Business Impact Analysis: A Guide for Identifying Potential Risks and Creating a Business Continuity Plan
Business Impact Analysis: A Guide for Identifying Potential Risks and Creating a Business Continuity Plan
Risks are inherent in any business. And as the business expands, the risks also multiply and have a greater potential to cause damage. While an enterprise cannot insulate itself completely from every possible worst-case scenario, a business impact analysis can help you analyze and predict the operational and financial impacts of disruptions.
By preparing for potential fallout from risks, an organization has the best chance at recovery. Business impact analysis is also crucial to any business continuity planning (BCP), which describes the steps organizations should take when an outage or disruption occurs. Without a sound business-impact analysis, it would be difficult to identify which systems and processes are most crucial and which dependencies exist within the critical systems.
What is Business Impact Analysis?
Business impact analysis (BIA) identifies critical and time-sensitive business operations and predicts or evaluates the effects of disruption or interruption on those operations. The disturbances can be a result of either man-made or natural disasters. Team members use the information to create business recovery strategies, as we’ll see in the next section.
Basic Business Impact Analysis
The Basic BIA is a shortened version of a Comprehensive BIA and is done for less critical systems and applications, meaning it can be restored later than 24 hours after the disaster hit.
Comprehensive Business Impact Analysis
The Comprehensive BIA is the full business impact analysis conducted for all critical systems or applications, meaning that they must be restored within 24 hours after the disaster occurs.
Business impact analysis is like risk assessment, and the two are often discussed together. While it’s easy to confuse the two, remember that a BIA emphasizes business continuity requirements, resource dependencies, and justifying the identified business requirements by showing how downtime will impact the organization. Risk assessment, on the other hand, identifies potential disasters and setbacks (cyber-attacks, fires, IT/network failure, natural disaster, supplier failure, utility outage, etc.) and identifies areas of vulnerability.
What Kinds of Business Impacts Are We Talking About Here?
It Takes up Too Much Time
Unreasonable or Outright Wrong Recovery Time Objectives
The Business Grows and Evolves, but the BIA Doesn’t
There’s Too Much BIA-Related Data to Analyze
The Data is Irrelevant or Useless
Uninvolved Management
Many organizations outsource their work to a third-party consulting provider that specializes in business impact analysis. Businesses that prefer conducting their BIA in-house should employ a business continuity manager and/or representatives from IT or related groups, such as a business analyst. Business analysts are particularly valuable since they have many useful business analysis techniques at their disposal.
The process should also ideally include the business owner or a representative, the technical application manager, and individuals who have the relevant system or application expertise, presented from a business or technical perspective. These analysis team members are referred to as subject matter experts (SME).
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When it comes to emergency preparedness and your disaster recovery plan, speed is everything. How quickly can you identify potential threats? How quickly can you communicate with employees? How fast is your response? How long does it take you to restore business operations?
Your organization’s ability to rapidly respond to and recover from business disruptions is directly related to the effectiveness of your business continuity plan. And every effective business continuity plan is rooted in business impact analysis.
While there are many ways organizations can improve emergency preparedness—from developing comprehensive preparedness plans to regularly conducting tabletop exercises—the world’s most resilient organizations are constantly looking for ways to accelerate how they detect, validate, and respond to any threat to their people or business. With a business impact analysis supported by modern emergency communication and threat intelligence technology, organizations can maintain organizational resilience, protect the bottom line, and keep business operations running as smoothly as possible during unexpected disruptions.
Sources:
https://www.parallels.com/blogs/ras/business-impact-analysis/
https://www.simplilearn.com/what-is-business-impact-analysis-article
https://www.alertmedia.com/blog/business-impact-analysis/
Business Impact Analysis: A Guide for Identifying Potential Risks and Creating a Business Continuity Plan
What is a business impact analysis (BIA)?
A business impact analysis helps you predict the consequences of disruptions to business processes, so you have the data you need to proactively create recovery strategies. For example, a manufacturing company could create a BIA to measure how losing a key supplier would affect company operations and revenue.
Simply put, a BIA identifies the operational and financial impacts of disruptions—like what would happen if your servers crashed or a global pandemic changed the market landscape. The data you collect during a business impact analysis helps you understand and prepare for these potential obstacles, so you can act quickly and face challenges head-on when they arise. For example, you could use the insights from your BIA to create a business continuity plan, which outlines how your team will respond to unexpected business changes.
Business impact analysis vs. risk assessment
A risk assessment analyzes potential threats and the likelihood of them happening. A business impact analysis measures the severity of those threats and how they would affect business operations and finances. In other words, a business impact analysis is essentially an extension of a risk assessment report—a BIA identifies potential risks, then also measures their impact.
Business impact analysis vs. project risk management
Project risk management is the process of identifying, analyzing, and responding to potential project risks. In this case, a risk is anything that could cause project failure by delaying the project timeline, overloading your project budget, or reducing performance.
While project risk management is focused on predicting and responding to roadblocks within a specific project, a business impact analysis is broader in scope. A BIA doesn’t focus on a single project, but rather overarching business functions and processes. For example, you would use project risk management for a cross-functional initiative to redesign your company app, but create a BIA to investigate how disruptions to your staffing may impact production for your company app.
What is Business Impact Analysis?
Business impact analysis (BIA) identifies critical and time-sensitive business operations and predicts or evaluates the effects of disruption or interruption on those operations. The disturbances can be a result of either man-made or natural disasters. Team members use the information to create business recovery strategies, as we’ll see in the next section.
Basic Business Impact Analysis
The Basic BIA is a shortened version of a Comprehensive BIA and is done for less critical systems and applications, meaning it can be restored later than 24 hours after the disaster hit.
Comprehensive Business Impact Analysis
The Comprehensive BIA is the full business impact analysis conducted for all critical systems or applications, meaning that they must be restored within 24 hours after the disaster occurs.
Business impact analysis is like risk assessment, and the two are often discussed together. While it’s easy to confuse the two, remember that a BIA emphasizes business continuity requirements, resource dependencies, and justifying the identified business requirements by showing how downtime will impact the organization. Risk assessment, on the other hand, identifies potential disasters and setbacks (cyber-attacks, fires, IT/network failure, natural disaster, supplier failure, utility outage, etc.) and identifies areas of vulnerability.
Sources:
https://asana.com/resources/business-impact-analysis
https://www.parallels.com/blogs/ras/business-impact-analysis/
https://www.simplilearn.com/what-is-business-impact-analysis-article
