Every business should be prepared for the possibility of things going wrong. A business impact analysis (BIA) examines areas where emergencies might affect your business and gives you the information you need to develop contingency plans for those events. The steps to a successful BIA include defining your goals, gathering information from your colleagues, analyzing the resulting data, and presenting your insights and recommendations in a Business Impact Report.
What is the purpose of a business impact analysis?
An effective BIA will help you narrow down which activities are the most crucial for maintaining day-to-day operations. The analysis is less about preparing for specific emergencies than it is about knowing what should be done when key operations are interrupted. If an event should occur that affects your company’s processes, it’s important to know which processes and activities should receive attention first so the business can move forward with as little financial loss as possible.
How often should a business impact analysis be performed?
Best practice is that a company should perform a BIA every two years.
What should a business impact analysis consider?
Your BIA should examine any event that has the possibility to interrupt normal business functions. Don’t focus only on natural disasters; supply chain delays, power outages, wear and tear of equipment, and key employees are also important risks to consider.
Information security is another concern and should factor into your risk assessment. Determining your “recovery point objective” (how much data can be lost before causing significant damage to the company) and “recovery time objective” (how long an application can be out of service before causing a significant loss) are key factors in your analysis.
What are the steps in a business impact analysis?
- First, get organized. You’ll need support and approval from upper management, as well as cooperation among departments. Every department head will likely consider their own operations to be crucial, so the goals of the analysis should be agreed upon in advance.
- Next, gather information. Create a survey and distribute it to your employees. Ask about the specific risks in each department, as well as the potential financial impact these events could have. Look carefully at your IT systems as well. Business continuity and disaster recovery are related considerations, neither of which should be neglected.
- Analyze the data. Use the information from the survey to determine which departments should be prioritized to minimize financial loss. Remember, the ultimate goal of a BIA is to narrow down the most essential operations, so the business can continue to operate should something go wrong.
- Present your results. Your Business Impact Report should indicate the order in which business processes should be restored in the event of an interruption. Include both the potential financial loss and the cost of each potential strategy for recovery.
Once you’ve completed your analysis, you’ll have the tools you need to create a business continuity plan. The BCP will eliminate any questions about procedure in the case of emergency and decrease the likelihood of further complications should one occur.