Definitions and Clarifications
Business Impact Analysis (BIA)
- Business Impact Analysis (BIA) is the study of the impact and exposure your business faces when an interruption occurs
- Impact is a measure of the financial results of the interruption
- Exposure is the probability of occurrence of the interrupting event times the impact. Exposure is the concern, not impact; i.e. if a hurricane hits your business and wipes out the facility, the impact may be $200,000,000. However, if your business is located in Denver, Colorado, the probability of a hurricane hitting is zero therefore the exposure is zero.
Business Interruption Business Case (BIBC)
- The Business Interruption Business Case (BIBC) is a business case that ties the BIA and BIP to the corporate strategy through the twelve business processes and provides a comparison of the various plans to one another, to the cost of purchasing BI insurance and to doing nothing.
Business Interruption Planning (BIP)
- Business Interruption Planning (BIP) is defined as the development of alternative business processes that circumvent the causal agent of a business interruption and allow for business continuation.
- There are twelve basic business processes that are planned for; six value chain processes and six business support processes
Business Interruption System (BIS)
- Business Interruption (BI) is defined as the ceasing of business operations for a period of time sufficient to cause a significant financial impact
- Causal agents of business interruption include but are not limited to: hurricanes, tornadoes, earthquakes, fires, floods, acts of terrorism, supply chain breakdown, information technology breakdown, natural resource spikes (oil price increases), national or global financial spikes, etc.
- BIS is a group of processes causally linked in a sequence that assures a business that in the event of an unexpected catalyst to business interruption, the financial impact is minimized
Business Interruption Scorecards and Dashboards (BISD)
- The Business Interruption Scorecards and Dashboards (BISD) is a system of key performance indicators (metrics) around BI that are tied to a red, yellow, green early warning system. The combination of these two tools, the scorecard and dashboard, enables proactive management of your business interruption system (BIS).
Current State Assessment (CSA)
- A Current State Assessment (CSA) is a tool that measures the business interruption readiness of the organization based on the readiness for each of the twelve business processes
- Webster defines a disaster as, “a sudden calamitous event bringing great damage, loss, or destruction”. Frequently in BIA and BCP the “great damage, loss or destruction” is defined as potential business cessation. Some of the commonly addressed disasters might include: Hurricanes, Pandemics, Earthquakes, Fire, Terrorist Attacks, etc.
- (FTA), for use in BIA/BCP, is a failure analysis in which an undesired state of a system’s processes and sub-processes are analyzed, for the most part using and/or logic to combine a series of lower-level events. This analysis of these undesired events, mini-disasters and disasters, is mapped using symbols in a manner similar to process mapping. However, an undesired state is taken as the root ('top event') of a fault-tree.
- A mini-disaster may be defined as a sudden calamitous event bringing great damage, loss, or destruction where the “great damage, loss or destruction” is something less than business cessation, but has a potential crippling impact. Some potential mini-disasters might include significant economic spikes, significant natural resource spikes, supply chain interruptions, acts of terror against a specific organization, infrastructure interruptions, white collar crime, etc.
- Businessdictionary.com defines “Process Mapping” as “structural analysis of a process flow (such as an order-to-delivery cycle), by distinguishing how work is actually done from how it should be done, and what functions a system should perform from how the system is built to perform those functions.” In BIA/BCP, the work referred to is the twelve key business processes.
Twelve Key Business Processes
- The twelve key business processes consist of six business processes that make up the value chain: define markets/customers, develop vision/strategy, develop products/services, market/sell, produce/deliver and invoice/service customers; and six support processes: develop/manage human capital resources, manage information, manage financial and physical resources, execute operating culture management program, manage external relationships, and manage improvement/change.