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​Balanced continuity investment

Blog post   •   Feb 03, 2016 16:23 GMT

From a business continuity (BC) perspective any business enterprise depends upon six essential elements working in harmony. These essential elements, or domains, utilise, contain and contribute to the cash flow, which is the common measure of success and survival. Therefore, we need to be prepared to avoid, or deal with, the absence or deterioration of any of those elements.

BC measures should be equally balanced across these six domains. This balance has to be judged on the effectiveness and appropriateness of these investments rather than any economic or financial measures.

Basic business elements

added valueA business can be viewed as a mechanism which manages and utilises the cash flow in order to generate added value. A commercial enterprise expects an inbound flow from customers; a charitable body may be set up for an outbound flow; a government department may seek to achieve either, or both, directions of cash flow, in a controlled, responsible and accountable manner. In either case the regular flow of valuable goods and services is directly related to the desired cash flow. The first diagram, ‘Essentials of Business Success’ shows how, when working together, those key elements add value to the overall enterprise.

cash drain Our second diagram, ‘Business Disruption Scenarios’ shows that whenever one, or more, of these elements is missing or dysfunctional there is drain on the financial resources which does not offer a return in terms of added value. The overheads associated with the operation remain and there may be additional costs associated with the repair or recovery process. In some instances there may even be penalty or compensation charges to be taken into account. In the long term, of course, the brand and image may suffer as a result of a significant disruption. These are the types of business disruption which we must try to avoid or plan to handle.

The key objective of business continuity is to protect the organization from the potentially devastating effects of a disturbance or interruption to any of its vital operations which are dependent upon the availability of their essential elements. It is an amalgamation of these six elements which enables a business to function successfully; contributing to, or enhancing the value of the goods and services which the enterprise offers its customer base.

The hexagon hypothesis

This basic hypothesis, based on 40 years of experience and study, suggests there are three technical and three physical classes of essential business elements. Thus we need to protect ourselves against three disruptive scenarios with a physical cause and three disruptive scenarios which have a technical cause.

The physical elements are:

  • Access, i.e. the ability to enter the premises and make use of the facilities
  • People, i.e. personnel who are willing and able to carry out the required tasks
  • Supplies, i.e. availability of suitable goods, materials and services

The technical elements are:

  • Communication, i.e. the ability to send and receive signals or messages
  • Data, i.e. access to all relevant records and information
  • Function, i.e. equipment and technology which is in good working order

Some of these elements are capital intensive, others are expensive in terms of running costs and some depend upon skills and sound management. We need to be able to spread our investment wisely across these six disparate areas in an appropriate manner. This means judging and comparing the investment in terms of similar value from a recovery perspective. Thus the effectiveness of our response and recovery measures should evaluated in terms of a reliable and effective performance in response to a potentially disastrous situation. It is not a simple matter of dividing up the budget into equal amounts but understanding and balancing the overall benefits of what we are trying to achieve.

A Gradient Scale of Impact

Proposition:

  • A threatened element poses a problem; a delay triggers an interruption; an element failure causes a disruption; two missing elements are a disaster; three (or more) missing is a catastrophe.

Recommendation:

  • You must learn and practice how to: manage a problem; deal with an interruption; respond well to a disruption; recover effectively from a disaster and avoid being overwhelmed by a catastrophe

Conclusion

Regular reference to this hexagon model and its implications will enable you to explain, promote, pursue and monitor a fully effective business continuity management system which delivers precisely what is needed and should be expected. It will also enable you to demonstrate prudence by maintaining a sensible balance of investment; thus ensuring ongoing support for your programme.

Jim Burtles, Hon FBCI

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