Business Impact Analysis: Template & Example

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

How do you rebound from a business disaster? That's one of the things a business impact analysis can tell you. In this lesson, you'll learn more about this type of analysis and find a template to create your own.

Analyzing Impact

What if ...

  • There was a fire at your headquarters?
  • An integral part of your leadership team quit?
  • Your business was sued?
  • Important equipment was stolen from your store?
  • All your customer data was accidentally deleted from your system?

As a business owner, the 'what ifs' that could happen may seem like a long and scary list of worst-case scenarios in your day-to-day operations. Recognizing these possibilities and assessing how vulnerable you are to each can help you in developing recovery strategies that mitigate the devastating impact of some of these scenarios.

What we're talking about is known as a business impact analysis report, and this lesson will explain exactly what that is, why you need one and offer you a template to help you get started.

What Is a Business Impact Analysis?

Business impact analysis, or BIA for short, is a method of gathering data to predict the impact that an interruption to a business function might have. This analysis, ultimately, is conducted to help develop strategies for prevention and recovery from these disruptions so that you are prepared in the event that one actually happens.

Scenarios that are important to include would be these types of things:

  • A possibility of a loss (such as personnel or property)
  • Operations that are disrupted (due to a natural disaster or vendor failure)
  • Accidents or emergencies that arise (such as a store keyholder being in a wreck or a fire taking place in your building)

The idea behind a business impact analysis is that all the functions of an organization are interrelated and depend upon one another to continue optimal performance. However, the BIA recognizes that some functions are more critical than others and require more planning and preparation ahead of time. A keyholder for one of your stores who falls ill and can't report to work would be a fairly simple fix, but a natural disaster that causes substantial damage to one or more of your locations would be more impactful.

The business impact analysis, part of your overall disaster recovery plan, should clearly outline the following components:

  • The event itself
  • The business areas impacted
  • Operational restrictions based on the areas impacted
  • Costs associated with the event
  • The amount of time recovery will take

The Role of BIA in Risk Assessment

If you think a business impact analysis sounds strangely familiar to a risk assessment, there's good reason for that. While both are focused on determining potential pitfalls for the business, a BIA is typically conducted before a risk assessment. A risk assessment is focused on identifying threats and vulnerabilities to an organization, while a business impact analysis is centered on analyzing the effects of business interruptions.

Steps in the BIA Process

Conducting a business impact analysis involves multiple steps. Here's a basic breakdown of the process:

Step One: Gather Information

The first step is to gather information to pinpoint a business' most important components, resources and personnel. This may come in many forms such as questionnaires, surveys or interviews. Consider asking the following:

  • Critical business functions
  • A ranking of business function importance
  • Departments or personnel impacted
  • Estimated operational impact of event
  • Estimated financial impact of event
  • Recovery time
  • Resources needed for recovery

Step Two: Evaluate and Analyze Findings

If you are quizzing or interviewing multiple employees, you may discover that not every threat is a valid one. This is the stage where you review the information gathered, conduct additional interviews to validate the findings and then start compiling the data. A spreadsheet, which we'll discuss below, is usually the best option for laying out these details.

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