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Business Impact Analysis: How to Strategically Analyse it

Your business works via a network of interconnected relationships and operations that are constantly being established and re-established. Their purpose is to come up with an end-product or service, which in turn is to be delivered to the customers for a profit. This is the ideal or otherwise normal functioning of a business. However, as any businessman or even employee will tell you, real life rarely abides by a perfect scenario. At every step of the way, an error or incapacitation of service might arise, stopping, delaying or damaging the usual processes of a business. Identifying and dealing with these potential errors and risks is the purpose of a business impact analysis or BIA.

Identifying and dealing with potential errors and risks is the purpose of a business impact analysis (BIA). Read Dana Riviere's post to find out how!

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What is a Business Impact Analysis?

Businesses are most commonly disrupted by a number of things such as utility outages, absenteeism of employees, corrupted information technology, delay in supply or the breakdown of essential machinery. On a wider spectrum, any change in technology that pertains to your field of activity might also have deep financial ramifications to your business.

 

In essence, a business impact analysis takes into consideration the worst-case scenario for your business, along with many other scenarios. It is the process through which the potentially disastrous effects of an interruption in critical business operations are systematically determined and evaluated. Similar to risk assessment, a BIA focuses on business practices and their potential vulnerabilities, especially in terms of time sensitivity.

 

The service industry, for example, constantly walks the line between supply and demand. Any increase or decrease in either of them is possible and can affect the other. As part of a business impact analysis, you can get in front of possible problems in demand by a timely investigation of your customers’ wants.

Identifying and dealing with potential errors and risks is the purpose of a business impact analysis (BIA). Read Dana Riviere's post to find out how!

The easiest way to predict future fluctuations in demand is thus through a survey. As a model, you can take a queue from Red Lobster’s customer survey in terms of availability. The greater the response rate, the lower the risk of getting surprised by changes in demand. As such, constantly probing the customer market is a habit of risk mitigation.

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How do businesses conduct a BIA?

Often taking place before a risk assessment process, the BIA identifies parts of the company that are most vulnerable and essential. Once these vulnerabilities are established and the supposed delay or disaster has occurred, the analysis gives way to recovery time objectives (RTOs) and recovery point objectives (RPOs).

 

A business impact analysis includes a few steps:

 

  1. Identifying key business processes
  2. Establishing links between resources and said processes
  3. Setting a clear classification of processes, from least important to essential
  4. Determining scenarios of interruption based on severity and length
  5. Putting in place plans for recovery

 

While it can be done by managers and other employees, a thorough BIA can also be conducted by professional risk assessors and analysts. By surveying the staff of a business, particularly those who hold knowledge of the means of supply, production process and the output of the end-product, these analysts can identify potential weaknesses that make the entire business prone to interruption.

 

Targeted, thorough and detailed, a BIA survey can thus make the difference between an unprepared business and a stable one. The latter deals with any situation that might arise with ease due to the knowledge it holds of its customers and production process.

 

Operational faults may not seem important at first, but your business is affected by each delay. Other issues that may impact your company are delayed/lost sales or income, fines, the losing of customers, a vital piece of machinery turning inoperable and even a full interruption of company functioning. While some can be dealt with structurally, a deep knowledge of the customers and their level of satisfaction is required before any change.

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How does business impact analysis help your business?

Every business impact analysis ends with a report that documents potential impacts resulting from the temporary stopping of normal business functions or processes. This includes damages of a financial and material nature brought to the business. Finally, the report proposes possible recovery strategies that might work toward the return of the normal business status.

 

The purpose of a business impact analysis is to make your company less vulnerable to the obstacles that might arise due to various reasons. As in some industries, the smallest delay can be financially costly, identifying a threat early on and being prepared for it greatly minimises the risk that accompanies it. Moreover, as even extensive damage brought to critical functions is taken into account, a BIA can also serve as a means of dealing with natural disasters and earthquakes. Even after such events, a recovery plan can be put in place.

 

Companies conduct BIAs for the purpose of devising business continuance plans, namely the quick recovery after a delay, fault or unplanned event in the business. Having a plan in place speaks to the level of preparation that such a company wants to maintain, and a prepared company is a strong and stable one.

 

The economy works in cycles – ups and downs that affect some industries more than others. Through strategic planning, preparation and forethought, your company can be kept safe from the factors that, in time, severely damage or ruin other competitors. As appearance does matter in the world of business, this level of preparation, while connected to a thorough, survey-based knowledge of both customers and your own business processes, is noticed by investors and consumers alike.

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Identifying and dealing with potential errors and risks is the purpose of a business impact analysis (BIA). Read Dana Riviere's post to find out how!

About the author, Dana Riviere

Dana Riviere is a Communications Officer who delivers creative, multi-channel media and comments that secure great coverage for online businesses. She is very proud of her master degree in Digital Marketing. After graduating from Metropolitan University Business School, Dana started establishing her way on this path as an online communicator.

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Dan Purvis

Founder & Director at Communications Axis
Dan Purvis is Director at Comms Axis, a digital marketing agency specialising in content, social media & website services for businesses of all sizes. He is also a Media Champion for the Alzheimer's Society, helping spread awareness and understanding of this cruel disease.

Dan Purvis writes for a number of leading business, social media and marketing sites, including Smart Insights, MarketingProfs, Marketo, MarTech Advisor, Marketing Tech News, MarTech Today, MarTech Exec, and Business2Community. Dan's also ranked by Brand Republic as one of the Top 50 UK Marketing & Social Media influencers.

Dan is passionate about the philosophy behind Comms Axis: we bring content, marketing and sales together to connect businesses with their audiences.

We pride ourselves on delivering tangible business value and ROI alongside excellent customer service. We work with a broad range of clients and industries, from B2B to B2C, from technology to cosmetics, from start-ups / SoHos to pan-European and global brands.
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