A Business Continuity Plan (BCP) is a professional document that explains how a company will continue to operate during a disruptive period, such as global pandemics or economic collapses.
This document, which is a part of business demand planning, outlines contingencies for operations, processes, assets, business partnerships, and human resource issues. Essentially, this outline will detail how every aspect that may be affected by the service disruption will be maintained during short or long-term outages.
In certain situations, insurance alone is simply not enough to recover from a disruption. A continuity plan can also determine how to handle certain financial aspects that may not be covered, as well as the operational processes.
Relying solely on a disaster recovery plan, which is created in reaction to disruptive events, won't mitigate risks as effectively as a business continuity plan, which outlines detailed steps to take before, during, and after an event.
Most Common Threats to Business Continuity
A business can experience different forms of disruptions to services. Some potential threats are industry-specific, while others are on a global scale with the potential to affect all industries.
1. Global pandemic
Pandemics may force businesses to limit or entirely halt services if workplace safety is at risk or economic issues limit operations. In the context of business continuity, preparations should be made in advance such as established remote work procedures.
2. Natural disaster
Forces of nature that threaten human safety and health, as well as critical infrastructure, can disrupt business operations. This includes disasters such as hurricanes, flooding, earthquakes, and fires. Some regions in the world are more prone to specific disasters, such as bushfires in Australia or earthquakes in California.
3. Human-made disaster
Catastrophes that are a result of human accidents, mistakes, or negligence can also affect businesses. These could include gas leaks, factory fires, hazardous spillages, and chemical explosions.
4. Utility outages
Failures from utility providers can affect and halt services in many ways. These failures include communication lines, water service disruptions, and electrical or power outages.
While this is a less-common disruption, it can still put businesses at risk of operational disturbance. This includes deliberate actions such as information leaks and bomb threats, for example.
When a company's technical assets are compromised by a hacker, this can have severe financial and reputational consequences for a business. Other examples of this situation may include scenarios such as ransomware and financial fraud.
How to Create a Business Continuity Plan
A business continuity plan should be as comprehensive as possible in the objectives and procedures outlined to protect against possible threats.
The following elements are key areas to be assessed in the business continuity planning process.
1. Objectives and goals
In this section consider what outcomes would be considered successful for your continuity plan. Though this will be different according to the context of the actual disruption, companies should still consider their different goals for each scenario in order to track the performance when the plan is put into effect. For instance, a recovery time objective can be outlined here.
2. Business continuity team
Assemble key personnel who will be responsible for different elements of the plan. Include titles, contact information, and the roles of each member, as well as first responders and secondary back-up contacts.
A tip here is to categorize the groups into command teams (such as the recovery management team) and task-oriented teams (communication, legal, customer operations, financial management teams, etc).
The company size will determine how many people are in the business continuity team, though at the minimum, it should include a manager, the manager's assistant, and an admin team member from each department in the company.
3. Business impact analysis (BIA)
This is an assessment of the different impacts that potential disruptions can have on each business operation. Leverage the use of predictions and forecasts to examine how core business operations may be affected, and what follow-up impact this has on other operations.
A BIA helps to pinpoint which aspects of operations are critical for business continuity. This should also include scenarios for different disaster levels and which resources/actions are therefore needed in each context.
4. Identify critical functions
Examine which critical business functions are essential and prioritize these operations, classifying the processes as high, medium, or low in terms of how critical these functions are to the business at large. Consider the following questions to determine the classifications-
5. Gap analysis
- Are there legal issues involved with this process?
- How many departments will disruption to this function affect?
- What financial impacts could it have? (i.e potential revenue loss if this function were disrupted).
This is a key step in the business continuity planning process, as it details the current resources of the company versus the resources required for recovery. Once the company has identified critical functions, its important to then ensure that they can be carried out effectively (albeit in a different way, if the crisis disrupts business operations resulting in scaling back services).
This is made possible by having these key resources accessible in the context of disruption. For example, if a company's critical process is to maintain communication with customers over the phone and the office space is compromised, it would be necessary to set up the appropriate communication tools (e.g. phone lines) for workers who may have to switch to remote working.
The gap analysis would reveal whether the company can meet this need, or if it should prepare for that possibility by obtaining the necessary resources before disruptions occur.6. Operations maintenance plan
Finally, this is the most comprehensive section of a business continuity plan and will also need to be revisited regularly as the business continues to evolve.
This involves creating readiness procedures, such as prevention strategies, to define which preventative measures can be taken immediately, before any disruptions occur. Organize additional utility providers for energy management, set up alternate communication networks and software for data backups, define team member roles and responsibilities, and even backup sites for office spaces.
Each department needs a unique emergency response plan as part of their BCP. This section would outline elements such as safety procedures for evacuations from different locations and disaster recovery strategies for after the disruption occurs.
How to Test a Business Continuity Plan
Having a controlled testing process is going to give a company the opportunity to assess how effective the business continuity plan will be. This will reveal any gaps in resources, information, and processes, and convey which business functions and processes still need to be improved.
The following are three common ways to test the effectiveness of a business continuity plan.
This is a conference-style meeting where the disruption management team assesses the plan and searches for gaps, as well as brainstorming processes to ensure all departments are represented. Business partners would essentially meet in these tabletop exercise tests to all agree on the best method of working through potential disruptions.
Each member of the team walks through the components of the plan relevant to their responsibilities and key business departments to identify any weaknesses. The walk-through test is often done under the context of a specific potential disaster and can also involve drills and role-playing exercises.
Disaster simulation testing
This is the most involved form of testing and is usually done annually. An environment is created that simulates a disaster as close as possible, with all resources being tested and the managing team of the continuity plan conducting their key responsibilities. It's then assessed whether the simulation proves that the company can carry out operational functions during the disruption while staying in line with health and safety procedures.
Planning for potential disruptions to demand can effectively minimize or completely eliminate the potential damages caused by pandemics or disasters. In order to protect itself from reduced profit, reputation damage, and customer loss, a company must create a business continuity plan.