What BCP is and how to use it for your organization
You’re surrounded by circumstances and choices every day, and you need to be ready. Readiness isn’t just about disaster preparedness; it’s about being ready for opportunity, as well as adversity. Readiness is a lifestyle, and any organization needs to prepare for all those little things that can go wrong and that seem to add up when the time is right.
All the strategic planning in the world isn’t enough unless you have contingencies in place. You should always identify what to prepare for when business doesn’t go as planned. This includes preparing for unexpected threats and also trying to foresee unanticipated opportunities.
Assessing the Risks
As you plan for your future, risk analysis and risk management can help you make plans to better maneuver around obstacles. Assessing risks in advance allow you to determine the most cost-effective strategies to handle each type of risk.
A downturn in the economy or slowing cycles in consumer spending can threaten business as usual depending on how sensitive your business is to changes in economic conditions. Macroeconomic trends and forces shape the economy as a whole – the credit market, the bond market and the housing market, for example. Some of these may seem farfetched, while others are quite a bit more likely to pose a risk to your business.
Consider, for example, how lenders have been raising requirements for home loans following the flood of defaults and late payments on homes purchased with subprime mortgages. This, combined with still falling prices across most of the US, has deterred home buyers, leading to a string of poor results and losses for major US homebuilders. Home ownership rates directly correlate to the economy and facilitate economic growth. Without economic growth, sales tax revenue decreases and results in less funding for government agencies. As a result, a lot of local governments have not increased spending which affects everyone with a government contract and impacts the quality of services delivered by the agencies.
Managing the Risks
Whether you think you are immune to the current slow down or not, consider the ramifications of disregarding such an economic change. Wouldn’t you sleep better if you had a clear idea how to mitigate real risks in your business operations?
Consider these ways to manage the risk:
- Utilize your current assets: Find ways to use existing resources to offset risk. This might be as simple as improving existing methods and systems, re-allocating responsibilities, or improving accountability and internal cost.
- Invest in new assets: Perhaps you can manage the impact of rising costs for goods by buying in bulk now. For example, if your costs are rising exponentially with the soaring price of oil, can you afford to stockpile your supplies at current costs?
- Develop continuity planning: You may decide to accept the risk of an uncertain economy but choose to develop a plan to minimize its effects. A good continuity plan allows you to take action immediately if you find yourself in an elevated crisis management situation. For example, you might consider cutting overtime among your employees or instituting a hiring freeze when you find the market getting tighter.
Business continuity planning is about making sure your business doesn’t stop running and minimizing the impact for your employees, customers, and your reputation if it does. It can be a one-page section at the end of your strategic plan, or it can stand on its own. We recommend you incorporate continuity planning into your regular strategic planning process because a good continuity plan should change as rapidly as your environment changes. Revising it at least once a year is a good idea.