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. By submitting my Email address I confirm that I have read and accepted the Terms of Use and Declaration of Consent. You also agree that your personal information may be transferred and processed in the United States, and that you have read and agree to the Terms of Use and the Privacy Policy. Business impact analysis and risk assessment are two important steps in a business continuity plan. A risk assessment identifies potential hazards such as a hurricane, earthquake, fire, supplier failure, utility outage or cyber attack and evaluates areas of vulnerability should the hazard occurs. 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. Human and technology resources needed to support the process including computers, networks, offices, people, etc. 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. Business Impact Analysis (BIA) is the key element to an effective disaster recovery, which is in the heart of business continuity. It has concerned me recently that I have read a number of papers suggesting that the business impact analysis is either unnecessary or that short cuts could be used.
A business impact analysis considers each activity or service within an organisation; analyses its importance to the strategic objectives of the organisation as a whole and, if appropriate, the department or division in which it sits.
The assessment then determines the impact over time of the services or activities being disrupted. Once the impacts have been determined, the maximum tolerable period of disruption (MTPD) can be worked out, by estimating how long after a disruption to or loss of that activity, you can survive before recovery becomes impossible. The business impact analysis is key to your continuity planning and determining, in the event of any major disruption, what needs to be done.

More importantly, the work will have established what period of ‘downtime’ is tolerable and the recovery time objectives (RTO). One of the challenging areas in today’s ever busier world is to decide just how far into the organisation to take the BIA, and I suspect it is here that the confusion can occur.
Initial BIA: To develop a framework for further analysis and clarify the BCM programme scope.
Strategic BIA: To identify and prioritise the organisation’s products and services, and understandthe organisation’s recovery timescales and disruption tolerance levels. Tactical BIA: To determine the dependent activities for the most urgent products and services and assess the impact of a disruption on them.
Operational BIA: To determine the required resources for the continuity and recovery for the most urgent activities. Prevents later disagreement with the BIA outputs because they set the landscape to begin with. As the business impact analysis is rolled out at the desired level it is important that the BC champions understand what the executive team considers to “really matter”, the outputs they will create and why they are doing this. Well briefed champions produce far more valuable data than those dumped in the process and simply asked to fill out a spreadsheet or page in a business continuity software application.
Much more could be said about the business impact analysis’ role within a business continuity programme, but here I simply wanted to set out its importance to your organisation’s wider business continuity framework. For a BIA to be successful, it must be set against clear objectives and scope; be focused on impacts and not risks, and those supporting the process must understand why they are doing so. Various horror stories abound the industry of major businesses who got “lost in their own BIA”, emerging years later unfinished. Ultimately the business impact analysis gives you very useful data for work area recovery planning, allowing smart investment in what can be an expensive service, and often purchased more on gut feel than a fully analysed requirement.
This item will help with this process by examining a number of impact situations and investigating various aspects of your organization. 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. Check out this quick guide for an overview on some of the basic concepts surrounding cache memory and best practices for leveraging cache memory technologies.
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 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. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States.
It sits right at the heart of the benefit that business continuity can bring to any organisation.

While it is understandable that people would like to reduce the work involved in delivering a business continuity project, to play around with the business impact analysis without understanding the risks of doing so is to put the whole business continuity plan at risk. This allows us to start to understand a certain activity’s criticality and build a profile of the organisation’s overall critical activities.
This is where business continuity works so well because it is impact focused and not risk led. This then also enables subsequent prioritisation of appropriate recovery strategies to be selected against time.
Recovery time objectives allow you to know how fast or slowly the business needs the identified activities or services back up and running. Being very focused on the scope and what you want from it, with clear senior input from the outset allows the business impact analysis to be an outstanding tool, the results of which can steer everything you do during a disruption.
The data can also be used for wider organisational cost-benefit analysis, having established what is critical to your organisation in true terms.
When all around you is chaos and you stand outside the burning edifice that was your office, it is not the time to regret that some short cuts were taken. Pioneer of simulation exercises with over 20 years experience in business continuity and crisis management.
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. A mitigation strategy may be developed to reduce the probability that a hazard will have a significant impact.
Therefore ensuring a thorough understanding of the impact of disruption to, or loss of, a service or activity rather than what actually might be lost under multiple different circumstances. 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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