Practical Application: Using Business Impact Analysis in Contingency Planning

Instructor: Scott Tuning

Scott has been a faculty member in higher education for over 10 years. He holds an MBA in Management, an MA in counseling, and an M.Div. in Academic Biblical Studies.

Regardless of planning, nearly all organizations are vulnerable to disasters of various kinds. This scenario will allow you to apply your knowledge of contingency planning to a fictional but realistic scenario.

Business Continuity Planning

The best place for a contingency plan is collecting dust on a shelf. Okay, not really. We all hope that some contingency plans never have to be implemented, but unfortunately, that's not very realistic. Problems don't always announce their intention to arrive and create havoc, so disaster recovery plans help businesses prepare for the unexpected.

While there are always some industry or company-specific concerns, nearly all businesses should be prepared to face disasters stemming from things like:

  • Fire and smoke damage
  • Flood and water damage
  • Contamination
  • Release of irritating substances, like ammonia, bleach, and sewage
  • Loss of power or climate control
  • Computer or network failures; loss of internet connectivity or data
  • Communication outages (cell phones, email, landlines, and radios)
  • Sabotage or intentional harm, especially from within the organization

Let's look at a scenario where you can apply your skills by building a functional contingency plan. If you'd like a quick review before getting started, you'll find some useful information in the lesson, The Effect of Business Impact Analysis on Contingency Planning.

A Flood of Epic Proportions

Imagine that a university has contacted you with a proposal for a consulting project. Your deliverable is the creation of a solid contingency plan for continuous operations throughout the loss of critical infrastructure. As part of the agreement, you'll conduct a full-scale disaster recovery drill based on your contingency plan. At your introductory meeting with your client's leadership team, they explain the event that led them to realize that they lacked an effective contingency plan.

About a year ago, a small group of teens broke into the engineering building and snapped off the fire sprinkler heads on the top floor. Water flowed freely for almost two hours before being noticed. By the time the incident was fully contained, the physical plant had incurred nearly $100,000 worth of damage. The lack of a contingency plan created havoc as faculty, staff, and students all found themselves without their classrooms, computers, and equipment.

Without a plan in place and resources pre-identified, it took nearly six weeks before business as usual could resume. Needless to say, your client doesn't want that to ever happen again.

Questions and Possible Solutions

Now that you've read the scenario, let's consider a few important questions:

  • What analysis or assessment must be completed before you can begin building the contingency plan?
  • Why must your project begin with this step, and what are the potential consequences of planning before completing this step?
  • How will you determine the priority or order in which the client's systems will be brought back to a functional state?

Impact Analysis

You shouldn't get too deep into the project before you have a high-quality business impact analysis. An impact analysis is critical because there's no way to deliver a good contingency plan until you have a solid understanding of which systems are critical to ongoing operations and which ones can wait.

With this in mind, conduct a business impact analysis for your client. Consider as many business functions as possible, including facilities, high-value fixed assets, engineering controls, safety systems, and technology.

Your impact analysis will be different from the one below, but you should compare the two so as to ensure that you captured the most important elements.

System Impact of Worst-Case Scenario Approximate Value Approximate Time Till Operational
Fire Suppression and Alarm Systems Buildings without functional systems are closed to all persons and activities. Varies 24-48 hours
Access Control Systems Door locks in campus buildings become inoperable, rendering it impossible to lock or unlock doors. $2,500 per access point (door with lock) 6-8 hours per access point
High-Value Assets and Unique Equipment The inability to use unique lab equipment prevents students from graduating on time, leading to financial losses for the university. $12,500 per impacted student Not applicable
Facilities The loss of facility spaces, such as classrooms or offices, require the leasing of off-site space. $83.78 per sq. ft. loss 180-day minimum lease term
Technology Equipment The loss of data or hardware prevents the college from enrolling students, entering grades, or processing payments. Average of $4,387 per hour of outage 24-48 hours

The Contingency Plan

Now that you have an idea of what can go wrong and how bad a certain category of disaster might be, it's time to outline how the university will handle an incident.

Create a contingency plan. For each plan item, identify:

  • A priority level
  • Item name
  • Summary of the impact
  • Target maximum downtime

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