Finance:Business continuity

Business continuity is the planning and preparation of a company to make sure it overcomes serious incidents or disasters and resumes its normal operations within a reasonably short period. This concept includes the following key elements:

1. Resilience: critical business functions and the supporting infrastructure are designed in such a way that they are materially unaffected by relevant disruptions. Resilience is established through controls that are preventive or deterrent in nature. Examples include redundancy and spare capacity;
2. Recovery: arrangements have to be made to recover or restore business functions that fail for some reason. Recovery is established through controls focused on detection, mitigation, and correction.
3. Contingency: the organization establishes a generalized capability and readiness to cope effectively with disruptions, including those that were not, and perhaps could not have been, foreseen. Contingency preparations constitute a last-resort response if resilience and recovery arrangements should prove inadequate in practice.

Typical disasters that business continuity covers include fires, floods, accidents caused by key people, server crashes or virus infections, insolvency of key suppliers, negative media campaigns and market upheavals (ex. stock market crashes). The locations of these disasters and the company real estates may be independent.

Responsibility

The management of business continuity falls largely within the sphere of quality management and risk management, with some cross-over into related fields such as governance, information security and compliance. Risk management is an important tool for business continuity as it provides a structured way to identify the sources of business disruption and assess their probability and harm. It is expected that all business functions, operations, supplies, systems, relationships, etc. that are critically important to achieve the organization's operational objectives are analyzed and included in the business continuity plan. Business Impact Analysis is the generally accepted risk management term for the process of determining the relative importance or criticality of those elements, and in turn drives the priorities, planning, preparations and other business continuity management activities.

If there is no business continuity plan implemented and the organization in question is facing a rather severe threat or disruption that may lead to bankruptcy, the implementation and outcome, if not too late, may strengthen the organization's survival and its continuity of business activities.

Standards

One important way to achieve business continuity is the use of international standards, program development, and supporting policies. These standards ensure that proven methods and concepts for business continuity are used. As with many quality management standards though, the primary task of identifying relevant potential disasters, making plans for evacuation, buying spare machines and servers, performing backups and bringing them off-site, assigning responsibility, performing drills, educating employees and being vigilant cannot be replaced by adherence to standards. As such, commitment by management to see business continuity as an important topic and assign people to work on it, remains the most important step in establishing business continuity.

Several business continuity standards have been published by various standards bodies:

• International Organization for Standardization:
  • ISO 22301:2012, "Societal security – Business continuity management systems – Requirements", specifies a management system to manage an organization's business continuity arrangements. It is formal in style in order to facilitate compliance auditing and certification.
  • ISO 22313:2012, "Societal security – Business continuity management systems – Guidance", provides more pragmatic advice concerning business continuity management.
  • ISO/IEC 27031:2011, "Information security – Security techniques – Guidelines for information and communication technology [ICT] readiness for business continuity", offers guidance on the ICT aspects of business continuity management.
• National Fire Protection Association: NFPA 1600, "Standard on Disaster/Emergency Management and Business Continuity Programs".
• ASIS International (ASIS):
  • BCM.01:2010, "Business Continuity Management Systems: Requirements with Guidance for Use", developed in partnership with Business Continuity Institute (BSI).
  • SPC.1-2009, "Organizational Resilience: Security, Preparedness, and Continuity Management Systems—Requirements with Guidance for Use", approved by American National Standards Institute (ANSI), is under consideration for inclusion in the DHS PS-Prep, a voluntary program designed to enhance national resilience in an all hazards environment by improving private sector preparedness.
• Standards Australia:
  • HB 292-2006, "A practitioners guide to business continuity management"
  • HB 293-2006, "Executive guide to business continuity management"
  • AS/NZS 5050 connects far more closely with traditional risk management practices. This interpretation is designed to be used in conjunction with AS/NZS 31000 covering risk management.
• National Institute of Science and Technology (NIST):
  • Special Publication 800-34, "Contingency Planning Guide for Information Technology Systems"
• British Standard: (deprecated)
  • BS 25999-1:2006, "Business Continuity Management. Code of Practice”, offered pragmatic implementation guidance, but was withdrawn in 2012 when ISO 22313 effectively superseded it.
  • BS 25999-2:2007, "Specification for Business Continuity Management”, formally specified a set of requirements for a business continuity management system. It too was withdrawn in 2012 when it was (in effect) replaced by ISO 22301.

Program

Ongoing management-level process to ensure that necessary steps are regularly taken to identify probable accidents, disasters, emergencies, and/or threats. It also involves (1) assessment of the probable effect of such events, (2) development of recovery strategies and plans, and (3) maintenance of their readiness through personnel training and plan testing. See also business impact analysis

Policies

Policies are those things mandated by the management of an organization that will always be performed according to a preset design plan, and supporting all business functions within an organization.

Business impact analysis (BIA)

The entire concept of business continuity is based on the identification of all business functions within an organization, and then assigning a level of importance to each business function. A business impact analysis is the primary tool for gathering this information and assigning criticality, recovery point objectives, and recovery time objectives, and is therefore part of the basic foundation of business continuity.

The BIA can be used to identify extent and timescale of the impact on different levels of an organization. For instance it can examine the effect of disruption on operational, functional and strategic activities of an organization. Not only the current activities but the effect of disruption on major business changes, introducing new product or services for example, can be determined by BIA.

Most standards require that a business impact analysis should be reviewed at defined intervals appropriate for each organization and whenever any of the following occur:

• Significant changes in the internal business process, location or technology
• Significant changes in the external business environment – such as market or regulatory change

Document management

In large information technology environments, personnel turnover is inevitable and must be planned as part of business continuity. The solution to the problems associated with turnover, is complete and up-to- date documentation. This ensures that new personnel will have the information they need to quickly become knowledgeable and productive with respect to the business functions they are tasked to support. This also implies that business function related documentation is largely generated (rather than written) from existing systems and managed in an automated manner.

Change management

Regulations require that changes to business functions be documented and tracked for auditing purposes and is designated as "change control". This brings a level of stability to the business functions by requiring the support personnel to document and coordinate proposed changes to the underlying systems. As this process becomes more and more automated, the emphasis will be less upon personnel control, and more upon regulatory compliance..

Audit management

One of the most costly and time-consuming aspects of information technology management is dealing with auditors. One of the goals of business continuity is data center automation, which includes audit management. All modern business functions should be designed with the concept of automatically generating the requisite audit compliance information and documentation as part of conducting day-to-day business. This dramatically reduces the time and cost associated with manually producing this information.

Service level agreements (SLA)

The interface between management and information technology is the Service level agreement (SLA). This provides a written contract stipulating the expectations of management with regard to the availability of a necessary business function, and the deliverables that information technology provides in support of that business function.

Communications systems

Another component of business continuity is communications in times of duress. Members of the disaster recovery team must be able to communicate effectively among themselves as well as with managers, directors, customers, partners, and even with the media. In order to avoid some of the potential problems associated with disrupted communication channels, the business continuity plan should include a lead manager who will be in charge of all communications in that area, the cooperation of executives and public relations people, and scheduled exercises to put the plan into practice.

Other components

The following is a list of logical entities within an information technology environment which aid business continuity:

• Virtualization (provides a means to achieve resiliency)
• Networking design (can support resiliency by design)
• Resource or service groups
• Journaling file system is a means to achieve resiliency
• High availability, along with Redundancy (engineering), describes a principle or means of achieving of resiliency
• Continuous monitoring (can be a means to maintain resiliency or improve recoverability)

Planning (BCP)

Planning, prevention, and preparation are a key part of any business continuity management system and have direct read across from civil contingencies planning. The activity begins with understanding the business to identify potential risks and threats to critical business activities both internally and from the external environment. It is also advisable to examine the resilience of suppliers.

The components of the business continuity methodology required for manifestation into a documented plan include:

Set of documents, instructions, and procedures which enable a business to respond to accidents, disasters, emergencies, and/or threats without any stoppage or hindrance in its key operations. Also called business resumption plan, disaster recovery plan, or recovery plan.

Should also include: purpose, scope, objectives and assumptions that were used to develop the plan. Key accountabilities including authority to invoke, instructions subsequent to invocations, and a detailed communications plan must be included in the plan to ensure efficient resumption of operations.

Task of identifying, developing, acquiring, documenting, and testing procedures and resources that will ensure continuity of a firm's key operations in the event of an accident, disaster, emergency, and/or threat. It involves (1) risk mitigation planning (reducing possibility of the occurrence of adverse events), and (2) business recovery planning (ensuring continued operation in the aftermath of a disaster).

Guidelines are those things which are recommended to be performed according to a preset design plan. However depending upon the needs and requirements of the target business function, these items may or may not be performed, or may be altered during implementation.

See also

• Business continuity planning
• Continuity of Operations
• Crisis management
• Digital continuity
• Disaster Risk Reduction
• Disaster Recovery
• Risk management
• Resilience (organizational)

External links

• Gittleman, Stuart (2013) U.S. regulators urge firms to improve business continuity and disaster recovery plans [online]. Reuters. Available from: http://blogs.reuters.com/financial-regulatory-forum/2013/08/21/u-s-regulators-urge-firms-to-improve-business-continuity-and-disaster-recovery-plans/ [Accessed 4 November 2013].
• What is Business Continuity Management? Special Publication by Disaster Recovery Institute International

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