Y2K: are you ready?

If you are like me, you have already heard far too much about the "millennium bug".  By now, you will have (hopefully) completed a Y2K audit of your business and made the necessary changes. You will have upgraded your computer technology and taken advantage of the tax incentives from revenue Canada.  So, can you finally relax?

As businesspeople, the millennium bug affects us in many ways.  This month, I want to draw your attention to some legal issues related to Y2K so that you can take some steps to remedy any deficiencies in the little time we have left.

Most software and hardware suppliers have Y2K compliance statements available.  You can obtain them by checking their web site, calling them, or faxing them.  If there is not one available, you should insist on obtaining their position with respect to their particular product. When you look around your office, do not limit yourself to computers and computer programs.  How about your voicemail, fax machine, personal electronic organizer, security system etc.?

Once you have your own office in order, you are not ready to relax.  What happens if the power fails, or one of your suppliers is not Y2K-ready and cannot deliver?  Even though you have corrected your own problems, external failures could prevent you from running your business and satisfying your customers.  You could be liable in such a situation.

To prevent or lessen your exposure to liability, you should do a number of things.  First, contact your suppliers and determine if they have made themselves Y2K-ready.  If they cannot give you a clear answer, then you need to be concerned. 

Next, contact your insurance company.  What coverage you have for business failures, loss of revenues, lawsuits from clients or other repercussions caused by the millennium bug?  There is a possibility that insurance companies may deny coverage on the basis that the Y2K problem was a foreseeable event and your losses are a result of your failure to adequately prepare for the problem.  You should obtain very clear documentation from your insurance company with respect to their coverage for Y2K-related losses.

Next, you should prepare a company statement on Y2K readiness.  This statement should set out that your internal systems are compliant (only, of course, if they are actually compliant) and that you do not foresee any difficulties internally.  However, you must set out any possibilities that you are aware of for service failures or interruptions due to external sources.

If you have adequately warned the people that rely on your business about the risks of interruptions or failures in their service due to Y2K, you will be in a much better position to defend yourself from a lawsuit from a dissatisfied or disgruntled customer.