Business continuity program
Why would a business invest in business continuity program? Stakeholder protection, past experiences, regulatory concerns and corporate image make up the majority of reasons given.
Organizations design and deploy business continuity solutions to manage:
• Regulatory risk
• Financial risk
• Reputation risk
Regulatory risk is a major driver of business continuity management . A growing number of corporations are held accountable by regulatory bodies to maintain tested business continuity plans. Organizations that do not employ businesscontinuity plans could be fined, and in some cases, prohibited from operating or delivering products or services.
The next risk category that drives business continuity programs is financial risk. Companies choose to mitigate financial risk by focusing on factors that minimize financial loss and maintain market share, including:
• Responding to customer demands
• Understanding officer liability
• Minimizing single points of failure and critical external dependencies
In terms of customer demand, a company may hold its suppliers accountable to maintain business continuity plans and protect its supply chain. In the case of a supply chain risk management, a company might use contract provisions to hold a supplier accountable for the delivery of products or services. This can happen in lieu of “force majeure” clauses, which declare the company exempt from the terms and conditions of the contract in the case of an event beyond the reasonable control of the company.
If the company’s directors and officers can be held liable for a company’s response to a business interruption, they are more likely to develop and enforce business continuity planning. Companies want to minimize the existence of single points of failure and critical external dependencies. For example, a company can face huge costs if it utilizes only one supplier and that supplier is suddenly unable to provide core products or services.
A company may implement BCM solutions to make sure operations can be resumed quickly in this case.
Reputation risk is the third main risk category that influences business continuity decision making. The drivers that relate to reputation risk include:
• Protecting the company’s brand in the face of growing competition
• Maintaining the public’s approval for the way the company handles a crisis
Business continuity program justification could be numerous.