Keeping the life raft afloat with business continuity management

Any organization, no matter how big or how small, is bound to undergo some kind of disruption at some point. With everything needed to keep a business up and running, it’s almost impossible for something not to go wrong. That’s why analyzing and measuring operational and financial impacts on the business is important.

In this article, we’ll cover the basics of what a Business Impact Analysis (BIA) is and the steps you need to conduct one. 

The nuts and bolts: Business Impact Analysis 

A business impact analysis predicts the consequences of a disruption in critical business processes or elements. It involves processing and gathering the human and technology resources needed to come up with an appropriate recovery strategy. 

A major disruption can lead to any of the following: 

• Lost revenue: Financial loss of revenue from disruptions
• Increased expenses: Increased costs associated with new investments in infrastructure, technology, and talent to deal with the business impact
• Regulatory fines: Penalties for non-compliance with mandated policies
• Contractual penalties: Failing to meet agreed-upon services and SLAs (Service Level Agreements)
• Reputational damage: Decreased customer trust in organizational competence in the market
• Delayed sales: Cancellation of new initiatives, projects, or expansion plans due to business disruption

Any one of these issues can completely derail your organization, no matter the market conditions. As a result, it is important to pinpoint the exact locations of vulnerabilities in critical business functions and close the gaps through rigorous business impact analysis followed by thorough business continuity plan implementations. 

Steps involved in conducting Business Impact Analysis

Before we dive into conducting a BIA, it is worth noting that many of the steps outlined here should be customized according to your organization’s business needs. This will ensure you obtain the highest ROI (return on investment). 

1. Identify critical business functions

During a disaster, time is of the essence, and prioritizing the most critical business elements will go a long way during the recovery phase. In order to successfully carry this out, however, it is important to identify the criticality of all the elements across all verticals within the organization. 

Business functions like sales, production, legal, supply chain management, finance, customer service, and PR are essential elements that make up the inner workings of the organization. When any of these areas is significantly impacted by disruption, it can spell disaster for the entire company. 

Roping in key decision makers for input through a business impact analysis questionnaire can uncover detailed knowledge about specific vulnerabilities should certain critical elements fail. More specifically, this information should uncover each function’s contribution to revenue generation, the impact on customer service, the role it plays in regulatory compliance requirements, and other business-specific variables.

Establishing criteria of criticality can help organize how essential the function is towards operations and what the impact is in the case of a disruption. 

2. Assess potential risks and impacts

Understanding your key risks and impacts prior to making any process changes will help you better understand the scope of changes as well as the exact steps to take when making them. 

Identify risks and disruptions 

There are an infinite number of risks and impacts that can befall any organization, but the key here is to figure out the ones that are most likely to have an impact on your processes in the current environment that you are in. 

You can look at the laundry list of natural disasters, technology failures, human errors, regulatory changes, and internal or external threats. Still, it won’t do you any good unless you can whittle down the most likely risks you face. You need to first define the purpose and scope of your risk assessment efforts.

Figuring out what you want to achieve for a specific critical business element will help you narrow down the action items to take to patch up any existing vulnerabilities. 

For example, if you are a business associate or covered entity in the healthcare industry, you run a high probability of getting fined by a regulatory body like the ONC or CMS if you are not up to date with the HIPAA Privacy Rule in your current business practices. Expert judgment and data analysis can help you prioritize and identify which practices are likely to have a major impact on your business in the case of a disruption. 

Assess impact severity

Assess the severity of the potential impacts of each identified risk or disruption on the critical elements. Consider factors such as the duration of the disruption, the magnitude of the impact, and the recovery time objectives (RTOs) for each function.

Knowing the severity of disruption ahead of time can help you implement a continuity plan closer to the ideal scenario of a disruption having no impact at all. Take into consideration factors like disruption duration and impact magnitude: 

1. Disruption duration: How long does the disruption last, and does that have a lasting impact on how the business is run? For example, an e-commerce store that faces a cyberattack during a major holiday season will have a tremendous effect on its yearly sales. Minimizing the duration of the effects of the cyberattack will be paramount to keeping the business afloat. 
2. Impact magnitude: What is the long-term and short-term severity and extent of the consequences of a disruption? Understanding the potential consequences of an event will help define resource allocation and allow decision-makers to come up with more informed risk management strategies. 

Locate dependencies

The internal and external systems and resources that are fundamental to your business operations can also be a source of risk. Locating these vendors, suppliers, IT systems, and other stakeholders critical to your success and assessing them for risk might change how and with whom you form those partnerships. 

Depending on an external party for a certain service might place more stress on your processes than bringing everything in-house. On the other hand, the opposite could hold true. Therefore, it is important to thoroughly assess your partnerships and create a situation where you carry the least amount of risk.  

3. Develop recovery strategies

Develop recovery strategies and options for each critical business function based on the identified risks, impacts, and dependencies. This may include strategies such as backup and redundancy plans, alternative sourcing, remote working arrangements, or other contingency measures.

When we talk about recovery strategies, we are really talking about ways to mitigate the current situation with the goal of getting as close to a disruption never happening in the first place or, at the very least, ensuring that critical business operations are up and running as quickly as possible. 

Depending on the circumstance, recovery might look like using backup product suppliers to find an appropriate remote working environment for critical team members. Regardless of what it looks like, contingency measures need to be carefully pre-defined so they can be deployed without hesitation at a moment’s notice. 

4. Implement findings into business continuity planning

Based on the analysis that you have conducted, the next step is to begin to implement your findings into some mitigation measures. This will make up the bulk of the business continuity plan. You can segment this across different areas of the business, including: 

Implementing backup systems

Having an IT infrastructure that has built-in redundancy controls allows users to continue obtaining information, even in the event of a failure. More specifically, fault tolerance will allow visitors to receive access to the requested site, albeit with limited functionality.

This can be done by implementing redundant servers and storage devices to minimize a single point of failure. Load balancing can also be implemented to make sure that operations still continue even if an individual component fails. 

Developing emergency response plans

Delegating roles and responsibilities, emergency services coordination, and resource allocation are all key components of an effective emergency response plan. 

Training employees

Figuring out how employees should react to evacuation protocols, shutdown procedures, and data recovery protocols is critical to operations in the midst of a disruption. Running exercises and tabletop sessions to prepare ahead of time is critical to the process flowing smoothly.   

Communication plans

Communication will be one of the most critical aspects you can optimize in the event of a business disruption. Communication plans should outline: 

• Communication channels and how to specifically message different stakeholders—internal and external—in the result of a disruption. 
• How the organization communicates with employees, customers, upstream and downstream suppliers, as well as any other vital partners with a vested interest in the continued success of the business. What kind of messaging is used and the tone involved can make all the difference when your goal is to instill confidence in the company.  

Following these steps are crucial to surviving a catastrophic event or sudden business disruption. The specifics of each step will be different according to organizational needs and will make up a unique business impact analysis report. If you need any help coming up with your specific disaster recovery plan, make sure to reach out to an expert. 

Contrary to popular belief, resilient organizations don’t just naturally fall into place. They use a combination of tools and analyses that are painstakingly strategized, developed, tested, and implemented.

A successfully executed business impact analysis entails asking the right questions and implementing the right strategy at the right time. It requires knowing the ins and outs of the organization and getting to the bottom of key vulnerabilities in critical elements that your senior management can point out. 

Understand that business disruptions are going to be a natural part of business operations in general. Evaluate your current strategies on a regular basis to stay in step with the current environment. Putting together a business impact analysis team that can make this a core part of your overall day-to-day business operations will get you that much closer to total organizational resilience.

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