Businesses don’t operate without risks, but risks are inherent in any business. These interruptions vary from a global COVID-19 pandemic changing the market landscape or to a new technology rendering existing products and services useless. When the risk of normal business practices is volatile, it becomes critically imperative for organisations to forecast what market channels, functions, and processes within the organisation may fail or grow – the Business Impact Analysis determines an organisation’s most important functions.
The prerequisites for successful Rick Management are to recognise connections and mutual dependencies within an organisation. Whilst an Enterprise cannot insulate itself completely from every possible worst-case scenario, a disrupted or crippled business potentially affects many people and can cause significant disruptions across supply chains and market economies. However, as the organisation continues to grow organically, the risks also multiply and can have a greater potential to cause significant damage.
Executive Leaders can’t make good decisions if they don’t understand why something matters and how much it matters, compared to everything else. That’s why, in the interest of contingencies and continuities, a Compliance Program aims at protecting an organisation from risk. An essential element of an effective Compliance Program is a Business Impact Analysis – the purpose is to test organisations, probe for deficiencies (weak spots) and uncover opportunities for improvement.
What are the common challenges with Business Analysis Impact?
In business analysis, the measurement of the impact of a change is to ensure that it is worth implementing. This determines the kind of disaster recovery plan it needs, but it isn’t always a straightforward process. There are several challenges that organisations encounter when conducting Business Impact Analysis and to assess the impact of a change:
Resistance of organisational changes
If systems have been in place for a long period (time), it is natural for stakeholders and employees to resist modifications, despite the identified inefficiencies. This is a typical response to the impact of Change Management and not everyone will embrace learning new systems and processes.
Predicting how users will react to a change can be a complicated process. They may not use the new features (as intended) or find workarounds that negate the impact of the change.
“Buy-in” by with unmotivated management
Business Continuity Management (and planning) can only happen with the support and leadership of the Executive Management Team. If they are unmotivated or uninvolved in the entire process, the Business Impact Analysis Plan won’t have a solid execution and will likely fail.
There is uncertainty along the entire journey when assessing impact. Changes often have complex ripple effects (that interlink with others) and may be difficult to predict.
Confusion arising from recovery priorities
Without a formal Business Impact Analysis, the organisation lacks objectivity when determining the scope, creating priorities, and defining your appropriate recovery goals. This may lead to confusion amongst stakeholders when handling disruptions and then undertaking the change.
Time-consuming and balancing stakeholders’ priorities
Collecting your data for Business Impact Analysis through interviews, workshops, and questionnaires can be time-consuming. For many organisations, it competes directly with their main priorities, but the process needs to be revisited (frequently) to capture all necessary components and to achieve long-lasting benefits.
Additionally, conflicting demands must be balanced when assessing impact (e.g., a change that benefits one group of users may have negative consequences for another group).
Change and accountability for process ownership
Any process or accountability of organisational ownership changes can create delays in the Business Impact Analysis. It shifts conflicting business priorities and results in a lack of initiative for new methodologies for change.
It can be hard to identify all the key stakeholders affected by a change. Some stakeholders may have “hidden agendas” that make them extremely resistant to change, while others may be unaware of the potential impacts that affect their accountability.
Capability gaps and incorrect program scope
A lack of commitment to Business Impact Analysis results in a misalignment between application performance and Executive Management’s expectations. This can lead to incidences of under-preparation, underspending, or overspending, which, in turn, could result in gaps in the Business Continuity Plan (and processes).
Lack of justification for investment in Business Continuity
Without the execution and implementation of a sound Business Impact Analysis, the following issues cannot be properly addressed:
- What are the Business Continuity requirements?
- What needs to be done if an outage occurs?
- How much money ($) and resources should we invest?
Strategic view with external factors
Many internal and external factors cause business vulnerabilities. Since organisations cannot control external factors, staying updated with those changes (then mitigating risk) requires multiple approaches across multiple systems and projects.
This is a strategic view of both tangible and intangible factors when assessing impact (e.g., a change may improve efficiency and deliver overall benefits, but make users feel less engaged with their work).
What are the benefits of Business Impact Analysis?
Conducting tailored and regular Business Impact Analysis is crucial to business’ survival. Predicting the consequences of disruption to a business function (and process) and gathering information necessary to develop risk recovery strategies is highlighted by the following five (5) reasons:
1. Helps to uncover new systems inter-dependencies
Business Impact Analysis establishes the inter-dependencies between the organisation’s products and services and IT applications. Most Enterprise Resource Planning (ERP) systems are often built around other SaaS applications that allow them to function together. But when one or more of the supporting SaaS applications are removed, then the organisation’s ERP system will not function correctly.
Without a clear plan on how these inter-dependencies map out, you may not get a clear view of how the failure of one (1) application can disrupt other business processes. When adding new technologies to the ERP environment, the more applications that are being added will reflect the more external dependencies your business will be relying on – potentially increasing multiple points of failure.
Performing regular Business Impact Analysis intervals can help to determine the resources that your key business activities needs and identify individual requirements to address them (as required).
2. Helps to understand third-party vendor risks
While Business Impact Analysis focuses on the organisation’s resources, it also looks at external factors, in particular its third-party vendors. For example:
- What would happen to the organisation if one of the vendors had an outage?
- Does the service provider have a Business Continuity Plan in place?
An organisation’s systems are constantly changing, just the same as its vendors and means that their Business Continuity Plan is evolving constantly as well. A Business Impact Analysis helps to assess third-party business risks and determine potential issues that might jeopardise the functioning of the organisation’s operations.
3. Helps to calculate the cost of business downtime
Conducting a Business Impact Analysis helps your organisation to determine its critical operational applications and how their downtime affects your business. For example:
- What would happen if the core application (ERP) fails for a few hours or days?
Business Impact Analysis can help you measure the impact levels (based on time) for each disruptive event and define recovery metrics, such as Recovery Point Objectives (RPO) and Recovery Time Objectives (RTO).
4. Helps to link business requirements to IT’s resilience
Undertaking Business Impact Analysis enables the organisation to mitigate risk on what their internal IT Team and external IT vendors are doing to support Business Continuity Management –
from support of IT systems to contractual guarantees from vendors. The organisation is at risk if it fails to understand these changes.
With support from crucial vendors, the Business Impact Analysis ensures there is a guarantee of availability. If the vendor cannot guarantee availability of services, then an organisation may have no alternative but to source a secondary vendor (serve as a backup).
5. Identifies legal, regulatory, and contractual obligations
Many organisations do not have a clear (and unfounded) understanding of the environment that they operate within and the context of their contractual obligations. Without ingrained knowledge of these important structures, an organisation cannot comprehend the implications of disruptions to its core business operations.
A Business Impact Analysis allows the organisation to have a clear understanding of its obligations to achieve regulatory compliance.
Why regularly conduct a Business Impact Analysis?
The value proposition of conducting a Business Impact Analysis and the regularity of continued enforcement for your Risk Management Programme are crucial to organisational success. Below are a few specific reasons why:
Proactive planning approach
By conducting a Business Impact Analysis, this helps the organisation take a more proactive approach to crisis management. Planning for disruptions and mitigation action is more efficient than reacting to risks as they occur.
Better understanding of business functions and critical processes
The Business Impact Analysis Team needs to develop a better understanding of the business functions and its critical processes that allow the organisation to operate smoothly, but before any recovery measures can be created. The benefits of discovering these organisational insights go well beyond the Business Impact Analysis itself.
Prioritise and protect business functions
By uncovering the organisation’s mission-critical functions, your Executive Management Team will know which processes to bolster and protect from business disruption. What this ensures is that during a crisis, any degradation of the organisation’s critical processes is within tolerable limits and can be realigned to minimise impact to business operations.
It is imperative to regularly update the Business Impact Analysis due to the progression of an organisation over time. Every two (2) years is the best time schedule to conduct another Business Impact Assessment and then Business Impact Analysis. However, small businesses that would experience fewer changes can obviously wait longer intervals. But organisations that are prone to disruption (e.g., banks, etc) may require more frequent analyses and based on regulatory change.
Summary
With establishing a foundation of compliance, an organisation’s best protection is to instil a culture of compliance, to minimise risk, and increase its business efficiencies. This element of thorough analysis is a vital part of strategic development and Risk Management.
Your organisation’s ability to rapidly respond to and recover from business change or disruptions is directly related to the effectiveness of its Business Continuity Management. Whether it’s a threat or unforeseen circumstance, it is crucial to understand how to minimise potential negative impacts. Speed is everything today – How quickly can you identify potential threats or risks? How quickly can you communicate with your employees? How fast is your response to risks? How long does it take you to restore business operations?
Most resilient organisations are constantly looking for ways to accelerate how they detect, validate, and respond to any internal / external threat to their employees or business. With a Business Impact Analysis supported by modern communication and threat intelligence technology, organisations can maintain organisational resilience, protect their profitability, and keep business operations running (as smoothly as possible) during unexpected disruptions.
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