The Effect of Business Impact Analysis on Contingency Planning

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  • 0:03 Contingency Plan
  • 1:33 Business Impact Analysis
  • 3:00 Why It Is Useful
  • 3:25 Result
  • 3:57 Lesson Summary
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Lesson Transcript
Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

In this lesson, we will look at why a business impact analysis is important in contingency planning, and we will learn how prior planning helps a business to continue operating after a disaster.

Contingency Plan

Meet Sherrie. She is the manager of a fictional business called Cupcake Toppers, which sells printed decorations for cupcakes. All of the company's products are stored in Sherrie's computer in digital form, and she prints them out as needed. Today, Sherrie is putting together product sheets for all of the company's new products. She is almost done when, all of a sudden, she hears a loud pop. Smoke starts coming out of her computer. Sherrie unplugs it right away, but it's too late. All of the information in her computer is gone. This means that all of the company's products, its financial data, and everything the company needs to do its work is gone!

To protect themselves from disaster, companies need a contingency plan. A contingency plan is a procedure a company follows to recover from a disaster and continue operating. In most businesses today, this plan includes recovering data stored in computer databases, replacing office and manufacturing equipment, and restoring other things necessary for the business to continue operating. When we talk about disasters, we are not referring to just natural disasters, such as earthquakes and hurricanes. A disaster can also include virtual threats, like hackers breaking into business computer systems to steal personal information or to disable the business website. Any type of disaster has the potential to ruin a business; however, when a company has a contingency plan in place, it can recover quickly and continue operating.

Business Impact Analysis

One of the key components of a contingency plan is the business impact analysis. This is an analysis of how the business may be impacted by a disaster, and it tells the company what resources could be lost, how much money is in jeopardy, and how long the business can last before the contingency plan needs to be put into place. If a particular resource needs to be set up within hours of failure, then the contingency plan must take that into consideration and outline a set of steps that will have the backup in place as quickly as possible. The business impact analysis also tells the company the order in which to recover its data and systems. An ideal analysis is very detailed and will cover everything from payroll to IT to customer data.

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