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October 29, 2007

Business Contingency Planning Is...

Written by  Larry Herriott, CDRP
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Business Contingency Planning continually confronts the unlikelihood of a disaster. An interruption could be something related to a winter storm, the loss of electricity to the general area, or the complete and inaccessibility of a facility for an extended period of time. The cause of the interruption doesn't matter, but I assert being capable of gaining management control of the interruption does.

Depending on the length or severity of the interruption, significant consequences or the very survivability of the corporation may depend on management's ability to reestablish critical business functions. Usually these business functions have required years to create and establish, but management must reestablish these functions sometimes within hours or days. This is a difficult problem and reestablishing the complex business environment in a timely manner requires a well thought out plan in place ready to be executed.

Normally we need only to cite the 1992 Chicago Flood or the 1993 World Trade Center Bombing to stress that while we tend to think of a disaster in catastrophic terms such as a building fire, natural flood, earthquake, or hurricane. Other totally unexpected causes can also cause significant business interruption which could be disastrous to the corporations. Some of these may be: Civil Unrest, Sabotage, Terrorist Activities, Power Grid Failure, Telephone Failure, Other Utilities (i.e. gas), Inclement Weather, Asbestos, Carcinogens, Computer Viruses, Corrupted Data, or Equipment Failure.

BCP is an answer to the unexpected business interruption. It is a proactive executive commanded crisis management program driven by business requirements.

The plan creates a crisis management team empowered to control any interruptions of the business. Properly constructed, this crisis management team has the capability of responding appropriately to any interruption; from the interruption of telephone service to and including a worst case scenario involving complete inaccessibility of facilities.

As a proactive management controlled program, BCP modifies the consequences of a business interruption to a level acceptable to management and provides a tested vehicle when executed will permit an effective resumption of interrupted business functions.

Each business function is analyzed to define the consequences of an outage of service in quantifiable financial terms, operational impacts, and legal or regulatory restrictions. These consequences are then assessed by management who defines the point at which the consequences are unacceptable. That point becomes the recovery time frame. Each business function may have a separate recovery time frame.

BCP then identifies recovery alternatives that cost effectively restores critical business functions within an acceptable time frame. Management authorizes and approves the recovery solutions. A recovery plan is developed around the recovery solution authorized by management. The recovery plan is exercised to train the recovery organization, to define changes necessary in the plan to strengthen it, and to provide a tested vehicle which when executed will permit an effective resumption of interrupted business functions or computer operations.

BCP objectives are to: Ensure continuity and survival of the business, provide protection of corporate assets, provide management control of risks and exposures, provide preventative measures where appropriate, and to take proactive management control of any business interruption.

BCP provides a balance between acceptable potential losses and acceptable onetime and annual costs.
Business Contingency Planning is a business function which when properly employed places revenue loss and cash flow exposures under management control during any business interruption. Business Contingency Planning can also assist management in providing customer confidence and service satisfaction, as crisis management control can assist the corporation in maintaining market share, and can provide the basis to promote industry image.

Business Contingency Planning implementation and ongoing maintenance mythology will provide answers to the questions of:

  • How do I reestablish my business function(s)?
  • What is a disaster?
  • When do the impacts begin?
  • How much loss can be tolerated?
  • What are the options?
  • What will a recovery plan cost?
  • How much is enough?

Larry Herriott, CDRP, is a manager of business contingency planning at PHH Corporation.

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