How can a business impact analysis (BIA) help with the assessment of business continuity needs?
As business continuity managers know, a business impact analysis forms a central part of the continuity planning process.
These analyses are specifically designed to predict how a business disruption would impact the organization, its operations, and its finances.
They are instrumental in determining what disruptions to prioritize, as well as how to design business continuity strategies.
In this article, we’ll examine the role that a business impact analysis plays in the business continuity planning process.
Assessing Business Continuity Needs with a BIA
Below, we’ll explore the business impact analysis (BIA) in detail, especially as it pertains to business continuity, change management, and organizational resilience.
A business impact analysis, as mentioned, predicts the impact that a particular disruption or type of disruption would have on a business.
Performing this analysis is among the first steps to undertake when developing a business continuity plan.
These analyses are also useful for other organizational resilience strategies, and can inform change management efforts, digital transformation efforts, risk management strategies, and more.
Types of Business Disruptions
There are quite a few different types of disruptive changes that can interrupt business operations.
These can include:
- Natural disasters, such as floods, tornadoes, earthquakes, hurricanes, or wildfires
- Workplace accidents and hazards, such as chemical spills, fires, or work-related incidents
- IT disasters, such as cyber attacks or hardware failures
- Power outages
- Supply chain disruptions
- Health-related emergencies, such as the COVID-19 pandemic
Not all of these disruptions will pose an equal risk to every organization. If, for instance, an organization isn’t located in an area prone to hurricanes, then those would not pose a very large threat.
Many of the other types of disruptions, however, can pose a threat and their potential impacts should be analyzed carefully.
Types of Business Impacts
A disaster, emergency, or any other disruption that affects business operations can result in a number of negative impacts to the business.
These can include:
- Lost customers
- Lost income
- Decreased market share
- Damaged reputation
- Increased expenses
- Service interruptions
A business impact analysis is aimed at uncovering these impacts and their scale, ideally with an estimate of the bottom-line financial impacts.
Steps Involved in a BIA
A business impact analysis should focus on a single disruption or category of disruption, otherwise the scope may be too large and the results too unclear.
Preferably, the analysis should be conducted by an experienced professional. However, if buy-in and budgets remain elusive, it can be conducted in house.
The analysis will include steps such as:
- Data collection
- Report development
The final report will then be presented to the relevant business leaders and used to inform the business continuity plan.
Defining Business Continuity Needs and Strategies
The results of the analysis will then be used to define business continuity needs and strategies, as well as organizational resilience and change management plans (see below).
A business continuity strategy will outline:
- Mitigation strategies
- Emergency response strategies
- Crisis communications and management strategies
- Recovery strategies
These strategies will be implemented as part of a response effort, which can include business continuity plans as well as other response plans. All of these plans will be initiated when a disaster or disruption occurs, then continue until normal operations have been restored.
Business Continuity Plans and Other Response Plans
According to some professionals, business continuity plans are primarily focused on maintaining business operations. Disaster recovery, on the other hand, should be implemented in separate disaster recovery plans.
Other professionals include both efforts in a single plan.
Regardless of how the plans are actually designed, those plans should all aim to achieve the same goals: maintain key business units and restore lost functions as soon as possible.
In many cases, the response effort will incorporate a set of plans:
- Emergency response plans designed to protect human life from potential threats
- Crisis communications plans that outline how and when information about the crisis should be communicated to stakeholders
- Continuity plans that aim to protect the organization’s most important business functions and operations, such as the customer experience
- Disaster recovery plans that restore lost business functions, IT assets, and other interrupted services
A coordinated response effort such as this can be effective at minimizing losses and reducing the damage associated with business disruptions. However, it is very important to remember that the plans’ effectiveness will depend heavily on the depth and effectiveness of the business impact analysis.
Organizational Resilience, Change Management, and the BIA
Business continuity plans and the other response plans covered above only represent one approach to minimizing the impact of business disruptions.
Forward-thinking businesses will not only develop response plans, but proactive mitigation strategies.
Organizational resilience is a framework or discipline that aims to develop a comprehensive approach to risk mitigation and management, including both proactive and reactive strategies.
These can include:
- Improving an organization’s digital resilience and digital maturity, which can decrease the impacts of digital disruptions or IT-related disruptions
- Cultivating a culture that is adaptable, agile, and pro-learning, which can improve employees’ ability to deal with sudden changes in the workplace
- Risk mitigation strategies that attempt to reduce or prevent controllable disasters or disruptions, such as workplace accidents
- IT security software and systems that can prevent and mitigate cyber threats
A well-rounded approach to organizational resilience can further decrease the negative impacts associated with business disruptions. And, like business continuity planning, organizational resilience strategies’ effectiveness will depend a great deal on the depth and breadth of business impact analyses.
Chris is the Lead Author & Editor of Change Blog. Chris established the Change blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to Change Management.