One of our senior contributing writers, Donald Byrne CBCP, CDCP, CBRO-M, Lead Auditor, and Managing Director of North River Solutions, has recently authored a position paper on the topic of building a case for Business Continuity Planning.

If your business continuity planning group is faced with the challenge of presenting a convincing case to management for writing and implementing a Business Continuity Plan as part of their corporate compliance program for the organization, then you should suggest that they add this article to their reading list.  

The position paper is posted as follows …….

 The Benefit of Business Continuity Planning

It would be difficult to find an executive who would argue against the benefits of business continuity planning (BCP). Unfortunately, it is equally difficult to find one who will argue vociferously to fund a BCP program. While surveys show that nearly every public and private organization is interested in the topic of contingency preparedness, only a minority have invested in a comprehensive plan. In fact less than X% of large firms[1] have a plan and this type of forward thinking is even rarer among small firms[2]. Confronted with these facts, one must ask, “Why is this?”

The simple answer is that there are many projects competing for funding and while the benefits of business continuity planning are obvious, they are not seen as immediate and compelling. Supported by a natural tendency to think, “Something like that will never happen to us!” BCP is viewed by many to be in the same league as insurance planning.

This rational is wrong! Properly used and understood, Business Continuity Planning can have an immediate and measurable benefit, as this Position Paper will show.

Five Benefits

There are five straight forward and obvious benefits to business continuity planning.

  1. Improved Life Safety
  2. Enhanced Organizational Reputation
  3. Increased Operational Efficiency
  4. Better Financial Management
  5. Reduced Legal Liabilities

While some of these benefits are obvious, others are more subtle and emerge only after a deep review and analysis of the information provided as a result of the BCP process.

1. Improved Life Safety

The most important benefit of business continuity planning is the most obvious – improved life safety. Even a minimal investment in component segments of BCP such as emergency preparations and evacuation planning can make a huge difference. While estimates vary on the number of lives saved as a result of regularly conducted fire and building evacuation drills, no one doubts the impact of these simple measures. Add to the threat of fire, the damage posed by natural disasters, especially severe weather and earthquakes and the importance of having an orderly evacuation plan is increased Unfortunately, recent events point out that the other categories of events that organizations must be prepared deal with include violence in the workplace and the threat of criminal and political acts of terror.

Training in accident prevention is also key aspect of a life and safety program and in many countries this effort is encouraged by the existence of various regulations[3].

By taking stock of potential threats and putting in place strategies to avoid and mitigate their danger and impact, reduces the overall risk to the organization. Just as important is the recovery plan that will allow the organization to resume normal operations in an expeditious manner.

The benefits of an active and visible life safety program include:

  • Improved employee morale;
  • Fewer accidents resulting in less sick time, fewer lost work time and better insurance premiums;
  • Creation of a “culture of safety”

A secondary benefit of such programs is that they often have a positive impact on the off-work time habits of employees. People who learn to be safe “on the job” also learn to be safe, off the job and teach this to their families! 

2. Enhanced Organizational Reputation

This benefit shows up in a number of areas including:

  • Increased Shareholder Value. A study conducted by the Royal Bank of XXX[4] demonstrated that having a comprehensive and well publicized business continuity plan could add up to 14% to the value placed on “Goodwill” by the stock market.
  • Better Employee Morale. The existence of a plan increased worker confidence in the stability of the work environment and reduced one area of stress resulting in better employee morale.
  • Competitive Marketing Advantage. Just as a reputation for quality can enhance a company’s market position, a company that seems well able to deal with any crisis will be rewarded by the marketplace with a “reputation boost” can translate into an enhanced market position and represents a competitive advantage.

While some of these benefits are difficult to quantify, few people doubt they are real.

3. Increased Operational Efficiency

The quality improvement experienced by firms that invested in the ISO 9000 and related documentation of processes initiatives are evident of the benefit that flows from a detailed review and charting of key business processes. Known as a Business Impact Analysis this activity is a core component of every detailed business continuity program. Often this auditing process points out opportunities for asset and operational re-alignment.

Mission clarity and group accountability are other side benefits that flow from the assignment of responsibility as part of the BCP process.

4. Better Financial Management

Besides the financial benefits of a business continuity plan already mentioned, a comprehensive approach can identify redundant activities, help contain costs, eliminate needless or inefficient spending, and lead to a better return by improving the overall resilience of the organization. In fact, several rating agencies are investigating the idea of offering a “Resiliency Index” rating the preparedness of public companies. If this occurs, the way is open for the insurance industry and others to set prices based on how the firm is rated[5].

Business continuity planning can also indirectly drive up revenues since the firm will be able to offer clients service level agreements (SLAs)[6] that enhance the organization’s competitive standing. It is also possible that the firm can command a premium price because of its enhanced resiliency.

5. Reduced Legal Liabilities

Discussions are taking place in and around courts that having a well formed BCP can help mitigate a firm’s liability when a disaster occurs. There have been no definitive statements to this effect but the issue is in active discussion and many experts expect to see such a ruling before the close of CY 2008[7].

There is a growing interplay between business continuity planning and regulatory compliance. The simple fact is, a disaster, no matter how severe does not excuse a firm from its regulatory obligations. Given the enormous potential of litigation and findings against an organization should a compliance problem arise as a result of poor disaster planning, the benefits of being prepared are clear.

Conclusions

It seems that all executives intuitively understand that business continuity planning is a worthwhile activity. By reviewing the five benefits listed above, you should be in a position to help these executives take the next step and actually support the funding of a BCP program. Don’t expect attitudes to change overnight. Just as it takes time to build a culture of safety; it also takes time to build a culture of understanding around the topic of business continuity planning.

 


[1] HP Study

[2] NRS Study

[3] For example, in the United States – the Occupational Safety and Health Administration (OSHA)

[4] From Sungard presentation

[5] Stuff here

[6] Similar to guarantees of performance.

[7] Other Stuff

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