Newsletter: B(Prepared!)

"Business Income Made Simple"
   By Robert M. Swift



Let us send you our free newsletter, B(Prepared!)!

For Email Marketing you can trust

 

www.bisimplified.com
 




 
 
 
 
 
 

The following definitions are for your information. The content is believed to be accurate, but is not guaranteed. Select the first letter of the word from the list below to go to the appropriate section.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

A

Act of God:  Violent and catastrophic event caused by the forces of nature which could not have been prevented or avoided by foresight or prudence. An Act of God may make performance of a contractual duty impossible.  

Actual Cash Value:  Depreciated value of an asset.  It is original cost minus wear and tear.

Administration Team:  Group responsible for recovering the administrative activities of the company after a disaster.  Part of the Contingency Team.

Agreed Amount:  Amount of risk the underwriter agreed to insure without any coinsurance penalty.  For example, a business income worksheet must be completed to obtain business income agreed amount coverage.

Americans With Disabilities Act:  Federal requirement that all facilities must be built or retrofitted to accommodate physically challenged people.  For example, ramps in the parking lot; lowered plumbing and handrails; lowered switches and electric buttons; ergonomically designed workspaces; etc.

Annual Net Revenues:  Total amount of income generated from the operations of the organization.

Asset:  Items of ownership convertible into cash; total resources of the business, such as cash, notes, accounts receivable, securities, inventories, goodwill, fixtures, machinery, or real estate.  Also the items detailed on a balance sheet, especially in relation to liabilities and capital.  Anything the organization owns.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

B

Back-up:  Duplicate site, usually in a different location such as a second facility or copy of electronic data.

Betterments:  Physical improvement, addition, or replacement that adds value to a property as distinguished from repairs/replacements that only maintain value.

Blanket Insurance:  Provides a single limit of insurance for several locations or for several coverages.

Bookkeeping Team:  Group responsible for maintaining all the accounting responsibilities of the organization.  Part of the Contingency  Team.

Brand Recognition:  Logo that consumers recognize; the quality and availability of a product or service.  It creates good or bad feelings depending on the history of the organization.

Business Impact Analysis:  Identifies bottlenecks and the most serious threats to an organization including the impact of those threats.  One of the most critical steps in the contingency planning process.

Business Income:   An organization’s gain or recurrent benefit usually measured in money that derives from capital or labor.  Amount of income to a business, usually calculated as net sales minus cost of materials and supplies, i.e. Gross Profit, Gross Margin, or Revenues.

Business Income Limit:  Amount of insurance an organization purchases to replace their lost income if they are shutdown by a covered peril.

Business Income Worksheets:  Spreadsheets that help an organization calculate their possible lost income and needed extra expenses.

Business Interruption:  Anything that stops or impairs the ability of an organization to conduct its business or operations.

Business Owner’s Policy (BOP):   Standard insurance policy for storefront businesses.  One size fits all; it has preset coverages with few choices.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

C

Civil Authority:  Fire, police, government, National Guard, etc. that denies access to your property due to physical damage to yours or an adjacent property.

Claim:  Request or demand for payment in accordance with an insurance policy’s terms.

Coded Entry:  Data that is protected or represented by a code.

Coinsurance:   This provision requires the business owner to insure a certain percentage of the replacement cost of property and a certain percentage of the 100% (annual) business income to receive full payment for a loss.

Coinsurance Calculation:  Penalty amount of the claim that is deducted for not insuring to value.  Based on your business income, not gross sales.

Cold Site:  Bare back-up facility with no furnishings and no improvements.  The least expensive option.

Command CenterSpace that is used by the Incident Command Team to gather data regarding the extent of the disaster; to mobilize and direct the other teams; and report the status to the Contingency Committee.

Commercial Multi Peril Policy (CMP):  Provides a menu of coverages and a choice of limits providing broader protection than the Business Owners Policy (BOP).

Computer Back-up:  Usually means data (but should also include equipment) that is duplicated to be used if the original data or equipment is destroyed.

Containment:  Process of confining or restricting an event to a specific space.

Contingency Coordinator:   Person who heads the Contingency Planning Committee and is usually appointed by the chairman or president of the organization.  They are responsible for ensuring the organization’s contingency plan is fully developed and tested.

Contingency Plan:  Developed by a business in expectation of a sustained, significant disaster.  The plan outlines the methods, procedures, and technical resources necessary to recover quickly and protect the organization from further loss.  It is the basic component in calculating the business income risk.

Contingency Planning Committee:   Committee that consists of senior managers responsible for such areas as operations, legal, sales, administration, etc.  They outline the strategic plan and supervise the development and testing of the contingency plan.

Contingency Team:  One or more people with specific responsibilities for recovering their assigned portion of the company’s operations.

Contingent Business Income:  Income a business could lose if a third party, i.e. supplier, subcontractor, or customer, were to be shutdown and could not perform its obligations.

Contingent Exposure:  Types of risks that could shutdown a third party.

Continuing Expenses:   All the expenses an organization continues to incur after they have been disrupted by a disaster.  This includes such things as payroll, mortgage, notes payable, utilities, etc.

Cost/Benefit Analysis:   Method used to determine if a course of action makes sense, i.e. spend $10,000 to save $50,000. 

Course of Loss:  Identifies what actually caused the damage such as wind, fire, flood, etc.

Coverage:  Protection provided in an insurance policy.  It lists perils, locations, and limits provided by the insurance policy.

Credit Line:  Amount of money set aside at a financial institution for a business to use whenever they need extra cash.  It is usually based upon collateral provided by the borrowing organization and most of the time the interest charged is prime rate plus some percentage.

Crisis Management Media Protocol:  Procedure to be followed by the organization’s Media Spokesperson after a disaster.

Customer:  Person or company that buys goods or services.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

D

Deductible:  Amount deducted from a claims payment.  This is the money the organization has agreed to pay.

Deferred Sales:  Lost sales that are regained at a later date.

Denial of Access:  Usually imposed and controlled by city officials, fire, or police and denies access and/or occupation of a business’s normal working environment due to a community-wide disaster.

Denial of Service Attack:  Someone sends so much data through the system that an organization’s computers are shutdown trying to handle the volume.

Destroyed:  Demolish something or reduce something to fragments so that nothing useful is left.

Disaster:  Calamitous event, especially one occurring suddenly and causing great loss of life, damage, or hardship, as a flood, airplane crash, or business failure.

Disaster Recovery Period:  Amount of time it takes for an organization to fully repair or rebuild their premises and move into them or other facilities permanently.  This period also includes the time it takes to reach expected income had there been no loss.

Disaster Recovery Plan:  Set of procedures used to return a business to activity following a calamity. 

Discontinuing Expenses:  Normal business expenses that discontinue when a business is shutdown.  For example, raw material purchases, utilities, or subcontracted services.

Dividend:  Distribution to a policyholder of a portion of the premium not needed by the company to pay claims or to meet expenses.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

E

Earnings coverage:  Provides loss of income coverage that replaces lost earnings (as defined in the policy) during a period of interruption due to physical damage to the property.

Emergency Command CenterTemporary facility that allows the Incident Command Team to gather, organize, and distribute team mobilization orders as well as report the status of the disaster to the Contingency Committee.

Employee Notification System:  Telephone calling trees, “800” numbers, and/ or email used to inform employees what is expected of them after a disaster.

Engineering Team:  Group from the engineering department usually charged with product quality control.  Part of the Contingency Team.

Evacuation:   Ability to remove persons or things from a dangerous place or disaster area for reasons of safety or protection.

Event Management Team:  Group charged with the responsibility of first responders.  They manage the event by coordinating first aid, EMS response, disaster evaluation, and damage assessment.  Part of the Contingency Team.

Exclusion:  A risk or loss a policy does not cover.  For example, discontinuing expenses are excluded.

Expediting Expenses:  Incurred expenses above the normal business expenses that were used to reduce the loss.

Expenses:  Charges incurred while operating a business.

Exposure:  State of being at risk of financial loss, or the amount of possible financial loss involved.

Extended Period of Recovery:  Period beyond the resumption of operations and represents the amount of time it will take to reach expected income had there been no loss.  The standard insurance policy includes 30 days beyond the resumption of operations, but most businesses need 90 to 180 days to reach their expected income level.
 
Extra Expense Limit:  Total amount an insurance company will reimburse a business for monies the organization spent above its normal operating expenses to recover as quickly as possible from a disaster.  For example, the cost to lease and move to alternate facilities; personnel travel costs; additional subcontract costs; etc.

Extra Expenses:  All the money expended by an organization above its normal business expenses to try to reduce the impact of a disaster.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

F

Facility:  Something designed, built, installed, etc., to serve a specific function affording a convenience or service.  Usually a room or building.

First Aid Team:  Group of individuals responsible for the first response to a disaster where they will administer what medical care they can while waiting for the community’s emergency medical professionals.  Part of the Contingency Team.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

G

Gap:  Wide divergence or difference; a disparity:  The gap between expenses and income.  Also a problematic situation resulting from such a disparity, i.e. the budget gap.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

H

Hazard: Circumstance that increases the likelihood or probable severity of a loss.
Hazardous Materials:  Materials determined by the federal government to be dangerous to people, animals, plants, or buildings.

Hot Site:  Fully operational back-up facility with lights on, running computers, desks, chairs, etc. where all one has to do is sit down and start working.

Hot Work Issues:  Business continues to operate while repairs are ongoing.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

I

Impact Analysis:  Report showing what will happen to a business under various situations.

Incident Command Leader:  Person in charge of the Incident Command Team.

Incident Command Team:  Group charged with overseeing the disaster recovery efforts as well as implementing the organization’s contingency plan.  Part of the Contingency Team.

Indemnity:  Protection or security against damage or loss.  Also, compensation for sustained damage or loss.

Inflation Guard:  Clause in some commercial property insurance policies that automatically increases the amount of insurance by a small percentage due to economic inflation.

Information Technology Team:  Group responsible for going to the back-up site and recovering the computer operations of the organization.  Part of the Contingency Team.

Insurance:  Act, system, or business of insuring businesses and organizations against loss or harm arising in specified contingencies, as fire, accident, natural disaster, computer viruses, or the like, in consideration of a payment proportionate to the risk involved.

Insurance Coverage:  Outlined in the insurance policy.  Tells what and how much of a loss will be paid.

Insurance Policy:  Contract which a company gives customers financial protection against loss or harm such as theft or illness in return for payment of a premium.

Insured to Value:  Amount of insurance equals the actual cost to repair or replace the property.

Inventory:  Complete listing of merchandise or stock on hand, work in progress, raw materials, finished goods on hand, etc.

ISO Certified:  Compliance with the Industry Standards Organization’s requirements for an organization to provide high quality products and be prepared for any disaster.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

J

Just In Time:  Where something happens right when it is expected.  For example, raw materials are delivered at the time they will be used.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

K

No definitions at this time.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

L

Landlord:  Person or organization that owns and leases space to others for personal or business use.

Leasehold Interest:  Coverage that protects lower than market lease payments.  Include if you are renting your facility.

Life Safety:  Safeguarding employees, vendors, and visitors when a disaster occurs. 

Life Safety Procedures:  Establishes the protocol for safeguarding employees, vendors, and visitors when a disaster occurs.  The intent is to protect lives, reduce injuries, and quickly provide medical attention.  There are two components of this plan:  evacuation and containment.  Part of the Contingency Plan. 

Lockdown:  Process used when a hazard such as tornado or workplace violence makes evacuation impossible.  People move to predetermined areas until given the all clear.

Loss of Utilities:  Electric, water, or communications services are stopped.

Lost Profit:  Amount of money that should have been left after all expenses have been paid.

Lost Sales:  Amount of sales that were not made due to a disaster.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

M

Man Trap:  Entranceway comprising two doors.  The first door has to close before the second door will open.

Man-made Disaster:  Event that causes a business to shutdown such as strike, vandalism, or workplace violence.

Media:  Means of communication, as radio and television, newspapers, and magazines that reach or influence people widely.

Media Relations:  Activities between a business and the media.

Mirrored Site:  Back-up site that contains fully redundant facilities identical to the primary site and supports real-time information mirroring.  This is the most expensive option. 

Mobile Site:  Movable back-up facility such as a trailer.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

N

Natural Disaster:   Any event or force of nature that has catastrophic consequences, such as avalanche, earthquake, flood, forest fire, hurricane, lightning, tornado, tsunami, or volcanic eruption.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

O

Off-Premise Utilities:  The equipment and supply of utility power, water, telecommunications, etc. that is not on the business owner’s property.   

Operational Flow Analysis:  Outline of how businesses get their materials, what they do with them, and how they distribute their product.

Ordinance And Law Coverage:  Coverage in the commercial property insurance policy that protects the insured from the impact of complying with ordinance and law.  For example, the Americans with Disabilities Act or a local zoning requirement that a property be rebuilt a certain size and for specific usage, etc.

Ordinary Payroll:  The payroll, benefits, taxes, and insurance premiums for everyone in the organization who is below the department manager level.  It would include such people as bookkeepers, salesmen, engineers, Quality Control, mechanics, facilities, etc.

Ordinary Payroll Exclusion:  Organization’s can choose to exclude their ordinary payroll and thereby reduce their insurance premiums.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

P

Partial Destruction:  Damage to 50% or less of the facility.

Period of Indemnity:  Identifies how long sales were lost and when you returned to “normal.”

Peril:  Cause of a loss such as fire, wind, explosion, etc.

Permanent Damage:  Cannot be repaired and must be replaced.

Personnel Team:  Group responsible for the human relations aspect of the organization.  Part of the Contingency Team. 

Physical Plant:  The building, equipment, and floor plan of an organization.

Premises:  A building together with its grounds or outbuildings.

Production Team:   Group responsible for getting the production operations up and running after a disaster.  Part of the Contingency Team.

Profit:  Monetary surplus left to a producer or employer after deducting wages, rent, cost of raw materials, etc.

Property Coverage:  Insurance policy protection of property.

Protocol:  Rules of correct or appropriate behavior of a group, organization, or profession.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Q

No definitions at this time.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

R

Records Management Program:  Procedure to be followed regarding the handling of all data and records in the organization.

Recovery Period:  Time it takes to repair or replace damaged property, resume operations, and reach the expected income level.

Recovery Time:  Measured from awareness of the event to the point where the organization’s revenues reach their projected level had there been no loss.

Redundancy:  Provision of additional or duplicate systems, equipment, etc., that functions in case an operating part or system fails.
.
Redundant Supplier:  Secondary source of supply.

Replacement Cost:  Amount of money needed to replace something in today’s dollars.  No deduction is taken for depreciation.  The replacement cost is limited by the maximum dollar amount on the policy.

Restoration:  Repair.

Retained Risk:  Amount of exposure to risk an organization does not insure.

Retrofit:  To build out or improve a facility, such as carpet, paneling, lighting, wiring, etc.

Return Point Objective:  Part of a contingency plan that dictates how much data you can afford to lose.

Return Time Objective:  Part of a contingency plan that dictates all other components of the plan.  It is how long the marketplace will allow a company to be non-functioning before it begins to lose business.

Risk:  Chance of loss or the perils to the subject matter of an insurance contract.  Also, thedegree of probability of such loss; a person or thing that is a specified hazard to an insurer.

Risk Assessment:  Process of identifying hazards to the business; the probability of occurrence; and what their impact would be.

Risk Assessment Analysis:  Determines the events with the highest probability and greatest impact on the organization.  Part of the Contingency Plan.

Risk Management:  Process of eliminating, transferring, or reducing the impact on a business from certain risks.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

S

Salvage:  To save and repair used, damaged, or rejected property or goods for recycling or further use.

Selling Price Clause:  Applies to the value of goods that have been damaged or destroyed by a covered peril.  The purpose is to pay the profit that would have been made on a sale.  This is property coverage not business income, because the goods are assets.

Single Source Supplier:  The only organization that provides a particular product or service.

Spokesperson:  Person who speaks for another or for a group.

Staging Area:  Designated place for goods or services to be situated before they are put into use.
 
Steering Committee:  Also known as the Contingency Planning Committee, this group develops the disaster recovery strategy and oversees the development of an organization’s contingency plan.

Strategic Planning:  General outline of the actions a company will take should a disaster occur.  Part of the Contingency Plan.

Subcontractor:  Person or company used to perform a function for another person or company.

Supplier:  To furnish or provide (a person, establishment, place, etc.) with what is lacking or requisite.

Supply Chain:  Workflow or process of moving goods or services through an organization’s operations.  For example, the raw material supplier sends material to the warehouse which makes the products; then sends them to the plant for packaging.  Once completed, the packages are sent to a warehouse for distribution to customers.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

T

Temporary Damage:  Damage that can be repaired.

Tenant:  Person or group that rents and occupies land, a house, an office, or the like, from another for a period of time.

Threat Matrix Template:  Chart showing the threats that pose a high probability and high impact through low probability and low impact on a organization.  Part of the Contingency Plan.

Time Element Coverage:  Provides insurance for a covered event that damages the physical premises and results in loss of use of that property.  It is calculated on the value of the time lost.

Total Destruction:  Damage to more than 50% of the facility.

Trap:  Stratagem for catching or tricking an unwary person.  For example, a 50% coinsurance penalty results in only partial payment of a claim if the proper insurance is not purchased.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

U

Unamortized:  Value remaining from the original cost of investment (usually for betterments) after the wear and tear value has been subtracted.  For example, wall paneling cost $1,000 a year ago.  We have “used” $200, so $800 is left.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

V

Vendor:  Person or agency that sells goods/services to an organization.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

W

Warehouse Team:  Group responsible for setting-up alternative warehouse
facilities, installing machinery and fixtures, and re-establishing operations.  Part of the Contingency Team.

Warm Site:  Computer operations back-up facility that is furnished but not
currently being used.  People moving in have to turn on the lights and equipment, plug in their workstations, locate their manuals and support material, load their data, etc.

Workplace Violence:  Attack on personnel by one or more persons that creates a hazardous situation for everyone in the vicinity usually resulting in bodily injury.

Worksheets:   Forms completed in order to calculate how much income an organization will lose during their recovery period and how much extra expense they will need.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

X

No definitions at this time.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Y

No definitions at this time.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Z

No definitions at this time.

Return to top



 
User Name:
 
Password:
 

   
 
   
 
   
 
 


To follow us,
click on the links below:








 

"Excellent resource. We completed the worksheets in a matter of minutes. One pass through the website, and all our questions were answered."

"Excellent service. Quick and easy. I love how I can use it over and over."

"The worksheets are awesome! Thanks!"


 

Phone:
307.433.8180
Fax:
307.634.9497

Comments or Questions?
Email Us