Whilst BI provides a lifeline to a business following a loss, inaccurate sums insured and inadequate indemnity periods are a major source of underinsurance, jeopardising the chances of recovery for many businesses.

The following tips will enable you to select the correct level of BI protection, and help assure future resilience to loss events.

Planning how to respond to potentially harmful events is vital for any business, and an essential first step in choosing the correct BI cover.

Business continuity planning is a valuable exercise that helps increase an organisation’s resilience through anticipating potential losses and planning how best to respond.

It is advisable to record key findings in a formal business continuity plan (BCP), which should remain under regular review and testing, and serve as a core risk management tool. For example, should a key supplier suffer a major loss, a good BCP might detail arrangements with alternative suppliers that could quickly meet urgent customer orders.

In addition to boosting resilience, considering potential loss scenarios is the best way of identifying much of the information needed to set suitable BI cover levels.

For example, without fully understanding how an organisation’s variable costs will change following a loss, it will not be possible to set an accurate gross profit sum insured (see tips 3 & 4 below). Equally, without contemplating potential worst-case scenarios, it will not be possible to choose a suitable maximum indemnity period (see tip 5 below).