and agreements with relevant organizations, preparation of the plans, and emergency communications and situation reporting. A company preparing its first plan can use these subjects as a contents framework to reduce omissions.
Which types of disaster should we prepare for?
Article 3 of the Framework Act on the Management of Disasters and Safety divides disasters into natural and social disasters. Natural disasters include typhoons, floods, heavy rain, heavy snow, cold waves, heat waves and earthquakes. Social disasters include damage from fires, collapses, explosions, traffic accidents, environmental pollution accidents, disruption of critical national infrastructure, the spread of infectious diseases and fine particulate matter.
Although there are many causes, the consequences for businesses tend to fall into a few categories. Building scenarios around consequences reduces the number of plans needed and makes them usable even when a cause is unfamiliar.
Consequence-based scenarios and preparation
| Scenario | Examples of causes | What to prepare in advance |
|---|---|---|
| The workplace cannot be used | Fire, flooding, structural collapse | Alternative work locations and procedures for working from home |
| A major staffing shortage | An infectious disease outbreak or heavy snow preventing attendance | Backup staff for each task and work manuals |
| IT systems stop operating | Power failures, communications outages, cyberattacks | Backup intervals, recovery procedures and paper processing forms |
| Critical supplies are interrupted | A disaster at a supplier's facility or logistics disruption | A list of alternative suppliers and safety stock |
Assigning a person responsible for each scenario makes readiness easier to check.
Which activities should be restored first?
The impact analysis described in the disaster-management standards means assessing the effects of interrupted work on the company and setting recovery priorities. Because not every activity can be restored at the same speed, record the maximum tolerable interruption and required resources for each one.
Example of an impact analysis for critical activities
| Activity | Tolerable interruption | Required resources | Alternative arrangements |
|---|---|---|---|
| Taking orders and responding to customers | Within one day | Customer lists, telephones and responsible staff | Forwarding the main telephone number and taking orders on paper |
| Production and shipping | A few days | Equipment, raw materials and skilled workers | Outsourced production and prioritizing shipments from inventory |
| Payroll and supplier payments | Until the payment due date | Accounting systems and banking authority | Multiple authorized staff and backup records |
| New product development | A few weeks | Design information and development staff | Adjusting the schedule |
The periods in this table vary by company. Where customer contracts specify delivery dates or service levels, those conditions set the upper limit on tolerable interruption. Alternatives need to be tried at least once in normal conditions if they are to work in an emergency. Start by testing simple arrangements such as telephone forwarding or paper order forms.
What should companies consider when preparing for disasters?
A study by Webb, Tierney and Dahlhamer (2000), drawing on five large mail surveys conducted by the US Disaster Research Center since 1993 among 5,000 private businesses in several regions, examined factors affecting business preparedness, the causes of disaster-related interruption and financial losses, and factors influencing recovery after major disasters. Preparedness, interruption and recovery need to be considered together; the researchers discussed the implications for business emergency planning and disaster management.
For your company, this means going beyond the planning document to calculate how much sales might fall after a disaster and how long fixed costs could be covered. Companies with little cash capacity may struggle even with a brief interruption. Include the amount of emergency funding needed and how it would be obtained in the plan.
How should the plan be tested and revised?
A plan that exists only on paper often fails to work well in practice. Begin with a tabletop exercise in which responsible staff talk through who would do what in a scenario, then expand to tests such as actually restoring systems from backup data. Revise the plan whenever the company relocates, reorganizes or introduces a new system. Scenario development resembles incorporating economic forecasts into business plans. For a way to assume a plan has failed and identify its weaknesses, see reducing judgment errors in management decisions.
How should we prepare for disaster mitigation certification and emergency communications?
Under Article 7 of the same Act, enterprises can apply to the Minister of the Interior and Safety for certification as an excellent enterprise in disaster mitigation. A certificate is issued following an assessment against criteria prescribed by Presidential Decree. The applicant enterprise bears the costs of assessment and issuance. Whether or not you seek certification, decide who makes emergency decisions and whom to notify in what order. Contact details change frequently, so checking the emergency contact list quarterly is advisable. Looking after safety at suppliers' facilities connects with responding to a lead company's ESG information requests, while diversifying suppliers should be considered alongside supplier-dependency reviews. The Korea Research Institute of Business & Branding studies governance, risk management and crisis response, and has expanded its work on supply chains and crisis response since 2020. See business research topics for risk-management subjects and business publications and reports for publications.
Frequently asked questions about business continuity planning
Do small companies also need a business continuity plan?
Smaller companies often depend on a single person or location for more of their work, making interruptions particularly consequential. Start by recording a few critical activities and their alternatives on one or two pages.
Can we do without a plan if we have insurance?
Insurance compensates for some financial losses but does not protect customer relationships or meet delivery deadlines. Preparing both insurance and a continuity plan is advisable.
How often should the plan be revised?
Review the entire plan at least once a year, and update the relevant parts whenever facilities, systems or the organization change.
Is certification as an excellent enterprise in disaster mitigation mandatory?
No. It is a scheme for which companies apply voluntarily. Its assessment criteria can also be used as a checklist when reviewing a plan.
References
- National Law Information Center, Act on Assistance to the Autonomous Activities of Enterprises for Disaster Mitigation, Articles 2, 5 and 7, effective January 12, 2021. https://www.law.go.kr/법령/재해경감을위한기업의자율활동지원에관한법률
- National Law Information Center, Framework Act on the Management of Disasters and Safety, Article 3, effective July 22, 2026. https://www.law.go.kr/법령/재난및안전관리기본법
- Natural Hazards Review, “Businesses and Disasters: Empirical Patterns and Unanswered Questions” (Webb, Tierney and Dahlhamer), 2000. https://doi.org/10.1061/%28ASCE%291527-6988%282000%291%3A2%2883%29