Business impact analysis (BIA) is a systematic process to determine and evaluate the potential effects of an interruption to critical business operations as a result of a disaster, accident or emergency. As part of a disaster recovery plan, a BIA is likely to identify costs linked to failures, such as loss of cash flow, replacement of equipment, salaries paid to catch up with a backlog of work, loss of profits, staff and data, and so on. Business impact analysis and risk assessment are two important steps in a business continuity plan. During the risk assessment phase, the BIA findings may be examined against various hazard scenarios, and potential disruptions may be prioritized based on the hazard’s probability and the likelihood of adverse impact to business operations. An organization may elect to outsource the BIA to a skilled third party or may include internal and external staff on the project team. A detailed questionnaire or survey is commonly developed to identify critical business processes, resources, relationships and other information that will be essential in assessing the potential impact of a disruptive event. The information gathered may include a description of the principle activities that the business units perform, subjective rankings of the importance of specific processes, names or organizations that depend on the processes for normal operations, estimates of the quantitative impact associated with a specific business function and the non-financial impact of the loss of the function, critical information systems and their users, the staff members needed to recover important systems, and the time and steps required for a business unit to recover to a normal working state.
Questions to explore during the discovery phase include interdependencies between systems, business processes and departments, the significance of the risk of points of failure, responsibilities associated with service-level agreements, staff and space that may be required at a recovery site, special supplies or communication equipment needed, and cash management and liquidity necessary for recovery. A BIA for information technology might start with the identification of applications supporting essential business functions, interdependencies between existing systems, possible failure points, and costs associated with the system failure. When information gathering is complete, the review phase begins in consultation with business leaders who can validate the findings. The goals of the BIA analysis phase are to determine the most crucial business functions and systems, the staff and technology resources needed for operations to run optimally, and the time frame within which the functions need to be recovered for the organization to restore operations as close as possible to a normal working state.


Challenges include determining the revenue impact of a business function and quantifying the long-term impact of losses in market share, business image or customers. The business impact analysis report typically includes an executive summary, information on the methodology for data gathering and analysis, detailed findings on the various business units and functional areas, charts and diagrams to illustrate potential losses, and recommendations for recovery. Senior management reviews the report to devise a business continuity plan and disaster recovery strategy that takes into account maximum permissible downtime for important business functions and acceptable losses in areas such as data, finances and reputation. A data center migration plan is a strategy created by an organization to migrate a data center with minimal downtime.
A BIA is an essential component of an organization's business continuance plan; it includes an exploratory component to reveal any vulnerabilities and a planning component to develop strategies for minimizing risk.
A BIA report quantifies the importance of business components and suggests appropriate fund allocation for measures to protect them. Assets put at risk include people, property, supply chain, information technology, business reputation and contract obligations. A BIA may be used to justify investments in prevention and mitigation, as well as disaster recovery strategies.
A spreadsheet may be used to store and organize information such as interview details, business process descriptions, estimated costs, and expected recovery timeframes and equipment inventories.
The report prioritizes the most important business functions, examines the impact of business interruptions, specifies legal and regulatory requirements, details acceptable levels of downtime and losses, and lists the RTOs and RPOs.
Senior managers need to review and update the BIA periodically as business operations change.


The result is a business impact analysis report, which describes the potential risks specific to the organization studied. The possibilities of failures are likely to be assessed in terms of their impacts in areas such as safety, finances, marketing, business reputation, legal compliance and quality assurance. The BIA focuses on the effects or consequences of the interruption to critical business functions and attempts to quantify the financial and non-financial costs associated with a disaster. One of the basic assumptions behind BIA is that every component of the organization is reliant upon the continued functioning of every other component, but that some are more crucial than others and require a greater allocation of funds in the wake of a disaster. The business impact assessment looks at the parts of the organization that are most crucial. For example, a business may be able to continue more or less normally if the cafeteria has to close, but would come to a complete halt if the information system crashes.
For example, a business may spend three times as much on marketing in the wake of a disaster to rebuild customer confidence.
A BIA can serve as a starting point for a disaster recovery strategy and examine recovery time objectives (RTOs) and recovery point objectives (RPOs), and resources and materials needed for business continuance. The BIA should assess a disaster’s impact over time and help to establish recovery strategies, priorities, and requirements for resources and time.



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