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For businesses, risk is everywhere – from supply chains to cyberattacks to severe weather and the cost of living. What can businesses do to get ahead of the threats? They can start by getting their business continuity management house in order.
But how to do just that? Well, it doesn’t get more foundational than the business impact analysis (BIA).
What is the BIA? In this article, we define the term and lay out the eight steps to take to conduct an effective business impact analysis.
What is the business impact analysis?
So, what is it? The BIA is the business continuity management technique used to define the impact of a disruption over time.
BIAs help organizations determine:
- Their prioritized activities
- Associated recovery timeframes and resource requirements
Another way to think about the BIA is as a dashboard for asset protection and recovery action prioritization that will keep everyone from the CEO to the doorman on the same page, should disruption occur.
A diagnostic of a business’s internal dependencies and vulnerabilities, the business impact analysis provides the analytical baseline for developing business continuity planning materials and battle-readying business continuity management systems (BCMS) and processes.
What does it do? A good BIA achieves the following:
- Offers senior management a bird’s eye view of the critical business activities that generate the most money or benefits to the organization
- Details how badly those activities would be impacted by a disruption
- Offers insight into the pathways by which that impact would possibly take place
8 steps to conduct an effective BIA
How to avoid the pitfalls? We recommend taking the following eight steps when conducting your BIA:
1. Know what you are trying to achieve
The first step to take is to review the context and scope of the BIA, establishing the Maximum Tolerable Period of Disruption (MTPD). This is the absolute time the organization has before the downtime of a process becomes fatal. Setting these parameters and obtaining executive sign-off early ensures that the BIA will be strategic in nature and approved by top management.
2. Carefully consider roles and responsibilities
As mentioned, people are one of the most important BIA inputs. To that end, it is necessary to assign BIA roles and responsibilities within the organization to the right people who will help the process operate smoothly. Start at the ground level with staff who understand daily responsibilities instead of solely relying on higher level management.
3. Create an implementation plan
Have a plan for action. Developing a Business Impact Analysis (BIA) implementation plan, here, involves outlining the correct approach and methodology for executing the BIA.
Why does it matter? Well, it’s crucial to adopt a uniform approach across the organization. The scalability of the process to align with each organization's unique needs is also important.
Evaluation may occur post-BIA or as part of the management review at the conclusion of the current BCMS cycle. The selected method must possess robustness to guarantee the consistency and impartiality of the collected information.
4. Determine priorities of products and services and the associated activities of the prioritized products and services
The types of impact considerations to determine these priorities could be financial, reputational, legal, customer, health and safety, operational, regulatory, and any other impact depending on the nature and type of the organization. It is important to consider the external sources, as well as internal activities as disruptions can often come from within the supply chain or from third-party providers.
5. Determine necessary resources
Perform a dependency analysis to determine the resources required for continuity of activities following an incident, as well as all other dependencies and interdependencies. Some resources to look out for include, human resources, technology & equipment, as well as facilities & workspace.
6. Consolidate results
Perform a final analysis to consolidate BIA results. Be sure to compare your required recovery times against your current capabilities and normalize data. Doing this identifies recovery gaps where the timelines of the organization are not necessarily supported by its operational reality.
7. Obtain top management approval of BIA results
Determining impacts over time should demonstrate to top management how urgently the organization needs to respond to a disruption. You want to turn the BIA data into a clear and actionable business case for investing in specific recovery measures.
8. Update
Periodically review the BIA as part of a continual improvement strategy. This will ensure that the BIA constantly reflects the organization’s current capabilities and its evolving risk profile.
Conclusion
A strong and effective BIA is the key to your organization’s resilience, not just a compliance requirement. By closing the gap between your recovery requirements and your recovery capabilities, you are ensuring a calculated response when operational disruption occurs. Creating this foundation today guarantees protection for your products and services in the ever-changing risk environment.
Every organization is different, so make sure your Business Impact Analysis is tailored to your company.
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