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What Is Business Continuity Planning? - Definition & Methodology

Instructor: Carol Woods

Carol has taught college Finance, Accounting, Management and Business courses and has a MBA in Finance.

Is your business ready for a disaster? Read on to learn what business continuity planning is, why companies do it, and how to implement and manage a continuity plan for your business.

What Is Business Continuity Planning?

factory

A business continuity plan - also called a disaster recovery plan - is a document that defines the possible risks that could disrupt the business, methods to reduce the chance of occurrence of those events, and the processes to be followed in the event a disaster happens to ensure that operations continue.

For example, all schools have a disaster plan that must be reviewed on a regular basis to comply with government regulations. This plan:

  • Defines and rates different types of possible emergencies (i.e., report of a shooting near the school, a fire in the building, a stranger on the playground, etc.) and specifies exactly how the school will respond
  • Defines which position will call the police (if required) and announce a 'Code Red' or other emergency designation via the school intercom or loudspeaker system
  • Specifies exactly what teachers will do in the event of a lockdown and what conditions must be met for them to unlock their doors
  • Defines where students will stage if they have to leave the facility
  • Specifies what teachers must have on hand in case of emergencies (such as granola bars, water, and a binder with all parent phone numbers)

Goals of the Plan:

The overall goal of your plan is to eliminate or minimize the impact of an event on your business. To accomplish this you will need:

  • An alternate location to conduct business
  • Access to key items needed to run your business, including computer files, materials to produce goods, and necessary equipment
  • Key people at that alternate location as needed to keep your business running
  • A plan to resume normal operations as quickly as possible

Methodology:

  1. List possible events
  2. Assess the potential impact of each event on your business
  3. Determine for each event if it requires being included in the plan based on its likelihood and potential impact
  4. Document the actions that should be taken to prevent or reduce the likelihood of that event occurring, if any
  5. Document the steps that should be taken once the event occurs to minimize impact and return to normal operations as quickly as possible
  6. Have multiple personnel review the plan
  7. Implement the plan, including training of personnel and implementation of prevention steps
  8. Meet on a regular basis, at least annually, to review and update the plan

We'll discuss each of these in more detail below.

List Possible Events

fire

Begin by developing a list of all events you can think of that might disrupt your business. Here are some areas to include:

  • Accidents - industrial accidents that injure people and/or property or accidents that result in the loss of key personnel
  • Emergencies - such as a fire or flooding on or near company property or an attack on your computer servers or website
  • Disasters - such as a hurricane or earthquake
  • Threat - such as a kidnapping of personnel, a reported shooter, or a bomb threat

Assess the Impact

It may be useful to put the possible events into a table which includes columns for the event, the severity of impact on your business from 1 (very minor impact) to 10 (serious incident we may not be able to recover from), and the likelihood of it occurring within the next 5 years as a percentage. Then, multiply the severity by the chance of occurrence to calculate a threat level score for each event.

Decide What to Include

Once you've completed this table, group the results into A, B, and C priorities based on their score. C items are low enough risk that you may decide not to address them. A and B priorities will need to be addressed with steps appropriate for their level of risk.

Document Next Steps

Often there will be steps that can be taken to reduce the likelihood of an incident occurring. Examples might include removing dry brush near any buildings, having automatic off-site backup of all critical data, and asking key personnel to travel on different flights. Each item on the list should be considered, and any steps that can reduce or eliminate the threat should be documented.

Next, their cost to implement vs. the threat reduction provided should be estimated, and a list of steps that are cost effective should be developed. Each step needs an action plan to define who, when, and how they will be addressed.

Document Emergency Actions

checklist

Develop a plan for each incident that tells exactly what should happen once it occurs. Address each of the key priorities in your process:

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