Practical Application: Conducting a Business Impact Analysis

Instructor: Amanda Robb

Amanda has taught high school science for over 10 years. They have a Master's Degree in Cellular and Molecular Physiology from Tufts Medical School and a Master's of Teaching from Simmons College. They also are certified in secondary special education, biology, and physics in Massachusetts.

This scenario will help you practice the skill of conducting a business impact analysis. During this activity, you'll analyze a scenario where a company wants to conduct a business impact analysis, then you'll write one of your own.

Business Impact Analysis

Have you ever wondered what the effect of a hurricane or other natural disaster might be on your business? How would you recover? How would sales be effected? All of these answers are covered in a business impact analysis.

As you read in the lesson How to Conduct a Business Impact Analysis, a business impact analysis (BIA) is a contingency plan that analyzes the financial, operational and logistical impacts of a disaster on the business. A BIA has five main steps that continue in a cycle:

  1. Project development
  2. Gather information and data
  3. Application and data criticality
  4. Data analysis
  5. Present and report findings

Let's practice creating a business impact analysis for a paper company that is worried about the hurricanes coming up the coast this fall.

Scenario

Johnson Paper Supplies is a small paper manufacturing company working out of South Carolina in the United States. They have customers all up and down the east coast of the United States, particularly schools that have big orders going out in the fall. However, these big orders also coincide with hurricane season in this part of the world.

1. Project Development

  • How should the manager at the local plant, Tom, start the BIA?
  • Who does he need to talk to?

The first step in a BIA is to do project development and get buy-in from executives. Tom presents his concerns and past weather reports to the executives. They see Tom's point of view and go ahead and authorize the BIA. Tom decides to recruit Sue, a BIA specialist, as a consultant on the project to help him.

2. Gather Information and Data

  • Now that Sue is on the project, what should she do next?

Sue needs to collect data about the critical operations of Johnson Paper Supply as well as company dependencies, process information, and resources needed to stay operational.

  • How should Sue start to gather this data?

She knows she needs to accumulate a large amount of data, so she starts with group interviews with different teams at the company to learn about the processes needed to get their paper orders filled and shipped out.

Sue learns about the manufacturing process, the materials needed to create the paper, where their suppliers are located, how paper is packaged and all about the details of their ordering system. This stage is extremely data heavy and can take some time to complete. Sue brings in extra recruits from her firm to conduct additional interviews.

3. Application and Data Criticality

  • Now that Sue has a lot of information about the daily operating procedures at Johnson Paper Supply, what does she do next?

Now she needs to sift through the data and identify processes that are critical to keeping the company running in the face of a natural disaster. Sue identifies that they need to keep their ordering system online, which requires the internet, and keep the machinery in the plant, and the trucks that deliver the paper, running. They also need a way to drive the trucks to their destinations, or come up with an alternative shipment plan in the event of a road closure.

4. Data Analysis

  • What's next for Sue?

Now she needs to work with her team and managers at the Johnson Paper Company to analyze the data they've collected in the previous steps.

  • What does their data mean for the fate of the company during a disaster?

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