How Business Continuity Provides Value to A Business. There are many ways in which Business Continuity can provide a business with tremendous value. Not just during an activation of the plan itself, which may keep the business from suffering substantial losses, but even during times of normal business operations. How? You ask!
The first and most obvious to many is that business continuity planning helps organizations obtain reduced premiums on insurance. Another is that it assists in providing consistency across the enterprise and increased efficiency. Let’s look at each of these and others in more detail.
- Reduced Insurance Premiums: It is well known that having a well-established Business Continuity Plan can assist businesses in obtaining a reduction in premiums for business interruption, supply chain, cybersecurity, and other forms of insurance.
Not certain if your provider will or has reduced your premium? Contact them and ask. If they aren’t willing to (though a majority will) start looking for a new provider that will.
In some cases, we have seen providers work closely with the client to further mitigate risk by providing additional assistance and suggestions. You might also find that an unacceptable risk before having a business continuity plan, becomes more acceptable with insurers now willing to underwrite the risk since you have written documentation on both mitigating and recovery should the risk occur.
- Consistency Across the Enterprise: Often, especially when spread across a large geographic area, a business will have different processes to complete the same task. This can often lead to confusion, inconsistencies, delays, lack of trained personnel, and frustration.
These disparate processes are easily found while creating the plan and easily consolidated into one or two (as a backup) processes for complete a specific task. This creates consistency across the enterprise, reduces waste, and even provides for more personnel in having knowledge of how to complete the same processes and tasks. This is also good for workforce continuity should the need arise, especially if having to move the process geographically due to business disruption.
- Increased Efficiency: Business Continuity Planning encourages the organization to perform deep-dive analysis into their processes. Mapping out the processes allows the business to find strengths, weaknesses, and inefficiencies and make improvements.
The refining of these processes over time helps the organization to increase efficiency maximizing operations for capacity, agility, and growth finally leading to better cost management.
- Meet Government Mandates: While there are currently no government mandates to have a business continuity plan, mandates do exist that can cause a business to meet severe penalties and fines if not met. Such as meeting payroll on time and accurately.
Having a business continuity plan in place for these processes ensures that they can be maintained effectively during a crisis or disruption keeping the business from facing steep fines.
- Meet Legal and Regulatory Requirements: In addition to governmental mandates, organizations face legal and other regulatory requirements to have business continuity and contingency plans. While it may not seem obvious at first, many businesses face Service Level Agreements (SLAs) and other contractual agreements that if unmet, can cost a business lost revenue and penalties.
In addition, businesses MUST meet requirements from regulatory bodies to have proper business continuity plans in place. Sometimes including specific requirements and within specific time frames. One such requirement is FINRA 4380. In addition, these regulatory rules have changed from time to time, only increasing in strength.
- Meet Needs of Clients and Business Partners: Having these Business Continuity plans in place allows the business to quickly meet the needs of its business partners. Many large organizations now require their vendors and business partners of all sizes to have and maintain a business continuity plan in place before they will even consider conducting business with them.
This gives the businesses that already have the plans and contingencies in place and obvious business edge against competitors and increased business value. as such businesses can command higher prices or premiums on goods and services they provide to other organizations.
- Increased Business Value: Organizations that have business continuity and contingencies in place can quickly meet the needs and requirements of their business partners. As such these businesses can command higher than normal prices and a premium when showing they can continue to support their clients and business partners during major disruptions.
- Reduced Business Liabilities: Business that have business continuity plans frequently find hidden exposures to the business and take steps to mitigate, reduce, or remove the risks and reduce the overall business liabilities that otherwise might have been unforeseen.
- Alignment of IT with Business Strategy: Business continuity planning assists the business in aligning business strategy with IT strategy. Too often businesses have communication and alignment gaps between business and IT strategy which leads to increased frustration on both sides.
Business continuity planning allows for the defining of critical, important, and non-essential processes along with supporting applications and other IT functions so that you can recover your critical processes quickly.
- Alignment to Maturity Model: Business continuity planning allows for the natural progression to a maturity model from non-existent, to repeatable, through to the optimized level.
- Alignment with Risk Management: Businesses with mature business continuity plans successfully align with Risk Management to further reduce liabilities and have strong contingencies in place for risks that will have a high impact on the business.
- Alignment to Vendors and Customers: Business continuity planning allows you to take a closer look at your vendors and suppliers and see how they will handle your needs during a disruption. This also allows for deeper and closer partnerships with your first-tier vendors and to work together to achieve objectives during disruptions to either entity.
The same can also be said for your most important clients. Well defined contingency plans account for working with top-tier and other clients during disruptions.
- Institutionalization of Program: Organizations that implement and maintain their business continuity plans tend to develop institutionalized programs. Meaning the future life and maintenance of the planning itself becomes an embedded process within the organization.
- Preparedness as a Culture: Developing a solid business continuity plan likely will create a culture of preparedness and employees will take a natural course to ensure the continuity of new and emerging processes and tasks that develop.
- Maintain Operations During an Emergency: Business continuity plans enable organizations to operate after, and ideally during a major crisis or emergency that might arise within or around the business.
- Increase Return on Assets: Businesses with continuity plans tend to keep greater track of critical and important assets. This allows the business to take action to realize and recoup the value of assets. This can be done through getting the full life out of the asset, donating the asset, and many other methods to achieve monetary value out of assets that otherwise would have not been achieved.
- Safeguard Critical Business Assets: Business Continuity planning allows for businesses to better safeguard critical assets in a variety of ways. Whether through insurance, hardening structures, or other methods. Planning makes for the identification of critical assets to take further action when required.
- Safeguard Business Reputation: Business continuity planning with well-defined crisis communications plans can help mitigate and, in some cases, prevent major impacts on an organization’s reputation.
- Safeguard Employees: Business continuity plans can also account for the safeguarding of employees and their workforce.
- Training and Education: Business Continuity Plans that are properly tested and exercised makes for a greater success of recovery during a disruption through continuous training and education.
- Discover Hidden Business Value: Business continuity planning creates opportunities for finding hidden value in the business. This is achieved through consolidation and deduplication of processes that may overlap. Better and more refined processes and new ways of conducting processes. In some cases, it also leads to new ideas and opportunities to provide to clients and customers.
It is not uncommon for organizations with business continuity plans to be able to quickly and efficiently respond to market and geopolitical changes and increasing their competitiveness.
- Reduce Revenue Loss: Business continuity planning leads to reductions in revenue loss.
- Increase Return on Investment ROI: Numerous cases exist for increased ROI with Business Continuity, among them are better-defined Disaster Recovery strategies and implementations often leading to cost reductions.
Businesses that faced disruptions with well-defined business continuity plans, could react quickly and adjust leading to profits while competitors struggled to recover.