I think it’s fair to say that the last few months have been a real test for all of us, adapting to extreme changes to our personal and business environments while also trying to stay safe, healthy, motivated (and sane!).
A business continuity plan (BCP) is a common practice within an organization’s overall business plan and risk-management strategy. Its purpose is to help the business be prepared for and continue to operate after an incident or crisis. The current pandemic is an unfortunate global example of an incident that has stress-tested many BCPs around the world. Some other examples of incidents that can incite one or many aspects of a BCP are:
- Natural disasters – floods, storms, drought
- Technology – computer networks, business-critical hardware, data breaches
- Work health and safety – accidents that are caused by work-related hazards
- Economic and financial events – global financial crises, interest rate increases, rising costs
- Human resources – union and industrial relations issues, human error, conflict management
- Suppliers – failure or significant disruption to supply chain for inventory or raw materials
The types of incidents can be quite broad and vary significantly, depending on the business, the event, and the potential negative impact on the business and its people. In terms of the current pandemic, this event has had an impact on several levels because it is global, and the nature of the event has meant that it has likely touched nearly every area of the above list of incidents with its ripple and flow effects – directly and indirectly (such as panic buying). Most incidents are more isolated – still severe, but limited only to a single business, a single industry, a single country, for example.
What is in a business continuity plan?
A BCP is not just a box to tick, as I am sure many businesses will attest to, especially now. The contents and complexity of the BCP will be unique to each business but all should have three core components:
- Risk–management plan (and business impact analysis) – What are the key risks that could adversely affect the business and their potential impact?
- Response plan – How will the business respond if one of the risks becomes a material event?
- Recovery plan – How will the business recover, if at all, following the event?
Even with a BCP in place, risks are often subjective, and it’s difficult, or even impossible, to accurately measure the foreseeable impact. It requires an element of scenario analysis based on what is known, what is foreseen, and events of the past.
Key takeaways following the pandemic
As we saw following the global financial crisis of 2007, I would expect that businesses will have a “return to normal” debrief of the events after four to five months.
One aspect that many businesses have underestimated during this pandemic was the need to be able to decentralize business-critical processes on short notice while minimizing disruption and cost to their business. The best-prepared organizations appear to be those that had already commenced a digital transformation strategy or, at a minimum, had enabled a semi-remote workforce.
If we look at supply chain and procurement as one example, we have witnessed the extreme strain placed on the supply chains of supermarkets, where demand for certain products increased drastically while at the same time certain manufacturers were unable to provide products. It highlighted the need for real-time visibility for these businesses to be agile, making informed decisions about pivoting their operations to deliver the best outcomes for their customers.
I have seen how important strong supplier relationships can be in a challenging business environment and the importance of good communication with suppliers and customers. In my engagements with customers and prospects, one of the biggest challenges they have faced is effectively decentralizing the finance function, which traditionally is the last area of the business to be addressed.
In my field, supplier invoice processing and corporate card/expense management have been highlighted as areas where the challenge of manual processes has been magnified by the need for workers to move to a remote working environment. This is true not only from a business process point of view but also due to a severe lack of control and visibility into financial liabilities at a time when cash flow is critical. Lack of insight also leads to the inability to make informed decisions, quickly, when it matters the most.
Digitizing these areas along with other core business processes will not only form a basis to build out a solid BCP but also ensure that businesses are better prepared to survive the challenging times we are experiencing today.