How to Build an Effective Disaster Recovery Plan

Hurricanes, floods, and system failures can bring operations to a sudden halt, leaving business owners scrambling to protect their employees, customers, and bottom line. An effective disaster recovery plan gives your business a roadmap for responding to the unexpected, helping your team act quickly, limit losses, and safeguard long-term stability.

What Is a Disaster Recovery Plan?

A business disaster recovery plan is a documented process that outlines how your company will restore operations after a catastrophic event, such as a natural disaster or a man-made crisis like a cyberattack. These plans are highly detailed and practical, spelling out the exact steps your business should take to protect critical systems, minimize downtime, and resume operations.

What Is the Difference Between Business Continuity and Disaster Recovery?

While many people use the terms business continuity and disaster recovery planning interchangeably, they serve distinct purposes.

• Business continuity strategies focus on keeping operations running during a disruptive event. It’s about maintaining essential business processes, so customers, employees, and vendors experience as little interruption as possible.
• Disaster recovery processes come into play after the disruptive event. They are about restoring critical systems, recovering data, and resuming normal operations once the immediate threat has passed.

Because they address different stages of a crisis, business continuity and disaster recovery plans work best together.

What Should Be Included in a Disaster Recovery Plan?

When creating a disaster recovery plan, it’s important to consider the types of disruptions your business could face, as each scenario requires careful preparation. Because disaster recovery planning involves multiple moving parts, it helps to have a clear framework in place. Below are the disaster recovery plan steps every business should consider:

Conduct a Risk Assessment

Identify potential threats that could disrupt operations and assess how each may impact business operations and critical systems. Consider scenarios like ransomware attacks, data breaches, and prolonged power outages, focusing both on likelihood and severity.

Identify and Prioritize Business-Critical Systems and Functions

Determine which systems, applications, and processes are essential for keeping your business running. For example, customer databases, payment processing systems, and communication platforms may be top priorities.

Review Your Business Insurance Coverage

Make sure your property, cyber, and business interruption insurance policies align with your recovery plan and potential losses. Coverage and limits should reflect the financial impact of downtime and data loss.

Set Recovery Point Objectives (RPO) and Recovery Time Objectives (RTO):

Define acceptable levels of downtime and data loss through recovery time objectives (RTO) and recovery point objectives (RPO). You should tailor your RPO and RTO to each system based on its role in operations and the cost of downtime. For example, a small business might set:

• An RPO of 4 hours for its customer database, meaning backups must occur at least every four hours.
• An RTO of 24 hours for email systems, which are important but not mission critical.
• An RTO of 2 hours for point-of-sale systems, where downtime directly affects revenue.

Establish Roles and Responsibilities:

Form a disaster recovery team with clearly defined roles to reduce confusion and speed up response time when every minute counts. Assign tasks based on expertise and decision-making authority. A well-rounded team might consist of:

• Disaster Recovery Lead: Oversees execution of the plan and coordinates across teams.
• IT Specialist: Manages system restoration, data recovery, and infrastructure troubleshooting.
• Operations Representative: Ensures continuity of business-critical functions and workflows.
• Communications Professional: Handles internal updates, customer messaging, and employee coordination.
• Legal Counsel: Assesses compliance, regulatory obligations, and liability risks.

Develop Backup and Recovery Procedures

Ensure critical data and systems are backed up and can be restored efficiently. Consider implementing automated, encrypted backups and storing them offsite or in the cloud to help protect against local failures.

Create a Communication Plan

Outline how and when stakeholders will be informed, including internal alerts for employees, customer notifications, vendor coordination, and media statements.

Train Teams and Test the Plan

Conduct drills, tabletop exercises, and post-incident reviews to validate your plan and refine processes. For example, run a tabletop exercise simulating a ransomware attack to test file restoration speed, evaluate decision-making under pressure, confirm customer notification protocols, and review messaging prepared for media and stakeholders. These exercises help uncover gaps, clarify roles, and build confidence in your recovery strategy.

How Often Should a Disaster Recovery Plan Be Tested?

An effective disaster recovery plan isn’t complete without regular testing. Best practice is to review your plan at least once a year and conduct additional tests whenever major systems or business processes change. With the right review cycle, businesses can catch blind spots, make improvements, and maintain confidence that their plan will work when it matters most.

Why Is Disaster Recovery Important for Businesses?

Creating a disaster recovery plan can make all the difference in whether your business bounces back or falls behind after a disruptive event. Here are some of the key benefits of a disaster recovery plan:

• Reduces downtime and financial loss
• Protects sensitive data and information systems
• Preserves customer relationships and brand trust
• Supports employee safety and productivity

The Role Insurance Plays in Disaster Recovery Planning

A key part of disaster recovery planning is reviewing your business insurance policy to make sure it aligns with your recovery needs. One important policy to consider is business interruption insurance, which provides coverage for lost revenue, ongoing operating expenses, and more.

Insurance isn’t just a safety net — it’s a strategic and financial safeguard that complements your disaster recovery efforts. When searching for a provider, consider one that offers risk control resources and staff that can help you assess vulnerabilities and strengthen your plan.

To ensure your coverage supports your disaster recovery strategy, connect with an agent today.