Financial Resilience & Budget Planning Flashcards

Which type of insurance provides coverage when a key supplier's inability to deliver goods or services causes financial loss to the insured organization?

Answer: Contingent business interruption insurance

Contingent business interruption (CBI) insurance covers financial losses that occur when a key supplier or customer experiences a disruption that indirectly impacts the insured organization's operations.

What is the primary purpose of a 'financial recovery plan' in organizational resilience?

Answer: To document the financial strategies, resources, and actions needed to restore financial stability after disruption

A financial recovery plan documents the specific financial strategies, available resources, and required actions to restore the organization to financial stability following a disruptive event.

How should organizations prioritize financial expenditure during the immediate response phase of a disruptive event?

Answer: Preserve cash by deferring non-essential payments and prioritize life-safety and critical operations

During the immediate response phase, organizations should preserve cash by deferring non-essential expenditures while prioritizing spending on life-safety measures and critical operational continuity.

What is 'catastrophe modeling' primarily used for in organizational financial resilience planning?

Answer: Quantifying the probability and financial magnitude of catastrophic events to inform risk financing decisions

Catastrophe modeling uses statistical and computational tools to quantify the probability and financial magnitude of catastrophic events, helping organizations make informed risk financing and insurance purchasing decisions.

Which document specifically outlines how an organization will fund its recovery operations following a major disruption?

Answer: Financial continuity plan

A financial continuity plan documents the funding mechanisms, available financial resources, and decision-making processes the organization will use to fund recovery operations after a disruption.

What is the recommended approach for organizations to sustainably fund long-term resilience programs?

Answer: Integrate resilience funding into annual budget cycles as a recurring operational investment

Integrating resilience funding into annual budget cycles as a recurring operational investment ensures sustainable, predictable funding rather than relying on reactive or post-disaster funding mechanisms.

Which financial planning concept identifies the minimum level of financial resources required to maintain critical business functions during a disruption?

Answer: Minimum viable operations budget

A minimum viable operations budget identifies the minimum financial resources needed to sustain critical business functions during a disruptive event, informing cash reserve requirements and financial resilience planning.