What are the main drivers for Business Continuity Management?

Every business will have their own reasons and drivers for implementing business continuity management (BCM), but the benefits and advantages gained can be universal. Having a continuity plan in place ensures a company is in the best position to not only survive, but also to protect their reputation and minimise any financial impacts following a major disruption. Continuity of service and/or products is essential if a business is to survive any sort of disruption, let's take a closer look at these main drivers in more detail.

Survival

The prime driver of business continuity management is survival. After a disaster, the priority of most organisations is to ensure the company is not so badly affected that it has to close business. One of the main roles of BCM is to plan to ensure survival in the event of a disaster. Having a good, tried and tested BCP in place can often make the difference between survival or not.

The risk control strategy manager at AXA insurance has stated that 80% of businesses fail to re-open or close down after 18 months following a disaster. This highlights how important it is for continuity plans to be in place and it is likely if effective BCM was followed in these situations the figure could have been much lower.

Why doesn't everyone implement BCM then?

Many organisations have insurance against these types of incident, for example fire or flooding, and they think that is enough. Whilst insurance protects against some of the financial loss it won't account for all of it and it won't protect staff from having to relocate or find new jobs. It also won't stop customers looking elsewhere for their product or service if no contingency plans were in place for the disruption and subsequent outage to their service.

Financial & Reputational

It is estimated that the UK economy loses £11.1 billion per annum through disasters and incidents caused by lack of continuity management. This highlights the importance of business continuity management and although there may be an initial outlay of costs around new staffing, training and software, it could potentially save the company money in the long term.

Reputation risk affects an organisations culture and values and is often seen as one of the more common risks. By having a plan in place to minimise brand image loss to the company, this will keep damage to reputation during an incident at a minimum and therefore, in turn, have a positive effect on profitability.

If we take the horse-meat scandal' as an example, at the time of the crisis, Tesco's shares dropped by roughly 1% in January 2013, however, by April 2013 shares had risen by almost 10%. This proves the organisation handled the crisis well and because of successful management it did not have long-lasting detrimental effects on the company's reputation or finances.

Customers

Retaining customers is one of the main objectives for an organisation during a crisis. By reducing reputational damage, loss of custom to the company will be kept to a minimum.

Businesses want to remain up and running after a disaster and if they have a good continuity plan in place, they are less likely to have to close for extended periods or will have alternative measures in place and as a result will retain custom.

Providing confidence to your customers that you can continue to deliver under any circumstance is an essential business practice as companies will not be able to afford to run without new and existing custom.

Also, for businesses looking to obtain new custom, detailing your BC plan is now a standard part of most RFI processes. If you have comprehensive BCM this can give you a competitive advantage in the tender process.

Employees

Although there is not currently any legislation in the UK that specifically relates to private sector organisations and business continuity management, going the extra step and deciding to implement BCM and aligning to ISO 22301 says to your staff that you have considered their wellbeing and safety during an incident and planned for the security of their jobs in the recovery process.

It can give them peace of mind that a plan is in place for an event such as a natural disaster or terrorist incident and can actually lead to staff being more proactive around smaller incidents. BC works better when everyone buys into the process and staff that are BC aware have been shown to act on a situation before it could lead to a larger disruption within the business.

People are the greatest asset in any company, and it shows you have taken the time to consider them, not just the technology or equipment required for them to carry out their roles. Communicating to your employees during an incident can keep them safe and can keep them from causing more disruption, for example during a cyber-attack, and risking a greater financial loss to the business.

Conclusion

Although there are circumstances where it would be difficult for a small organisation to come back from a major disaster, effective business continuity management can help aid the recovery and minimise loss where an incident occurs better than in those companies without a plan in place.

Embedding BCM protects the interests of key stakeholders, as well as the organisations reputation and brand.

A competitive advantage can also be gained by complying to international BC standards, insurance premiums can be reduced, and new business can be won by proving the resilience of your supply chain.

The benefits are clear, and figures show more and more companies are implementing a BCMS now to make sure they are more resilient for the future.

However, should more be done with legislation to protect employees of private companies who are not currently protected by BCM? Let us know your thoughts!

Contact us today!