The Importance of Business Continuity

Why should you put in the effort and spend your precious time on making your business resilient? We can all sit at our desks and put our business continuity plans on the bottom of the pile and forget about it. We asked a number of people if they were prepared for a disaster and got a wide range of responses:

Some of these you may even be thinking yourself. However the vast number of businesses that have actually failed to survive a disaster suggest that such responses are based on false assumptions.

Nearly 1 in 5 businesses suffer a major disruption every year. Yours could be next. With no recovery plan, you have less chance of survival.

(Office of the Deputy Prime Minister, 2004)

Even if you think you are not in a disaster-prone area, something like a chemical tanker overturning can prevent you and your employees from getting to your facility. Even if a flood doesn’t put your business under water, customers and supplies may not be able to get to you. Power outages, brown-outs or surges can affect your daily business operations.

Many disasters, like wind storms, tornadoes and earthquakes, can strike quickly and with little or no warning. Disasters have no boundaries and whether you are a small or large business you will be affected in one or more ways by a disaster in your area. The main purpose of developing a Business Continuity plan is to ensure its survival when a major disruption occurs. Although there are a number of other upsides to being prepared:

Research has shown that following a catastrophe organisations that have successfully dealt with a crisis have seen their share value increase in the long-term. In contrast to those who have been perceived not to have managed the crisis well whose share price declined and after a year had still not recovered.

(Business Continuity Institute, 2005)

Creating a tried and tested Business Continuity Plan will directly affect how quickly and painlessly you manage to get back to ‘business as usual’ in the event of a disaster.

Internal Importance

How people view 'Importance' is all about perception, for example;

For The Chief Executive and the Chief Financial Officer:

The value of having a resilient business lies in the positive difference it makes between the net asset value of a company and its market value.

For The Accountants:

The optimum value of a business can be worked out as a multiple of profit and/or turnover and intangibles, times a factor. Intangibles may consist of brand value — but increasingly it includes an element of how resilient the business is. In Japan, since 2006, business insurance premiums have been adjusted downwards for those businesses with a clear business continuity plan. In the UK elements of the same approach are coming into the general market; regulated industries have tended to have this type of approach for some time.

This can be written thus:

V = (∫P + ∫T + ∫I ) �

Value = A Function of Profit plus a Function of Turnover plus a Function of Intangibles Times a Factor. (Different businesses have different approaches to each but all business values are assessed against this ort of equation).

Any change (Δ) to each of these variables clearly has an effect on the value of a business.

So in terms of the resilience of a business we could re-write the equation:

V = (∫P + ∫T + ∫I + ∫R)�

Where I is now other intangibles and R is a measure of resilience in the business.

Any positive or negative Δ in R has an effect on V.

For Everyone Else:

Resilience stops your business folding if there is a major disaster.

As you can see there are very relevant reasons to make your organisation resilient, so utilise this site as a valuable resource to help your business achieve this. For help with this process or for more information on our solutions please feel free to call us on 08457 715 715.