If you are running a business, you just can’t afford to remain unprepared. Typically, crises occur without warning. While you should not start each day anticipating the worst, you should be prepared for anything. If you do not have a business continuity plan in place, a business crisis can cost your organisation a lot of money and damage your brand reputation. If you want your organisation to be able to keep its business continuity in the event of a crisis, you will need to develop a business continuity plan. This is to ensure that the core functions of your business are maintained. BCMs are responsible for business continuity planning (BCP) and business recovery planning (BRP). BCM's full form is business continuity manager.
In this article, we are going to discuss Business Continuity Plan in detail. After going through this article, you will have a clear idea about what a Business Continuity Plan is and how it works.
Let’s start with the basics then!
What is a Business Continuity Plan?
A business continuity plan or BCP is a mechanism for protecting a corporation from unforeseen hazards. The plan guarantees that workers and assets are safe and that operations can resume rapidly in the wake of a crisis.
BCP includes identifying all risks that may have an impact on the company's operations, making it an essential component of the company's risk management plan. Natural calamities (fire, flood, or weather-related occurrences) and cyber-attacks are examples of risks. Once the risks have been identified, the plan should incorporate the following elements:
- Determining the impact of certain risks on operations
- Putting in place measures and procedures to reduce risks
- Examining the procedure to ensure it is up to date
- Testing the procedures to ensure they perform as expected.
Common threats, crises, or disruptions a Business may experience
Every brand will experience major threats, depending on the type of business and level of risk. That is why conducting risk assessments before developing a business continuity plan can be extremely beneficial.
While you should have a plan in place for any possible outcome, the followings are the most prevalent business threats or disruptors to keep an eye on-
As we saw during the Covid-19 period, pandemics can disrupt your business plans from every angle and perspective. We saw citizens being obliged to stay at home and complete as much work as possible from home. This led to higher demand for particular commodities and decreased supply at the same time, owing to manufacturer shutdowns or interruptions throughout the supply chain.
One of the most critical plans to implement if you are concerned about a global pandemic is how your employees will interact with one another and perform necessary tasks offsite. It's also critical to have supply options in case your supply chain is interrupted.
- Natural calamities
Natural calamities include weather-related events such as cyclones, tsunamis, as well as other natural phenomena such as earthquakes. Some of these disasters are impossible to forecast and can occur in a matter of seconds. They have the potential to do significant damage to physical structures and anything within, as well as disrupt supply chains in affected areas.
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- Utility outages
A loss of power production, communications networks or water shutoffs can severely interrupt day-to-day operations, potentially causing physical asset damage and a loss of productivity and service.
Any computer-based attack on a technological asset is considered a cyberattack. data theft, SQL injections, ransomware attacks and DDoS ( distributed denial of service ) attacks are examples of cyberattacks. Your technological infrastructure will be limited in functionality until the problem is fixed. In the worst-case scenario, you could lose access to all of your business data if you do not maintain a data backup.
Why Should a Business Create a Business Continuity Plan?
Certain important benefits of having a business continuity plan in place are discussed below-
- Maintains business operations
A business continuity plan is essential because regular operations must continue in the situation of a crisis — and sometimes, during the crisis as well. Having a business continuity plan in place for each type of crisis will help in the continuation of your operations.
Businesses cannot rely solely on insurance because it does not cover all costs and consumers who switch to the competition. It is crucial to remember that BCP may be less successful if a substantial proportion of the population is impacted, like in the event of a disease outbreak. BCPs, nevertheless, can increase risk management by preventing disruptions from escalating. They can also help reduce network or technological downtime, saving the business a lot of money.
- Builds customer confidence
Your clients would like to know that you can adapt to any situation so that they can continue to receive the same level of service from your business. Consumers typically look to their favourite businesses in catastrophic circumstances to see how they are reacting on the public platform and how they are sailing through the internal storm.
- Protects your supply chain
The supply chain exemplifies the saying, "Don't put all your eggs in the same basket." Supply chain disruptions are widespread because they can occur in a number of ways. A pandemic, for example, could force the closure of manufacturing plants. Alternatively, a natural calamity could disrupt transportation in a key geographic area. A strong BCP will include options for avoiding supply chain issues that have already been tested.
- Protects your brand and reputation
Large-scale crises and disruptions are likely to become food for the media and hence you are unlikely to be able to carry out your plan quietly. The entire world will be watching. Brands that appear ready and capable of rising to the occasion with grace, strength and consistency will demonstrate their durability to their customers.
- Reduces financial risk
Knowing what to do rapidly in the event of business disruption is a critical component of risk management. The longer the downtime, the greater the risk of financial loss. However, with the correct strategies in place to react quickly and restore functionality where it is most needed, you can keep your loss to a minimum.
- Helps you gain a competitive edge
When many businesses are hit by disruption, your ability to make things up and running will go a long way toward convincing consumers that your brand is among the strongest. Consumers also closely monitor brands during disasters to see how they will respond. Quick yet deliberate action will increase trust in your brand, providing you with an advantage over your competitors.
How to create a business continuity plan?
Many businesses must take certain steps to create a good BCP. They are as follows:
- Business Impact Analysis
A business continuity impact analysis is an important aspect of building a BCP. Here, the company will identify time-sensitive functions and resources. It identifies the consequences of disruptions of business processes and functions. It also makes decisions on recovery priorities and tactics based on the available information.
This component of your plan will require the most time to finish. Because it is a thorough examination of how a crisis will affect your business, you will need to study various sorts of situations that you may encounter and analyse how each one will influence your business. You will also need to identify the particular parts of your business that will be impacted.
The recovery component of a Business Continuity Plan (BCP) outlines the steps and processes to be followed in the event of a disruption to ensure the rapid restoration of critical business functions. Here, the company must identify and implement procedures to restore these functions. It typically includes detailed plans for data backup and recovery, alternate site arrangements, emergency communications, and procedures for reconstituting essential systems and processes. The goal of the recovery component is to minimize downtime and ensure that the business can return to normal operations as quickly as possible following an interruption.
This component of a Business Continuity Plan (BCP) outlines the structure and responsibilities of the crisis management team and other key personnel involved in the implementation of the BCP. It includes the definition of roles and responsibilities, lines of reporting and communication and the assignment of specific tasks and activities to be performed in the event of a disruption. This component is essential for ensuring a coordinated and effective response in the event of an interruption and helps to ensure that all key stakeholders are prepared to take appropriate action. The organisation component may also include drills to ensure that the crisis management team and other personnel are familiar with their roles and responsibilities and are able to respond effectively in a real-world emergency.
4. Training and testing
The training and testing component of a Business Continuity Plan (BCP) involves the preparation and education of key personnel in the organization, as well as the regular testing and validation of the BCP itself. This component is critical for ensuring that all stakeholders are familiar with their roles and responsibilities in the event of a disruption, and are able to respond effectively and efficiently.
The training component typically includes regular educational sessions, drills, and tabletop exercises to familiarize key personnel with the BCP and the procedures it outlines. This training helps to ensure that personnel understand the scope of the BCP, their individual roles and responsibilities, and the procedures to be followed in the event of a disruption.
The testing component involves regularly testing and validating the BCP to identify areas of improvement and to ensure that the BCP remains relevant and effective. This may involve conducting simulated exercises, reviewing response times and procedures, and conducting regular audits and evaluations of the BCP. The testing component is essential for ensuring the continued effectiveness of the BCP, and for ensuring that the organization is prepared to respond effectively in the event of a real-world emergency.
Characteristics of an effective Business Continuity Plan
Here are some important characteristics of an effective Business Continuity Plan-
- Realistic -You would not want to find yourself in a disaster or crisis and discover that your best plans cannot be implemented as intended. Therefore, you should be realistic about the BCP you have devised. It is a good idea to include as many contingency plans as possible.
- Comprehensive - It is almost impossible to plan for every possible disruption, but, it is worthwhile to try. Don't presume your initial plan will be effective. You must have backup plans, as well as backups for your backup plans. Consider every possible aspect, and assume that everything would go wrong at a certain point.
- Adaptable - Nothing on print can ever compare to the unforeseen surprises that nature or other forces may throw at us. Allow plenty of flexibility in your strategy for adapting to the present as circumstances vary — sometimes even every minute. The BCP should accommodate continuous monitoring of the situation and lay a solid foundation for resolving the instant issue.
- Efficient - Because business is a complex affair, you should be diligent with your business continuity plan. It must be completed efficiently and with the resources available. The extra pressure and expectations during a crisis or interruption can make even routine jobs more difficult to complete. Make sure this is incorporated into your plan.
How should you test your Business Continuity Plan?
You should review your business continuity plan at least 2 times a year. You should evaluate and test the plan to ensure that it is consistent with your existing business operations. The larger your organisation is, the more complicated your systems will be. This means, the more frequently you should review your business continuity plan more so as to ensure there are no gaps.
As you add new processes, leaders, departments, and technology to your company, include updating the BCP as a part of your SOP (Standard Operating Procedure) to ensure that all bases have been covered.
The schedule below would help you maximise the validity and accuracy of your BCP while reducing the time that you spend on reviewing it-
- Conduct emergency drills
Your organisation, like schools, should conduct emergency drills to prepare your employees for the measures outlined in your BCP. Such drills should be conducted at least twice a year. This will help in the event of an actual crisis because the employees will have practised the steps beforehand.
- Hold roundtable reviews
Every other year, all stakeholders that are part of your BCP should gather to assess it. The review doesn't have to be time-consuming and you do not need to go through every single step. But it can help you identify the areas of concern that would otherwise go overlooked without testing.
- Conduct a comprehensive review
The comprehensive review, as opposed to the round table review, digs deeper into the plan. It should carefully examine the cost-benefit calculations and recovery procedures to ensure that everything is in sync with the current business operations. Such a review can be conducted every other year.
- Conduct mock recovery tests
This is a thorough test in which your BCP is put through its paces to identify any flaws or errors. Because this test takes time, it should not be done frequently, but it will guarantee that all internal stakeholders are satisfied with the plan.
How does a Business Continuity Plan differ from a Disaster Recovery Plan?
BCPs and disaster recovery plans are similar in nature, with the latter concentrating on technology and information technology (IT) infrastructure. BCPs are broader in scope, concentrating on the entire company, such as customer support and supply chain.
BCPs are concerned with decreasing the total costs or losses, whereas disaster recovery plans are mainly concerned with technology outages and associated costs. Only IT personnel, who establish and monitor the policy, are often involved in disaster recovery plans. BCPs, on the other hand, typically have more employees trained on potential procedures.
Regardless of the type of organisation you run, you must continuously contemplate the possibility of a crisis. If you want to effectively manage them, you must have an effective business continuity plan in place to deal with challenging or unexpected scenarios. We hope the discussion above will help you understand what the term Business Continuity Plan means, what is its full form, what its benefits are, and how to create one. We have also discussed other important matters related to a Business Continuity Plan. For more information related to any topic in business and insurance, you may contact BimaKavach. Here, you can also get the best recommendation for any insurance product in just 5 minutes.