Business Continuity Planning:

Paving a way to future protection

Author

392016

Keywords

Black swans, Business continuity, Business

planning, Prevention

Abstract

Future protection for large and small

businesses has to be in place, with

globalisation developing over the last 100

years, impacts from disasters can reach

around the world affecting everyone.

Disasters are more commonly known as Black

Swans within a professional industry but can

be further defined into self inflicted and

natural. With the idea of black swans comes

the idea of protection, protection though an

efficient use of business continuity planning

and management. Both can provide a

recovery time which would be acceptable for

a business, however without proper

management the plan will become outdated

and inefficient.

Introduction

Creating a successful business in

recent years has not been the easiest feat;

lessened consumer buying power, increased

fees for services and fierce competition. All

are obstacles to any business and without

proper management within the business,

trade may cease to due to financial difficulty.

Along with these factors which are down to

human influence other phenomenon’s most

commonly known as a catastrophe or a

natural disaster could also halt business

operations for the unforeseeable future.

Catastrophes and disasters can be defined as

a rare event but carries a large impact and as

described by Cred (2010) it is a situation or

event, which overwhelms local capacity and

requires local or international assistance.

Certain criteria need to be fulfilled for an

event to be branded as a disaster. A more

unknown term for a catastrophe or a disaster

which incorporates a range of rare situations

are Black Swan events.

This report is going to look into how

Black swans are defined within the

construction and real estate industry as well

as how proper planning and management

through a Business Continuity Plans (BCP) and

Business Continuity Management (BCM) can

result in a faster recovery period during a time

of halted business trade.

Black Swan Events

Black swans are events are generally

rare and lead to large amount disruption to

either business operations or public living

standards. Past examples which have had

extreme impacts are the 9/11 terrorist attacks

which resulted in a major dip in the stock

market and a halt of business around the city

of New York and the tsunami in Japan which

halted all business within its country and

destabilised its economy. Both have had

impacts directly and indirectly to every

business in the modern world.

Within the professional industry black

swans are often referred to as unpredictable

events and as characterised by Taleb (2007)

they are events which are outside regular

expectations and carry an extreme impact

such as natural disasters, market crashes or

terrorist events. However within that

definition it does not describe how smaller

events can have an equally large impact on a

business or organisation. Smaller events like a

power loss, a network freeze or a data leak

are all small black swan events but have an

equally large impact on a business. Although

these events are still infrequent they may

happen more often due to their nature.

Another theory about these

catastrophic events are self inflicted black

swan events. It will never happen to me is a

common phrase which can be applied in this

situation. As Kronenberg (2011) stated texting

while driving is frowned upon, but a situation

may arise which requires the attention of the

driver. Sending one text the first time may not

cause an accident, but a habit of sending texts

while driving, and a thought of “it will never

happen to me” will eventually cause an

accident. This can then be further explained

and demonstrated by applying it to the

construction industry. Under no pressure or

time constraints a labourer may follow all

health and safety checks. If delays become to

develop, routines may become rushed and

shortcuts found. The same shortcut could be

used multiple times creating a habit within

the rushed routine. This could result in

something major being forgotten or missed, a

vital wall tie on a scaffolding tower or a

forgotten screw on a crane attachment, both

have happened in the past and both have

been caused by a self inflicted event.

These events, whether self inflicted or not will always occur randomly and infrequent, but as technology advances and mans influence on the world grows; new types of rare events will emerge. As depicted by Woods (2006) these “surprising events” reflect on the businesses inability to recognise new threats as well as their ability to produce an effective countermeasure during times of recovery. With the inherent uncertainty and new threats constantly emerging, knowledge should be at the forefront of prevention. Taleb (2007) also described that black swans represent our misunderstanding of the likelihood of a surprise. Both authors demonstrating that knowledge is always required to prevent and recover but Masys

(2012) also explained that planning and managing risk along with proper understanding of the space of possibilities is also required to avoid disasters.

Business Continuity Plans

As black swan impacts are potentially

catastrophic, full planning should be laid out

in order to prevent such events or to lead to a

faster recovery period. These plans are

commonly known as Business Continuity Plans

(BCP) and as characterised by Hotchkiss

(2010)A BCP’s are a set of procedures for each

potential risk which if carried out in full could

result in an acceptable level of recovery and

continuation of business operation. Recovery

times will vary dependant on the situation

however the need to recovery will always be

the same. Loss in revenues may result in

bankruptcy so it is clearly evident to have a

plan in place. Unfortunately Kash and Darling

(1998) discovered only a few businesses have

a continuity plan set up even though 85% of

businesses acknowledge the risk of a crisis.

For a BCP to be efficient for the future

protection of business operations it also

needs to cover a range of aspects. However

frequent studies have found that the plans set

up only concentrate on a limited range of

events. Hearnden’s (1995) study identifies

that the majority of BCP’s primordially focus

on ICT, even though ICT usage is important in

the modern age the protection of just this

area is not enough. Plans for a new building of

operations or a procedure to move all

equipment need to be in place along with

other backup plans.

With all planning comes management,

an essential role to keep the plan or

procedure up-to-date and well know within

the business culture.

Business Continuity Management

Business continuity management will

ensure the longevity of the BCP within the

business, through further training, testing and

maintaining of the current BCP, in doing so

the plan will stay up to date and well

communicated. Hotchkiss (2010)B said that a

BCP without proper management will

eventually fail.

With more business looking into a

BCP and BCM the British Standards have

produced a life cycle model (Fig 1 BS 25999-

1;2006) demonstrating the four key areas

which should be focused on when producing a

new BCP and BCM.

(Figure 1 BCM Life Cycle)A

The first of the four key areas is

“Understanding the Organisation”. This will

include a business impact analysis and a risk

assessment with a risk matrix score for each

eventuality (Fig 2).

(Figure 2 Risk Matrix)B

The second area is “Determining BCM

Strategy”. This will involve taking all risks

found and producing a procedure (BCP) to

overcome the problem. HM Government have

produced some general procedures (Fig 3-4).

(Figure 3-4 Tactic to Adopt)C

The third area is “Developing and

implementing”. Possibly the hardest stage

due to:

Employee resistance to change

Extra training needed

However after it is fully integrated the only

stage left is testing and maintaining. The stage

required for the BCP’s to be successful in

years to come. Testing and auditing will riddle

out potential problems which could in the

long term save the business if a high impact

event were to happen.

Conclusion

In conclusion humans influence is not

the only factor which can end a business.

Black swans can and do also play apart.

Whether it is self inflicted or natural, past

events have had dire impacts on singular

business, but due to the modern era of

globalisation, impacts can reach around the

globe. With this in mind it is ever more

important to have BCP’s and BCM in place.

However at the moment 85% of businesses

accept the risk but a much lower rate do not

have any recovery plans in place. If they do

however the majority only focus on ICT. This

lower rate and singular focus needs to

improve for the future protection of single

businesses and the country wide economy.

References

BRITISH STANDARDS. (2006) Figure 1 BCM Life Cycle. Don’t panic and stay calm [Online]

Available from: www.bsigroup.hk

[Accessed: 28th Dec, 2012]

Centre for Research on Epidemiology of Disaster 2000, Cred website Avaible from: www.cred.be [Accessed: 25th Jan 2013]

HEARNDEN .K. (1995) Business continuity planning Cited in: PITT, M and GOYAL, S Business Continuity Planning as a Facilities Management Tool Vol.22 (3), pp87-89

HM GOVERNMENT (2006)A-C Figure 2-5. How prepared are you? [Online]

Available from: www.direct.gov.uk

[Accessed: 28th Dec, 2012]

HOTCHKISS, S. (2010). Business Continuity Management. Available from: www.dawsonera.com [Accessed: 1st Nov, 2012]

KASH, T.K, and DARLING, J.R. (1998) "Crisis management: prevention, diagnosis and intervention" Leadership & Organization Development Journal Vol.19 (4), pp179-186 [Online] Available from: http://www.emeraldinsight.com [Accessed: 28nd Dec, 2012] KRONENBERG .E. (2011) “Strategy and Business” How to Prevent Self-Inflicted Disasters[online] Available from: www.ljmu.ac.uk [Accessed 15th Jan, 2002]

MAYSYS .A.J. (2012)”Black swans to grey swans: revealing the uncertainty”.

Disaster Prevention and Management Vol.21 (3), pp320-335 [Online]

Available from: www.emerald.com

TALEB N.N. (2007) The Black Swan: The Impact of the Highly Improbable Cited in: MASYS A.J. Disaster Prevention and Management Vol.21 (3), pp320-335

WOODS .D.D. (2006) Essential Characteristics of resilience Cited in: MASYS A.J. Disaster Prevention and Management Vol.21 (3), pp320-335