Overview
It must be stated that BCPs are essential in any company. Anything that hinders the business activity for whatever period it takes leads to losses and increased cost and again starting up is not easy.
This results to low profitability, incidence of financial loss, possibilities of business getting to a stage of declaring bankruptcy and in the extreme wiping off a business through liquidation.
The extent of the impact of a BCP is to make sure the business can fully recover with very brief disruptions. In BCP, the scope of risks that can impact a firm’s operations is identified, making the process critical for a firm’s risk management profile.
Some of risks could be fire, floods, hurricanes or earthquakes, pandemics, acts of terrorism, and hacking or cyber assaults. Once the risks are identified, the plan should also include:
- Deciding on how those risks will impact its operations
- Measures, which must be taken to minimize the dangers
- Procedures are ways and methods or processes for testing to ensure they work.
- Audit of the present process to ensure that it is still the most appropriate one available.
Insurance is not sufficient because they do not cover all the costs or the customers that shift to the competitor. This is why, commonly, concept of BCP is advanced and includes a number of key stakeholders and personnel concerns.
What Is a Business Continuity Plan (BCP)?
A business continuity plan (BCP) is a process of organizing for and operating as a business that is not interrupted through preventing as well as mitigating impacts of probable hazards. It guarantees people and property, and also to be ready to operate as soon as possible in case of a disaster. BCPs need to safeguard employees and company’s property so they can resume operations in case of disruption. These BCPs must be exercised prior to an actual emergency situation so business can determine the plan is operational and what flaws exist where remedial action is required.
Key Takeaways
- Business continuity plans are strategies of avoiding and mitigating risks including natural disasters or cyber-attacks.
- This comes as a backup to protect personnel and other assets while ensuring they can get up and running immediately when disaster hits.
- BCPs should undergo a test for one major reason – to know if it is flawed in some areas that needs to be addressed.
Benefits of a Business Continuity Plan
There exists a wide range of misfortunes that can befall a business at some point ranging from small mishaps to complete disasters. That’s why business continuity planning is usually supposed to provide for the ability of a business to carry on operations in case of such catastrophes as fires. BCPs stand out from disaster recovery plan, which is aimed at the restoration of a company’s Information Technology system after the disaster.
Suppose there is a settlement based financial company operating from one of the big cities. It can put a BCP in place by actions such as the organization backing up its computer and client files offsite. In case something happens to acquire the corporate office, the other regional offices would still find the information as useful.
Note that the BCP may not work well when many people are affected such as is the case when a disease has broken out. However, BCPs can enhance the risk management —contingency action halting the spread of disruption. They can also be useful in preventing broad time lapses of networks or technology which in turn costs the company a lot of money.
How To Create a Business Continuity Plan
To fashion a substantive BCP there are several stages most organisations must go through. They include:
- Business Impact Analysis: Here, the business will reveal the functions and the corresponding resources that relate to it, and which are the sensitive ones to time. (More on this below.)
- Recovery: Concerning this part, the business has to outline and integrate actions in regards to restoration of key business operations.
- Organization: There has to be a presence of continuity team. This team will come up with a strategy of handling the disruption.
- Training: On matters of continuity, the continuity team must be trained and tested. Members of the team should also do other exercises where they cover the plan and strategies.
Other checkpoints that companies may find helpful in developing a list might the name and number of an emergency contact, a list of the resources that the continuity team may require, where the continuity team can find backup data and other critical information, and other people that the continuity team may need to consult.
Apart from that, the company should also test the BCP itself when testing the continuity team. It should be tested several times to make sure it does apply to numerous risk situations. This will help call out the flaws that are likely to be there in the planning process so that they are avoided.
What Are the Elements of a Business Continuity Plan
- Scope and purpose of the BCP.
- Differentiating between and their location including critical systems, business functions/processes, and data.
- Risk Assessment: Common problems that need to be solved within risk management and assessment to identify threats that can harm business activities include: Here, one also needs to assess possible risks from within and outside the business, for example, hurricanes, cyber-attacks, failed supply chain and so on.
- Business Impact Analysis: Assess the degree of risk posed by each of the risks which are likely to affect core corporate activities. Such an analysis makes it easy to allocate resources and initiate recovery depending on the measure of harm.
- Emergency Response Procedures: List clear procedures on how to handle emergencies and protect the members, mitigate loss, and start recovering from the emergency regularly.
- Business Continuity Strategies: Strategies that should be employed during disaster preparedness so as to ensure that essential operations of business continuity are protected are as follows. This covers issues such as identifying where extra equipment, supplies or resources may be kept and how, in the eventuality of a particular situation, more resources can be sourced.
- Communication Plan: That is why a measurable and practical communications plan should be developed to assist in the timely and accurate dissemination of information between the employees, customers, suppliers, etc., during a crisis. This way the expectations of the audiences are easily controlled for and the management of the organization has a clear picture of what to expect.
- Training and Awareness: Carry out periodic security awareness creating sessions and security awareness training or security compliance training to ensure that the members of staff appreciate their policies and responsibilities in case of a risky event. This helps create awareness that everyone is ready and know what to do in an event of occurrence.
- Testing and Exercises: Continuously validate the BCP by implementing tests and, of course, best practice exercises. It aids in opening up the plan to scrutiny in order to define and take into account specialties and shortcomings that need corrective work as well as constant enhancement.
What Are the Risks of Not Having a Business Continuity Plan
Financial Loss: Disruption actually has such wrongful implication for a business because it alters the financial make up of a business.
Losing tens of thousands of dollars every year, the organisation without the BCP cannot fully retrieve the money and achieve the organisational stability required for the long run.
Operational Disruption: Failure to develop a BCP means that operations can be stopped, organizations cannot provide their services to buyers, and cannot meet customers’ expectations and obligations. This can dent the image of the organization, and also end up with loss of customers or clients.
Legal and Regulatory Compliance: There are legal and regulatory requirements that apply to different industries in the society. Breaches of these obligations because of the absence of a BCP attract legal consequences, fines, and legal suits.
Damage to Reputation: Disruptions are risky as they make everything appear uncertain and unpredictable thus a negative image to clients, customers and business partners. Lack of BCP to tackle these challenges may lead to depredation of the organization reputation beyond any recovery.
Competitive Disadvantage: In the current business environment, the organizations that will be able to show effective BCP have the comparative advantage. In cases where an organization has no BCP in place it becomes very difficult for the organization to regain competitiveness or market share that it may have lost to competitors.
Importance of BCP Testing
The BCP needs to be comprehensively trained and exercise to the continuity plan team yearly. The other activity that would be conducted in testing would be the team to engage in activities that entail covering the plan and the strategies with a view of creating awareness.
Besides, if the team is trained on the plan, it may be quickly and effectively put into operation at such conditions when the storable plan may be inaccessible for the team during the disaster.
The tests may also assist the team to develop a thought process on this if the office is unavailable and/or your systems are unavailable in the event of a disaster (where your plan is kept).
Actually, the goals of BCP tests are as follows: to enhance the process of response, to discover the shortcomings of the plan, and to increase team readiness and response as mentioned above. Like with many other recommendations, tests should be run at least once a year.
Developing a Strategic Business Plan
Audit of Business:
- Carry out an exploration of the characteristics of the business as they are today.
- Previous performance financial statements, market position, and a firm’s overall performance.
- SWOT: Strengths, Weaknesses, Opportunities and Threats.
- Assess the company’s internal strength and weaknesses.
Analyzing Micro and Macro Influences on the Business:
- Bring out trends of competitors, customers, suppliers and changes in regulation of the business environment.
- There is also the need to analyze other macro-environmental forces such as the economic forces, technological forces and political forces.
- General tools to evaluate external business environment are PESTEL analysis and Porter’s Five Forces.
- Highlighting Business Objectives:
- It is also necessary to identify business goals for the near future and for the long term.
- Create new objectives clear and concise with a focus on Specific, Measurable, Achievable, Relevant and Time-based (SMART) objectives.
- The objectives must therefore correspond to the company’s mission and vision.
Identifying Critical Business Processes:
- Outline the strategic operational activities that make a significant difference to the performance of an organization.
- An approximate assessment must be made as to how efficient and effective these processes are.
- Focus more on enhancing the strategic niches in an organization in order to achieve strategic goals.
Developing Contingency Strategies:
- Always have contingencies organized that may be likely to affect the business.
- Develop forms and plans of contingencies and crises.
- Develop contingency plan to deal with potential mishaps that occur in the process of performing the operations.
Ongoing Monitoring and Adaptation of the Plan:
- Tie your activities to the implementation of key performance numbers known as KPIs, or performance indicators.
- To minimize failure in the business, the following tips should be practiced:
- Allow the adaptation of the newcomers to implement arising opportunities and threats.
Communication and Alignment:
- Communicate the strategic plan widely and regularly to the staff within the organisation.
- Obtain the employees other type of assurance of commitment buy-in levels.
- Make certain everyone knows his or her part in implementing the plan and realizing its goals.
Resource Allocation and Budgeting:
- Manage the human capital and financial capital according to the strategic initiatives that the objective is set to support.
- A budget that must incorporate all the financial expenses that the plan will incorporate should then be created.
- Reinforce the importance of the value of money and conduct stringent control towards expenditures – make use of the special budgeting techniques if necessary.
Implementation and Execution:
- Create an implementation chart for achieving the strategic objectives.
- This should be given out to particular teams or individuals so that they can handle work on their own capacities and capabilities.
- Remember to check your advancement frequently so that you may alter something that has gone off course.
FAQ’s
Where Does Business Continuity Planning Belong in an Organization?
As to the culture of the organization implementing the business continuity plan, the department differs. It very often constitutes one of the critical business strategic development plan components, in which case it would be under the IT division. Or if financial effects are of most interest to your organisation, the running of the plan may require the finance department.
Which Department is Responsible for Business Continuity Plan?
Typically, the business continuity plan is created by or implemented with help from a specific role that is a part of an organization’s structure and reports to the management team, such as Business Continuity Manager. It might be a single person and at bigger organisations can be one or multiple teams that are tasked with the development of this plan and are also supposed to alter it constantly to keep it up to date as to accommodate the organisational disruptions.
Is Business Continuity Planning Legal?
While it does not have to be, there are often industry and governmental pressures in which organizations are required to have the plans in order to maintain business continuity and preparedness in case of an emergency.
What Part Can Business Continuity Planning Play in the Recovery from an Incident?
It serves a critical function within an organization in enabling it to overcome disruptions by offering an organized system for analyzing, managing and preventing negative outcomes stemming from interruptions, meaning an organisation will undergo a short time out and less losses. This protects working procedures in that crucial functions can quickly be back on and running fashion that does protect the reputation of the organisation and confidence of the stakeholders.
When Should a Business Continuity Plan Be implemented?
A business continuity plan should be put in place as proactive in the unfortunate case that disruption strikes. An event may be a natural disaster, a cyber-attack, a disruption of supply chain, or any other upset that poses a risk to the continuity of company’s operations.