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.
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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. 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 description of the customer impact of external facing or inward facing processes, and a list of departments that depend on the process outputs. 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. Disaster recovery risk assessment and business impact analysis (BIA) are crucial steps in the development of a disaster recovery plan. To do that, let us remind ourselves of the overall goals of disaster recovery planning, which are to provide strategies and procedures that can help return IT operations to an acceptable level of performance as quickly as possible following a disruptive event. Having established our mission, and assuming we have management approval and funding for a disaster recovery initiative, we can establish a project plan. A disaster recovery project has a fairly consistent structure, which makes it easy to organise and conduct plan development activity. Adapted with permission from the BCM Lifecycle developed by the Business Continuity Institute. As you can see from The IT Disaster Recovery Lifecycle illustration, the IT disaster recovery process has a standard process flow. Following the BIA and risk assessment, the next steps are to define, build and test detailed disaster recovery plans that can be invoked in case disaster actually strikes the organisation’s critical IT assets. Detailed response planning and the other key parts of disaster recovery planning, such as plan maintenance, are, however, outside the scope of this article so let us get back to looking at disaster recovery risk assessment and business impact assessment in detail.
Working with IT managers and members of your building facilities staff as well as risk management staff if you have them, you can identify the events that could potentially impact data centre operations. A BIA attempts to relate specific risks to their potential impact on things such as business operations, financial performance, reputation, employees and supply chains.
BIA outputs should present a clear picture of the actual impacts on the business, both in terms of potential problems and probable costs. 2C Consulting’s Barnes said a key aim of the BIA should be to define the maximum period of time the business can survive without IT. Overview of conducting a Business Impact Analysis (BIA) for the purpose of Business Continuity and Disaster Recovery Planning. Building an effective disaster recovery plan requires considerable work before getting to hardware, software or service considerations.


Another standard is ISO 31010:2009, Risk Management -- Risk Assessment Techniques, which provides guidance on how to organize and conduct a risk assessment.
The new global business impact analysis standard (currently going through the approval process) is ISO 22317, Societal Security -- Business Continuity Management Systems -- Business Impact Analysis.
Finally, a handy professional practice guide for BIAs and RAs is the Business Continuity Institute's Good Practice Guidelines, 2013 Edition. BIAs identify the impact of disruptive events on key issues like business operations, financial performance, reputation, employees and supply chains, and the systems and networks that support them.
Use BIA results to define the maximum period of time for which the business can survive without its people, process, technology and physical locations. Results from the BIA will identify, prioritize and document the critical business processes conducted by various business units and the IT resources needed to keep them operational. Specialized BIA software tools may be part of business continuity software (eBRP Suite and Resilience ONE from Strategic BCP) or separate tools (BIA Professional from SunGard). Once the BIA has been completed, identify the most critical business processes and the supporting IT assets needed by each.
Once you've identified the most critical business processes from the BIA, identify threats from various sources, such as company records of disruptive events, National Weather Service historical data, U.S.
When performing an RA, begin by identifying potential threats and vulnerabilities from the resources previously noted.
Define the purpose and scope of the risk analysis, as it helps determine the goals of the RA.
Identify the business functions that may be at risk to further pinpoint the technological and infrastructure reasons for conducting an RA. If you use cloud file-sharing services, you've most likely conducted benchmarks to see how they perform.
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. Impacts to consider include delayed sales or income, increased labor expenses, regulatory fines, contractual penalties and customer dissatisfaction. 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. But, before we look at them in detail, we need to locate disaster recovery risk assessment and business impact assessment in the overall planning process. The speed at which IT assets can be returned to normal or near-normal performance will impact how quickly the organisation can return to business as usual or an acceptable interim state of operations.
Such plans provide a step-by-step process for responding to a disruptive event with steps designed to provide an easy-to-use and repeatable process for recovering damaged IT assets to normal operation as quickly as possible.
Operational and financial losses may be significant, and the impact of these events could affect the firm’s competitive position and reputation, for example. The results of the BIA should help determine which areas require which levels of protection, the amount to which the business can tolerate disruptions and the minimum IT service levels needed by the business. A company needs to have a detailed perspective of the types of risks it will need to be protected from and the impact that those risks represent to the organization. It complements ISO 31000, in that its specific focus is how to prepare for a risk assessment. The business impact analysis is the starting point for risk identification in a disaster recovery context.


Ensure that BIA results can be integrated into an overall disaster recovery project that identifies mission-critical systems and their dependencies, potential threats (from a risk analysis) and recovery strategies, and designs a DR plan. The risk analysis helps you identify threats and vulnerabilities that could potentially disrupt the continued operation of the BIA-identified processes and systems. Analyze the likelihood of an event occurring, the potential severity of the event and the vulnerabilities impacting the situation.
The strategies you define for mitigating risks are used to help design disaster recovery strategies, which are used to create disaster recovery plans.
He contributes regularly to SearchDisasterRecovery, and is a member of the Board of the Business Continuity Institute's USA Chapter.
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. The BIA identifies the most important business functions and the IT systems and assets that support them.
The final column lists the product of likelihood x impact, and this becomes your risk factor. For example, in the Lloyd's insurance market in London, all businesses depend on a firm called Xchanging to provide premiums and claims processing.
Both a risk analysis (RA) and business impact analysis (BIA) should be performed to determine where to focus resources in the disaster recovery (DR) planning process and how much to invest in building and maintaining those resources.
Similar to the above risk standards, this new standard sets out the principles of the BIA, and also offers good practice guidance on how to prepare for and conduct a BIA. First is the recovery time objective (RTO), which is the maximum amount of time a system can be down before the business suffers. 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. A mitigation strategy may be developed to reduce the probability that a hazard will have a significant impact. Next, the risk assessment examines the internal and external threats and vulnerabilities that could negatively impact IT assets. Those events with the highest risk factor are the ones your disaster recovery plan should primarily aim to address. This article will provide a step-by-step roadmap for preparing and completing both of these important analyses.
Table 1 depicts the relationship among disruptive events and business factors for a BIA -- actual losses and recovery times will, of course, vary from organization to organization.
Next is the recovery point objective (RPO), which identifies a point in time needed to recover data to when it was last used. 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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