Inadvertent human error. Hardware failure. Loss of power. Cyber attacks and malware. Businesses experience data loss for a variety of reasons, many of them unexpected. Whether it’s something as simple as an employee opening an infected email or a natural disaster such as a major hurricane, it’s essential to have a disaster recovery strategy in place to minimize the length and the resulting impact of any disruption event.
A Business Impact Analysis (BIA) is a component of business continuity planning that predicts the potential impact of a disruption of services within a business and gathers information needed to develop recovery strategies. Shockingly, small companies absorb an average loss of $20,000 for every day its business can’t function. Worse yet, more than 50% of businesses that can’t resume normal operations within 10 days and close their doors within six months. The combination of financial peril and the resulting tarnished reputation among clients and customers is too great to overcome, making BIA crucial. Taking steps to evaluate your business impact analysis report provides the basis for a recovery, prevention, and mitigation strategy.
Create a BIA Team
Identifying and assembling key individuals and senior management, for a BIA team is the first step toward business continuity peace of mind. The BIA team can consist of employees from the firm or an independent third party which specializes in business continuity planning. The BIA team’s responsibilities include interviewing and gathering information throughout the company.
The next step is gathering the information necessary to make the business impact analysis. This data needs to be gathered from interviews as well as questionnaires. It’s also essential to gather relevant information from employees and managers from every department because they know which required processes are critical for the business to provide ongoing service to its customers or clients. Most companies have an information technology system in place for storing, retrieving, and sending information. The information-gathering phase consists of individual department meetings with BIA team leadership and completing detailed questionnaires as part of an overall risk assessment operation. It’s important to note that the risk assessment phase is used not only to ascertain the potential impact of business interruptions but also to determine what could be done in terms of prevention and mitigation development plans. In addition to plotting scenarios for the potential of lost revenue, many intangibles need to be considered, most notably loss of reputation among clients in the event normal business processes are interrupted for a prolonged period. It’s one thing to have a power outage that lasts a few minutes and another to have a widespread technological glitch that can prevent business as usual for several hours or even days.
Identify and Evaluate Information
Once collected and documented, the information must be analyzed. This review accomplishes multiple objectives:
- Prioritization of business processes in terms of which would have the most significant financial impact in the event of an interruption. BIA teams should focus on scenario planning that covers every possible type of disaster, including weather-related events, cyber-attacks, labor disruption, utility failure, workplace accidents, employee error, and a long list of somewhat complex emergencies.
- Establish a recovery timeframe in which to recover the original process. In addition to plotting scenarios for the potential of lost revenue, many intangibles need to be considered, most notably loss of reputation among clients in the event normal business processes are interrupted for a prolonged period. It’s one thing to have a power outage that lasts a few minutes and another to have a widespread technological glitch that can prevent business as usual for several hours or even days.
- Some businesses also need to determine what regulatory responsibilities they must adhere to in the event of a recovery event to avoid potential fines and litigation.
Prepare and Present the Results
The bottom-up BIA information-gathering process can take several months or longer. Copious notes are taken to fully assess every eventuality cited by employees and managers and define worst-case situations. A final report is then created for management to document every eventuality and quantify the potential business loss resulting from each possible disruption. The contents of a final BIA report should begin with an executive summary and the objectives and scope of the project. In addition to a summary of findings, a detailed analysis of the findings must be presented. The analysis should identify and list the most critical business functions, the impact of disruptions based on duration, and a full breakdown of potential financial costs under a variety of circumstances. No BIA report to management is complete without such supporting elements as documents, charts, tables, and graphs. The BIA team should end the report by making recommendations to management on which business continuity procedures should be implemented and in what order. With the final BIA report in hand, management can determine which expenditures should be made in terms of prevention and what needs to be done to ensure the most critical business functions are least affected under any potential circumstance. A well-documented and thorough BIA plan is among the most valuable resources a company can have.