After the fuel crisis, the rail crisis and the flood crisis, you would think that businesses would be making Continuity Planning a priority. Not so, says Simon Grace.
Business Continuity AWAreness Week in January brought reports that UK businesses are putting their own future and that of their suppliers, customers and employees at serious risk by failing to learn appropriate lessons from the rail, fuel and flood problems experienced last year.
Of the managers surveyed by the Institute of Management, 93% admitted that their businesses had been disrupted by last September's fuel crisis, with 66% highlighting disruption from rail problems and 64% from flooding as causing further problems.
Have they learned anything? Not according to the evidence. Less than half (45%) have taken steps to reduce the impact of any future fuel crisis, while only one in five (16% and 23% respectively) has done anything about preparing for rail and flood problems.
John Sharp, chief executive of the Business Continuity Institute (BCI), says that businesses must plan for the worst.
"Businesses are failing to learn the simple lesson of `once bitten, twice shy'. Having been hit by a series of crippling crises during 2000, few have thought about what they will do should similar problems strike again."
A structured plan is needed
The way forward, say Sharp and other business continuity and disaster recovery specialists, is for directors and managers to develop and implement business continuity plans.
"Business continuity management is a key management discipline," says Sharp. "All organisations, small and large, should incorporate it into their business."
What he and others have found, though, is that even where there are structured plans in place there is considerable scope for improvement. Fewer that half (49 %) of organisations test their plans at least once a year, and four-tenths do not test them at all.
To address these issues, the BCI and others - including the Association of Insurance and
Risk Managers (AIRMIC), Marsh, Royal & Sunalliance, Guardian iT, Survive, BAE Systems, the Computer Services & Software Association (CSSA), the Building Research Establishment/
Loss Prevention Council, and the Disaster Management Forum - have produced the "Business Guide to Continuity Management", a three-part advice and information portfolio comprising a strategy document, a detailed practical guide, and a series of benchmarks.
Launched in January, the guide has been endorsed by a broad range of professional and trade bodies, including the Association of British Insurers (ABI), the British Bankers Association, the British Damage Management Association, the Chartered Insurance Institute, and the Institute of Risk Managers.
There are key steps that should be taken to bring business continuity planning to the forefront and maintain its pivotal position in business management.
The first is to ensure the acceptance by directors and senior managers of the strategic importance of properly structured planning.
Next, and perhaps most time-consuming, is a systematic and comprehensive analysis of the likely effects of disruption and disaster on the business, the identification of crucial functions and the establishment of recovery targets.
The development of appropriate strategies and processes is a central part of the design and implementation of a business continuity plan, along with the creation of business-wide awareness of the plan and its components, followed by extensive training.
Regular and consistent monitoring and testing of the plan are essential, as is measurement against industry and sector yardsticks.
Public relations and communications during a crisis or interruption are of prime importance, especially where brand reputations, customer relations, distribution streams and the like are compromised or damaged.
Business continuity planning is nothing more than good, sound, common sense, but it is worrying that so many businesses are prepared to ignore the process or be satisfied with less than comprehensive programmes.
Get the show back on the road
Insurance focuses on after-the-event issues, principally on indemnities against loss, either by way of monetary recompense or through replacement. Business interruption insurance offers a further source of income replacement.
Site and premises loss is a major worry for businesses, and recovery specialists are adept at avoiding long and expensive shut-downs. Even when you discount major disasters in which premises are lost irretrievably, minor fire damage can result in widespread problems. In one instance, water pumped on to an accidental fire in a cavity wall resulted in flood damage and serious contamination. Restoration processes costing £14,000 allowed staff to return to work within four days. The alternative, which would have involved shutting down air supply systems, recabling IT networks, cleaning ducting and replacing wall coverings would have taken at least three months and would have cost nearly £120,000.
Protecting documents is relatively straightforward, or so it would seem. But fire, smoke and water damage can render paper materials useless. In such a case, pre-planned restoration measures can save thousands of pounds and hundreds of hours. One company suffered an electrical fire, and the resultant smoke and water damage destroyed all of its working documents, its filing cabinet contents, books and archive files.
Restoration of some documents could have been undertaken but would have cost at least £5 a page; while replication would have taken several months. However, by using a specialist service, the entire body of paperwork was fully restored within two weeks, with file retrieval systems to ensure that any urgent documents could be fast-tracked and restored within a day. The cost totalled £18,000 and disruption was minimised.
There is significant evidence that senior executives and managers are not looking at the whole picture when they think about business continuity planning. In the January survey by the Institute of Management, the overwhelming cause for concern was IT systems. Britain's managers fear losing IT capacity more than any other disaster, including loss of skills, site, premises, negative publicity, flood, or fire.
Take the full range into account
A spokeswoman for Guardian iT says that over 90% of corporate disasters result from IT failures, so the emphasis may be justified.
"The more sophisticated a company's operations, the more it exposes itself to different types of risk. A disaster occurring in a single location can strike many different businesses." She reports that one estimate of the average company cost of lost time through an IT "outage" is £52,000 an hour.
IT system protection features more prominently (69%) in organisations' plans than any other area. Fire (47%), loss of site (43%), health and safety (30%) and loss of skills (28%) are the next most common areas of coverage.
"Effective business continuity management is not just about IT," says Rod Ratsma, director of Consulting at Guardian iT. "It's about assessing and safeguarding your organisation against the full range of disasters that can disrupt a business."
By any yardstick, UK businesses have a long way to go before they can feel justifiably confident about their ability to face disaster and disruption and make a good recovery.
Give us a break!
Insurers know the importance of effective business continuity planning, but could do more to encourage policyholders. If shopkeepers and householders can get discounts for sophisticated alarm systems, shouldn't businesses get similar credit for having business continuity plans in place?
Interviewed in an extensive market research programmes conducted last year by Performance Concepts for Survive, (an international industry-wide group of business continuity and disaster recovery professionals), eight out of ten businesses said that there would be more support for continuity and recovery planning if there were some form of bonus.
For many businesses, planning for disaster consists primarily of insurance. The attitude appears to be that if premises burn down, if goods are faulty, if workers are injured, the insurers can handle it.
That may well work once, but try it a second time and the cost will usually prove unacceptable. Insurance companies at least seem to learn from history.
Damage management standards
The British Damage Management Association (BDMA) was launched at Lloyd's in December 1999 with the aim of setting industry standards and providing professional accreditation for recovery and restoration technicians. With the endorsement of the insurance industry through the Association of British Insurers (ABI) and the Chartered Institute of Loss Adjusters (CILA), each of which has representatives on the BDMA executive, the association has attracted support from government and business.
Jeff Charlton, technical director of Restorex and first chairman of the BDMA, says that the association has quickly established an authoritative position. "What began as a disparate group of individuals has quickly become a cohesive professional association that can be seen to be setting standards for the benefit of both clients and contractors."
In its first year the BDMA made substantial progress, producing a set of industry standards and a comprehensive examination syllabus. The association says that, prior to its formation, insurers and other clients had no means of measuring the technical competence of damage management contractors. It has recently issued guidelines to assist those employing recovery contractors on how to avoid using "cowboy" firms and individuals.
Last November, Charlton told deputy prime minister John Prescott that the BDMA "provides practitioners with a route to professional accreditation that can easily be distinguished by the insurance industry and the general public". This is particularly relevant in the wake of recent severe flooding incidents in the UK, when Prescott promised consultations to tackle the problems of shoddy workmanship and poor quality contractors. The BDMA has asked to be represented at any such discussions.
The current chairman, Dr Greg French, managing director of Belfor-Relectronic (UK), says that he is looking forward to increasing dialogue with the government and other policy-making bodies.
The recovery and restoration industry is intensely competitive and BDMA accreditation, only achievable by examination, offers a recognised means of identifying competent individuals and firms.