Risks and threats to businesses are all around us – those we know and those we don’t. It’s the ones that organizations do not consider and plan for that often cause the most damage to people, property and reputations. That happens when organizations fail to take the necessary steps to mitigate the exposure or make the necessary plans to reduce the damage once a loss occurs.
Risk managers are responsible for preparing their organizations to manage a crisis and create a resilient organization – to identify, mitigate and/or reduce the impact of a risk while ensuring continuity of business operations. The stakes are incredibly high:
Economic losses from natural disasters topped $268 billion in 2020 – that’s 10% above the 21st century average.1
Annual global cyber losses are expected to reach $10.5 trillion by 2025, which represents the greatest transfer of economic wealth in history.2
Climate change and extreme weather events will have a direct impact on 70% of all economic sectors worldwide.3
Risk managers need a Business Continuity Management (BCM) framework to mitigate and process risks that threaten operations and limit their impact to the business.
BCM is a holistic approach that identifies potential threats to a business then helps mitigate the potential financial and operational negative impact. Sound business continuity plans can help organizations respond to business disruptions effectively, manage supply chain challenges and minimize critical operations outages. BCM builds organizational resilience to safeguard the interests of key stakeholders and their value-creating activities.
BCM can enhance an organization’s financial performance, and is divided into four key components. Once those components are in place organizations can then understand their level of BCM maturity and begin to evaluate how their employees approach business disruptions and where gaps exist that need to be fixed.
4 Key Components of Business Continuity Management
Business Continuity Management must be a core part of the risk management function within any organization. Risk management seeks to identify and quantify the threats to the business, its people, its facilities, its operations and its finances. Business Continuity Management takes those risk calculations and puts them into action.
1. Business Continuity Unit
This team makes the necessary preparations to identify the impact of potential business interruptions. It formulates recovery strategies, develops business continuity plans and administers a training, exercise and maintenance process.
2. Crisis Management
Risk managers need the ability to strategically manage an event, including the internal and external communications necessary to protect an organization’s reputation and brand image.
3. Emergency Response
Business continuity requires a coordinated, effective and timely response to an emergency. The goal is to avoid or minimize injury to personnel and damage to an organization’s assets.
4. IT Disaster Recovery
An organization should address the technological tenets of a business continuity program. The focus is on restoration, possibly at an alternate location, of data center services and computing capabilities.