Three key (business continuity) questions that CEOs need to ask

29 January 2015 Leigh-Anne van As, ContinuitySA
Leigh-Anne van As, Business Development Manager at ContinuitySA.

Leigh-Anne van As, Business Development Manager at ContinuitySA.

Many CEOs tend to see business continuity management purely within the context of complying with King III and other governance codes. But, says Leigh-Anne van As, Business Development Manager at ContinuitySA, CEOs also need to see how business continuity management can help them answer three key strategic questions.

Van As argues that CEOs need to be able to answer ‘yes’ to three key questions:

• Do you know which products and services offered by your company are vital to ensuring its strategic objectives can be met?
• Is your organisational structure aligned to the company’s strategic objectives?
• Do you know exactly which resources (including human resources) are required for the company to achieve its strategic objectives?

“Companies typically offer a multiplicity of products and services, but CEOs and their immediate teams need to understand which ones are absolutely vital to the company’s ability to meet its strategic targets. They also need to understand exactly which resources are essential to delivering those products and services,” she explains. “Once they have the answers, CEOs and their teams can allocate investment and attention appropriately, and optimise the company’s operations.”

Because companies often lose sight of what their core business actually is, they can find out too late that even a small disruption to a vital process can cause a major disruption to clients. Once lost, market share can be hard to regain—if at all.

“In the same vein, while every part of the business is important, not every part has the same time-sensitivity. Do CEOs properly understand the role each process plays in delivering the strategy; and how quickly, and in which sequence, each one has to be restored in the event of a disruption?” Van As asks.

CEOs also need to understand the company’s risk profile—some firms are more at risk than others. Factors here might be a high reliance on unionised labour, dependency on a single supplier, or even the location of the business.

Those companies that don’t have the answers, or that are not confident of their correctness—and this is likely to be the case in a majority—can find/ validate the necessary information from the business continuity management process.

“As part of putting a business continuity management plan in place, an initial strategic business impact analysis (BIA) should be undertaken. This helps leaders to understand very quickly the specific risks the company faces. The business impact analysis also includes a subsequent detailed analysis of how the various components of the organisation interact with each other, and their relative importance. It is even likely to identify and quantify the costs linked to failures, including lost profits.

This kind of detailed understanding of how the company actually works, and the relative impact of the failure of each of its components, is not just useful in planning for disaster. It also provides vital information that can be used to improve the company’s normal operations and to give the CEO a three-dimensional view of how the company works.

Van As says that savvy CEOs can also use the business continuity plan to seize market share when a competitor is suffering a disruption, or even to offer production facilities to competitors if such an approach accords with the overall strategy.

“In short, the business continuity plan is more than insurance against disaster—it can play a key role in building, and communicating, a sounder picture of what’s important to a company’s long-term success, and help leaders formulate and implement strategy much more effectively,” Van As concludes. “It can also help CEOs understand the industry context in which they are operating much better.”

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