Every business exists for only one purpose: To make profits. And to ensure that profits are coming in, businesses need to be operational. In case there is any disruption in operations, then revenues will stop, which will directly impact the business’ survival.
To avoid any disruption in regular operations, the organization needs to understand what factors impact their business processes and avoid such disruptions.
What Is Business Impact Analysis?
Business Impact Analysis is an integral part and a foundation for a Business Continuity Plan for any organization. By conducting a Business Impact Analysis, a company can recognize and identify the factors integral to the company’s survival.
As per the Federal Financial Institutions Examination Council in the US, Business Impact Analysis is the first step towards creating a Business Continuity Plan.
Difference Between Business Continuity Plan & Business Impact Analysis
There is a big difference between a Business Continuity Plan & Business Impact Analysis since the later is a part of the former. Assume a natural disaster like an earthquake strikes an organization and its various offices located in a geographical location.
In such a case, Business Continuity Plans will be executed to ensure that the business’s operations are not hindered, and there is no loss to the employees, company’s assets, customer base, and the business processes. It’s the recovery plans, and sustainability plans for ensuring that organization recovers from the natural disaster.
On the other hand, Business Impact Analysis will identify and inform the critical factors necessary for the company’s survival. It recognizes that business processes such as vendor supply, customer deliveries, plant operations, and workflow management are crucial.
Hence, Business Impact Analysis sets the stage for an in-depth and practical Business Continuity Plan to be formed and executed. Without a Business Impact Analysis, no Business Continuity Plan can exist.
How To Conduct Business Impact Analysis: Step by Step Process
Depending on the organization, their modus operandi, and their eventual focus, there can be different ways to formulate Business Impact Analysis Steps.
However, based on global organizations’ standardization and benchmarking, here is a rough outline for an analyst for Business Impact:
Step 1: Talk With The Management & Understand Business Requirement
The analyst for Business Impact first needs to talk with the management, and clearly understand their perspective regarding productivity, business operations, revenue generation, and profits. A questionnaire needs to be created based on the top management’s view on business continuity and how to make sure that the company survives in the event of a disaster.
The questions asked to the top management will set the stage for in-depth analysis and reporting of the key business processes, which are essential for the organization’s survival.
Step 2: Create A Scope Of Business Analysis Impact
The analyst needs to identify the top 6-8 business processes in a company and meet with the subject matter experts of these processes/units, who are doing the work hands-on. Based on their experience of day to day operations, create a scope of Business Impact Analysis for the organization. Identify those critical business processes, which, if stopped, will make the entire organization vulnerable to disaster.
A good business impact analysis example would be the outsourcing industry. Assuming there is an outsourcing company which handles the back-end of a retail client. In such a case, we will need to find out the specific 5-8 processes, which are vital to the operations such as call center agents, handling of customer data, software used for accessing the data and more.
Step 3: Finalize The Operating Parameters Of Business Impact Analysis
Based on these results, the analyst will formulate the Operating Parameters of the Business Impact Analysis for the organization. This is an essential step in the analysis process since it will enlist the organization’s impact, in case a business process fails.
Some of the factors to be included are:
- Financial and Non-Financial impact categories for different business processes. For example, what can be the financial impact if suppliers stop supplying raw materials, or customer service operations close down?
- Assign a weighting factor to each of these categories based on the level of importance of the organization’s overall survival.
- List out the data required for creating a Business Impact Analysis Report: data about financial transactions, balance sheet, project allocation reports, and more.
Step 4: Conduct In-depth Interviews Of All Stakeholders
Now, at this point of the process, the Business Impact Analyst will have the data related to the most important, critical business processes, and categorized them based on financial and non-financial impact, with a weighting factor.
For business impact assessment, this is considered as one of the main steps.
Based on this information, an in-depth interview needs to be scheduled with all the business processes’ stakeholders. It can include the operations manager, the floor supervisor, HR, quality tester, customer service managers, CEO, etc.
The interviews’ focus will be to understand how these important stakeholders of the critical business processes manage their work and what they think of the importance of their work to the overall ecosystem. The process and the system of these key business processes need to be decoded and mapped.
Step 5: Create a Business Impact Analysis Report
Based on the data aggregated and collected, create a Business Impact Analysis report and share it with the management. This report should have:
- An Overview of the Business Impact Analysis process
- Ranking of the key Business Processes, based on the importance and relevance
- Key highlights of the pointers mentioned by the stakeholders of these business processes
- An action plan to ensure that these key business processes are not disrupted (which becomes the foundation of the larger Business Continuity Plans)
- Conclusion and remarks
This Business Impact Analysis report will then become the foundation for creating recovery strategies and Business Continuity Plans. This BIA report will inform the management about the business processes, which will impact the overall survival of the company if they fail.
If you are an entrepreneur, and looking for expert guidance related to business process outsourcing, Business Process Management, and Business Impact Analysis, then MSMEx.in can help you right now.
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