If your insurance company offered a reduced premium for having a BCP, would that get your CFO's attention?
Of course it would--particularly if the premium discount was more than the cost of preparing the plan. Such a 'BCP discount' must be the Holy Grail of CFO's, risk managers and contingency planners everywhere.
The quid pro quo is that having a well-developed BCP should reduce the amount of an insurer's loss exposure, so it should reduce its client's property and liability insurance premium accordingly.
No insurance company I know explicitly offers a BCP discount; if you know one that does, I'd like to hear about it.
Insurers will have some thorny questions about calculating the proper discount, such as:
• Does your company's plan cover all hazards, or just certain ones? • Does your BCP include loss prevention and mitigation activities? • How do you (the insured) or we (the insurer) know your plan will actually "work"? • By what amount, precisely, does your BCP reduce our potential loss exposure?
Figuring out answers to those questions should keep insurance actuaries gainfully employed for several years.
Many of the companies with well-developed BCPs, such as banks, have relatively low property liability loss exposures. They often rent rather than own their offices, and the industrial hazards in their work environments are negligible.
But companies with very large insured risks--semiconductor fabs, automotive assembly plants, oil & gas refineries, for example--have huge financial incentives to reduce their risk profiles. This will spur them to develop BCPs, if they have not already done so, and to seek a simple way to monetize the value of their investments in contingency planning.
Buyers and sellers, sharpen your pencils.