Business Continuity

31 March 2008

The floods last year which affected businesses and homes across a wide area of the UK served as a timely reminder of the need to have made adequate preparations for when disaster strikes. If you are trapped in your home by rising flood water, how do you service your clients? If your client is flooded out, will you still have a client to service when the floods recede?

This is the last in a series of short articles in which Stephen Graham-Weall, IIM Operations Director, looks at the issues involved in ensuring business continuity.

PART III - MITIGATING THE THREATS TO YOUR BUSINESS

Research shows that 80% of businesses affected by major incidents fail within 18 months

Part I of this series explained that planning is the key to becoming one of the 20% which survive, part II introduced a method of assessing the probability of a threat occurring and the impact on your business.

This piece is about reducing the impact of any threats. Consider them by descending order of magnitude, as you know that those with the highest ratings are most likely to make your business one of the eighty percent. This step needs a good knowledge of your business, some lateral thinking and some ‘ball park’ costings.

Using the example of the threat of flooding of a riverbank site, mitigation could be relocation of parts of, or even the entire operation, building flood defences, relocating the flood sensitive equipment, services and materials to a higher level or floor. Whether the site is owned or rented will affect this decision on relocation; an early lease break could give the opportunity to eliminate the entire threat at minimal cost by moving to a new location. If the site is owned, selling or renting to a business which is not vulnerable to flooding may be the best option.

Of the other threats, the loss of key personnel can be mitigated by reviewing and revising their employment terms to include golden handcuffs, key person insurance, developing a succession plan and documenting their methods of working and contacts. The risk of loss of a major customer can be reduced by pro-actively enhancing the service level, and amending commercial terms to reward loyalty, supported by a strategy of growing the customer base to reduce dependence on a few major customers.

As before, there is no secret to this process, it is a matter of finding the time to share the concerns with the team members affected, deciding what could be done, followed by a cost / benefit analysis of the options to identify those which are commercially worthwhile. Once this has been done, there are two further steps:

• Revisit the probability and impact list and revise the assessments to include the effects of the mitigation plans (if we relocate the riverside business the scoring would be reduced from an alarming 25 [5X5] to as low as 5 [1X5]
• Prepare a prioritised action plan – and budget – for mitigating the risks.

If you are concerned about the work involved in this process, remind yourself of the unexpected and unplanned work that will be essential if the serious threats materialise.