business_continuity_risk

Business continuity management and risk management

Business continuity management is the act of anticipating incidents which will affect mission-critical functions and processes for the organization and ensuring that it responds to any incident in a planned and rehearsed manner.

There is common misunderstanding that business continuity management is important only for large organizations. One of the factors forming this opinion was the promotion of computer disaster planning. It was traditionally aimed towards large organizations e.g. big financial institutions like banks.

Business continuity management is extremely important for small and middle-size businesses as well. Because of business size, business continuity management in this case is simpler and the cost will be proportionally less than for larger organizations. The consequences of not being properly prepared are, however, likely to be more severe since smaller businesses have smaller buffer capacityEto absorb the strength of the disaster.

It does not have to be a high-profile disaster as hurricanes, earthquake or a terrorist attack. There are the dozens of relatively minor issues such as prolonged power outages or computer network failures that may cause the serious impact on business survival. The vast majority of problems are caused by people or process failures. This is where the effort and investment should be concentrated.

Business continuity management is very close related to risk management. i.e. the process of identifying risks, evaluating their potential consequences and determining the most effective methods of controlling them or of responding to them. Every business decision should take into consideration risk management in order to reduce the frequency of risk events occurring, whenever this is possible, and to minimize the severity of their consequences if they do occur. The effective risk management cycle consists of systematical risk identification, analysis, control and monitoring.

Operational risks have the main impact on business continuity management eventually affecting your business:

Problems with customers and distribution like interruption with product distribution or raw material supply, e.g. quality of supplies, transport difficulties, industrial disputes / strikes, product counterfeiting, key customer goes out of business or switches to alternative supplier, etc.;
Disasters like fire, flood, explosions;
Other factors like design mistakes, computer/power systems malfunction, equipment breakdown, pollutions, fraud, losses or sabotage, loss of key people etc.

Therefore, business continuity management is not just about recovery from a disaster such as one caused by fire or flood or the failure of information technology systems. It can be about the collapse of a key supplier or customer, about fraud and unethical operations.

Can your organization manage through a disaster better than your competitors? What would be the impact on your business? Would it survive? Do you have the plans which ensure it?

You may be in a situation when key customer or business partners agree to do business with you only when they are satisfied with adequate business continuity plans, describing all critical processes and vulnerabilities.

Different aspects of business continuity and risk management can be analysed helping you to stay in business. It may be business impact analysis, risk analysis or preparation of business continuity plan.

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Reference:

Business Continuity Institute, http://www.thebci.org

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