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Business Continuity Management in the Energy Sector

Posted on March 13, 2019

We are fully aware as professionals within the discipline that Business Continuity Management (BCM) is an imperative approach for any organisation to undertake to ensure survival, protect its reputation and minimise any business disruption in the case of an incident. Although there are some events such as extreme weather or a pandemic which could affect any business, there are some cases of disruption which are specific to one particular industry. In this article we will investigate the kind of factors which might affect operations within the energy sector, and how Business Continuity Planning (BCP) can be considered to minimise negative impact within each factor.

Effective Business Continuity should be an essential part of any energy company’s management process, not least because they are a critical part of the national infrastructure with customers hugely dependent on delivery of their services. Business Continuity planning can help companies to reduce the impact of interruption to their operations through the identification of critical activities/processes/functions that need to be prioritised for recovery – and the resources required to enable that recovery.

Good BC Planning also facilitates effective management decision making and communications.

Industry Background

The utilities market consists of several different sub sectors within the production and distribution of energy, including gas, electrical and nuclear power, petroleum, coal and renewables, and is worth over $1 trillion globally. It has been under significant global uncertainty in recent years including questions around the stability of due to the changes in technology and innovation used within the sector, the increase in renewables and varying political and legal regulations in different regions. The market is rapidly progressing toward three main transitions – decentralisation (distributing functions away from a central location in favour of a number of different sub locations) digitalisation (the increase in using digital functionality for key data, processes and activities) and decarbonisation (the removal of carbon dioxide from energy sources).

Business Continuity in Energy – most important BCP factors

Safety Concerns

Business Continuity (BC) in utility firms differs from many other industries in that it is producing goods that are potentially toxic, radioactive and extremely dangerous to employees and the wider population. We know from cases like 1986 Chernobyl nuclear incident and the Fukushima Daiichi disaster of 2011 just how devastating these materials can be, not just to the employees of the business and not just immediately following an incident, but those in the surrounding areas and often for years or even decades after the event. Safety should be the first concern and highest priority for a company like this – as we know all organisations require people in order to survive and a people-centric approach to Business Continuity is often seen to be the most effective. To best prepare for safety risks, an effective BCMS should be integrated with an Enterprise Risk Management (ERM) process in order to not only identify and assess potential hazards but also to employ systems to mitigate, control and manage these.

Disruption to Operations

As energy companies utilise processes, plants and machinery that are exposed to several external factors making them vulnerable and likely to experience failure, they must consider operational risk as one of the most significant and should again work with their ERM department and resources to organise Business Continuity Plans accordingly, considering the RTOs and RTPs of each element of the business that will affect the continuation of operations. All organisations rely on fuel in some aspect – from the delivery and distribution of supplies, products and services to the transport of employees to and from their place of work, so this resource is clearly of universal high importance – no downtime is expected or tolerated. Additionally, it has been reported that utility companies can experience such colossal disruption that their losses must be counted in millions per hour from a financial perspective – both in terms of losses from distribution and from a production side.

Comprehensive BCPs to effectively respond to operational failure, incorporating and planning for and every element which could malfunction from a functional perspective, will support the organisation and ensure that they can both fulfil their responsibilities from a customer side and minimise negative financial impact.

Industry Governance

As utility companies are already highly regulated and continuing to experience increasing pressures from several regulatory bodies including Legislators, Auditors, Customers and Corporate Governance, and as BCM is widely known to support success in the achievement and maintenance of compliance, it is no surprise to discover that the rate of BCM deployment in this market is at one of the highest when in comparison to other industries. Robust Business Continuity Management goes hand in hand with adhering to key regulations and legislations.  Additionally, as part of the national infrastructure players within this market have more governance put upon them to address their high levels of social responsibility and ensure comprehensive Business Continuity Management Systems that will minimise the effect of any operational failure to its provision of energy supply.

Damage to Reputation

The impact experienced by this industry can be so globally devastating – such as the notorious Deepwater Horizon oil spill (also known as the BP oil spill) which not only cost an estimated $65bn, but also took 11 human lives, injured 17 others and killed thousands of different wildlife creatures – a figure which has still not been able to be finalised as the damages continue to unfold.  We can clearly decipher that an incident like this could cause a devastating impact on another hugely valuable asset to a business – its reputation. Reputational risk refers to the potential for business losses or destruction resulting from damage to a company’s livelihood. In this market, the risks are far more destructive than some other businesses might experience.

BCP around reputational risk focuses on crisis communications – staff should be trained and able to react in the organisations preferred way to any negative media attention, and a crisis communications plan should be compiled and tested as one of the key BC plans to ensure that the company is prepared to act immediately in the case of any incident which may affect reputation.

So with business continuity clearly a high priority, what is the best way for this industry to go about their BCMS? Here at C2 we have worked with several high-profile global utility clients to automate their key BC processes and provide a support in adhering to compliance and governance frameworks. By utilising our world-renowned BCM software, our clients experience a number of key features and advantages including plan management, dynamic plan templates, integrated mass notification tool and much more. Find out more by booking a demo of our software here today!

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