When any number of problems could bring business grinding to halt, a continuity plan is vital. And, according to the latest survey by our sister title StrategicRISK, senior management agree
Extreme weather was the event most likely to have caused disruption to businesses in the past year – according to the latest poll of corporate risk managers, carried out by Insurance Times’s sister title StrategicRISK in association with Ace. Thirty-one per cent cited weather as the greatest cause of business interruption, followed by loss of IT (20%) and utility outage (14%). Surprisingly, few (5%) of the 85-strong sample of European risk managers had suffered interruption in the last year as a result of supply chain problems. This stands in contrast to the generally perceived wisdom that a downturn leads to more disruption of supply chains.
In the future, 27% thought loss of IT would be the biggest potential threat over the one-year horizon. Utility outage and damage to corporate reputation were the two other factors cited (11% each) as likely to cause disruption within the next year.
Loss of key skills was also cited by 9%, indicating that some businesses are cautious about losing key human resources as their organisations downsize in the face of a drawn-out recession. Once again, only 4% of respondents cited supply chain issues as the main business continuity risk in the near future.
Sixty-five per cent of the businesses surveyed had some sort of continuity plan in place covering critical activities. But a significant minority (28%) are only just in the process of implementing one. Seven per cent of the survey respondents have no plan in place. Around three-quarters of our sample have access to an alternative work site in the event of a major disruption. Furthermore, almost all (94%) of the organisations we sampled support remote working in the event of a major disruption. The message is clear though: businesses need to ensure that they have the infrastructure in place to do this.
Customer demand did not feature as a prominent driver of business continuity management (only 8% said so). Instead, business continuity initiatives are likely to be driven by strategic imperatives (46%) or corporate governance standards (46%). The vast majority of businesses in our sample believe business continuity reduces the incidents of disruption on their organisation (82% believed it did so “well” or “extremely well”). Just over one in 10 (12%), however, felt that it did not have this effect.
Level of awareness
Business continuity management is regarded “highly” or “very highly” by senior management within the large majority of our sample organisations. Only 21% said their bosses did not place business continuity very highly. Around half (49%) of the organisations queried said that senior management takes responsibility for business continuity. The board takes responsibility in a minority (14%) of the sample. In a fifth of the organisations, either operational staff or the operational risk department were the prime sponsors. In other cases (17%), a specific business continuity team is responsible for it.
Around half (47%) of respondents said their business-critical suppliers are required to have business continuity plans in place. A quarter (28%) said they intended to implement this requirement on their suppliers or outsource partners.
The results indicate that there is quite a strong trickle-down effect for business continuity, where larger businesses insist that their smaller suppliers have the measures in place to prevent disruption. This could be why few businesses fear disruption from a supply chain failure – they feel measures are in place to mitigate the risk.
Focusing on the risk of disruption from a global flu pandemic, only around a third (36%) of the respondents think their plans are significantly robust to deal with an outbreak, although 6% of these respondents think their measures are “very robust”. The majority either have no specific plans for the threat (15%) or think their measures are “weak” (7%) or only “moderate” (42%).
A third (32%) think that a flu pandemic would lead to absenteeism rates of up to 10%. And the most likely length of employee absenteeism is one to two weeks, according to 46% of the survey’s respondents.
Overall the results clearly show that business continuity is regarded by most organisations as essential. It also appears to be taken seriously at the top level of most organisations. IT