Insurance is an important component of the business continuity planning process. While insurance is not a substitute for an effective BCP, it may allow management to recover losses that cannot be completely prevented and expenses related to recovering from a disaster. Generally, insurance coverage is obtained for risks that cannot be entirely controlled, yet represent a potential for financial loss or other disastrous consequences. While the decision to obtain insurance is based on several factors, one consideration should be the probability and degree of loss identified during the BIA. Financial institutions should determine potential exposure based on various exclusions, deductibles, limits, and riders. Available insurance options should be reviewed to ensure that appropriate insurance coverage is provided given the risk profile of the institution. Institutions should perform an annual insurance review to ensure that the level and types of coverage are commercially reasonable and consistent with any legal, management, and board requirements.

Insurance can reimburse an institution for some or all of the financial losses incurred as the result of a disaster or other significant event. To facilitate the claims process, institutions should create and retain a comprehensive hardware and software inventory list in a secure off-site location and detailed expenses should be documented to support insurance claims.


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