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Volume 29, Issue 5

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What would be the impact to your business in the event of a disaster affecting computer processing capabilities? Considering today’s telecommunication requirements, how long could it realistically take to recover? Days? Weeks? or even longer? Possibly some critical activities could be done manually, but for how long? Would your production be impacted? Could you get your statements out or would you just have to wait despite a serious impact on cash flow? How would your customers respond? Certainly most would be understanding in the event of a major disaster, but how long could they, or would they tolerate a lack of response to their inquiries or your inability to expedite their order.

The probability of losing good customers and money seems almost certain, but how soon, and to what degree? Any Organization dependent upon computer processing should know the answers to questions like these. The only good method for determining such answers is through an effective Business Impact Analysis.

The results of a Business Impact Analysis are extremely informative, particularly to senior management, who are often not fully aware of the company’s computer dependence.

Understanding the company’s computer dependence will help senior management in making strategic decisions affecting the whole corporation. For example, the amount of resources applied to security and protection should consider the organization’s computer dependence. Likewise, the relationship between revenue-generating functions and the degree of computer support to those functions is extremely valuable information. The results of a Business Impact Analysis define and quantify these issues.

A very revealing graphic, the Loss Curve demonstrates for senior management the projected lost revenue which will occur to the company in the event of an extended computer outage. In most cases, these losses are non-recoverable. The illustrated loss curve is from an actual (mid-sized Fortune 1000) manufacturing company.

This company is heavily dependent upon their computer for ordering, inventory control, and shipping. Without it, production would have to be reduced by 50% in order to perform these critical functions manually while maintaining some degree of control. An additional analysis tool is an Impact Bar Chart, which reflects the consensus of line management’s intuitive perception of the overall impact to their department in the event of a computer outage. As shown in the illustrated bar chart, 75% of the line management believe a computer outage would have “significant” or even “disastrous” impact to their area after only 7 days of no computer support.

Other examples of critical findings from a Business Impact Analysis include:

  • A west coast life insurance company anticipated $2.3 million in lost premiums after 15 days because they could not manually produce and control 51,000 statements sent out monthly.
  • A multi-state bank determined they would have to shut down their ATM’s in an attempt to minimize fraud. This action would then increase the anticipated chaos inside the branch offices.
  • A private 700 bed hospital depends on their computer for medication ordering/dispensing, pathology and radiology tests and results reporting, and other life-related functions. They are not staffed to control all of these activities manually. In addition to a computer outage jeopardizing life, they project $5 million in lost revenue due to errors in attempting to manually produce billings.
  • An east coast 120-branch savings and loan association realized without their item processing, they would lose $1 million in 48 hours because of their inability to capture returned items.
  • A large Blue Cross/Blue Shield organization discovered their data processing insurance was totally inadequate for their needs.

These are a few of the eye-opening findings derived from business impact analysis. It is the first major step in the implementation of a Corporate Contingency Plan to protect the corporation from any type of catastrophic event.

Written by Hugh R. Smallwood, Data Base Recovery Services, Inc.

This article adapted from Vol. 1 No. 4, p. 29.

Printed In Fall 1988