Reducing your company’s risk is more than a technology issue. As we’ve seen, business continuity affects virtually every aspect of a company’s operations. As CEO, it is critical you’re prepared to manage security risks after a major disruption — a natural disaster, loss of power, cyberattack or a pandemic.
In fact, all businesses should have a business continuity plan. Without one, it could take longer than necessary to recover, or the business might not recover at all.
What are the core components of an effective business continuity plan?
For a business continuity plan to be effective, a business impact analysis is required. During this process key business areas and their critical functions are identified within an organization. From this analysis, a plan is devised that outlines how each will operate in the event of a major disruption.
The next aspect of a business impact analysis is identifying potential losses — usually categorized into financial, legal, reputational and regulatory losses — and trying to understand what impact those losses would have on the organization over different lengths of time. At the same time, interdependencies between IT systems and those critical business functions should be identified.
A recovery time objective tests how quickly each business function and IT system needs to be back up and running before unacceptable losses occur. At the end of the process, companies will better understand how to prioritize recovery efforts.
The third component is continuity procedures, which focus on contingency plans for people and processes in the event of various interruptions. That amounts to a lot of ‘what if’ scenarios and making sure that, for each of those, the business could continue operating while minimizing unacceptable losses.
How have business continuity plans performed during the pandemic?
There have been mixed results. Organizations that have more mature business continuity plans were better able to utilize their plans to transition their employees to work remotely. Organizations that didn’t have a mature business continuity plan have tended to struggle through the transition.
Many organizations have a generalized or high-level business continuity plan that doesn’t offer specific steps to take in the event of a disaster. That’s because many organizations have never tested their business continuity plan, which is the only way to measure its effectiveness. Some organizations have learned in hindsight and have used those lessons to update their plans so that they’re better prepared in the future.
What tools should businesses use to develop better business continuity plans?
There are various tools to help with business continuity planning. Some CPA and business advisory firms can help organizations with business continuity planning. They can help build a plan from scratch, update an existing plan or help with implementing and socializing the plan so that all the stakeholders involved clearly understand their role in its execution. Firms can also help test the plan using, for example, tabletop exercises that run through and poke holes in it to find the flaws.
A business impact analysis is a critical first step in developing a business continuity plan. You can’t effectively recover processes and systems without understanding which of them are critical, so the response can be prioritized, and recovery can begin. Don’t forget to test, because too often, organizations discover at the worst possible time that their plans are ineffective or unrealistic.
As recent events have shown, the time to put a business continuity plan in place is now. Our advisors have helped countless organizations and we can help yours too. Contact us today.
Article adapted from Smart Business.
