Continuity in Economic Decline
February 20, 2009
A Case for Business Continuity Response to Economic Chaos – Continued
By John G. Stockman, CISA, PMP, CBCP, MSIS
Several weeks ago, I wrote a piece about the logic in updating your Business Continuity plans to accommodate the ongoing economic stress we are seeing around the globe. I held off on writing this next piece to see if there were any signs that things would start to bottom out and turn around in the near term. In other words, I was looking for signs of life in the economy. Well, it’s now about two weeks later and there are no signs to point to that indicate a tilt toward recovery. Governments are spending trillions of dollars in an attempt to kick-start a turnaround, or at least stop the fall. I could quote source after source that backs up these assumptions, but we all know the story by now.
So, what now? While we all work to keep our organizations viable and survive to the inevitable turn-around, we now need to take stock of our organizations and check out how “shock-proof” they are as it relates to a business continuity plan.
Most business continuity plans, if done correctly, account for both natural and man-made disasters. Their complexity vary by the nature of the organization, including size, economic scale, number of employees and supply chain dependencies to name a few. So, if you have a business continuity plan, I suggest the following key areas to review:
- Review Personnel Dependencies – Every plan depends on knowledgeable, responsible members of your organization if it is to be executed correctly. However, if you have had layoffs or departures from your team, make sure that those people did not have responsibilities in your continuity plan. If they did, you need to find a replacement, update the plan and educate that replacement as to their new responsibilities. Ideally, this will be as part of a business continuity exercise for the entire plan. If you are responsible for only part of a larger plan, make sure you communicate these changes to the plan owner.
- Review Vendor Dependencies - If any part of your plan depends on outside vendors for support and/or execution, now is the time to check their viability. Many companies are going out of business or suspending operations. Each vendor needs to be contacted and, ideally, met with to ensure they have not experienced conditions that affect their ability to support your plan. If there is a formal contract in place, review it with the vendor to ensure all clauses and services are still valid. This is also the time to discuss any additional concerns or gaps brought about by the economic situation that may not have been valid when the agreement was originally signed.
- Plan for Financial Disruptions – Most plans do not specifically account for potential income/revenue disruptions. Clearly the banking situation is unstable. The best advice here is to diversify your financial dependencies if at all possible. If you use a payroll service, make sure they have at least considered the impact of a financial institution failure. While most deposits are insured, there could be at least some interruption in availability of funds to pay employees, creditors and vendors.
- Assume a Minimalist Survival Attitude – When reviewing your Business Continuity plan, approach it with the assumption that your business could be severely impacted by economic disruptions and plan for scenarios where you will have minimal resources to keep the doors open, or at least prevent the doors from permanently closing. Ask yourself what would have to be done to recover from a one, two or three week suspension of your business. Do you pay employees full salaries? Do you tap credit lines? Do you delay shipments? These are serious questions that need to be reassessed in the light of current conditions.
The recommendations I have made are not the only ones you should consider. I do believe, however, that they are some of the most important. Remember, there are always options and ways to make sure that your organization continues to function.
I have approached a number of my customers about this line of thinking and they have all been extremely interested in a “crisis review” of their business continuity plans. So many of them were concerned about just the natural disaster and terrorism aspect of continuity, they hadn’t truly considered using their plans as a bulwark against potential challenges from our current deep recession.
So clearly, this is a good time to consider this exercise. Remember, recessions always end, so don’t assume a doom and gloom attitude. Run through the plausible scenarios that may affect your organization and plan accordingly.
Business Continuity Now
February 4, 2009
A Case for Business Continuity Response to Economic Chaos
By John G. Stockman
It is easy for all of us to give in to despair given the circumstances we face. As the economy here and around the world continues to decline, the tension and fear is evident in everyone I talk to these days. I’ll admit that I too am finding each day a challenge.
Even in the relatively robust Northern Virginia/DC Metro area, business is slow and people are tightening their belts. Every time I scan a website, open a magazine or read a blog entry, the negativity and virtual despair sucks you in and threatens to drag you down.
So what do we do now? How do we move forward when each day becomes a struggle to just meet our basic business goals? Both personally and professionally, it’s time to step back and take stock. Just a few months ago, I wrote articles on business survivability (Strategy in a Slow Economy – September 17, 2008). It was a four part series on how to position yourself to endure the downturn and be ready for the recovery. At the time I wrote those pieces, I had no idea how bad things could or would get over the coming months. Suffice to say, we know things are much worse now and any recovery looks to be far off.
As a business leader and consultant, the key to success is always being ready to adjust and survive. The ability to recognize trends and respond appropriately is crucial.
So, here are some of my recommendations to my clients now in light of where the economy stands:
- Assume This Is A Long-Term Economic Struggle – Despite the efforts of government to halt the slide, conventional wisdom and quite a bit of data indicate things will get worse. How much worse is largely a matter of speculation at this point. However, as a leader and business person, you must assume that credit will remain extremely tight, business demand will be low and work will be hard to come by at least for the rest of this year.
- Stay Current And Connected - I am currently devouring all the data I can get about pending legislation, national, state and local economic reports and business data. Try to stay on top of things and you will be surprised at your ability to anticipate trends and emerging opportunities to improve your situation. Double down on your contact with customers and your personal and professional network.
- Eliminate Unnecessary Expenditures and Conserve Capital - If you have any fat in your budget, get rid of it if possible. Get rid of unnecessary items like additional cell phone lines and subscriptions you never read. If you own multiple web domain names, take off the auto-renew function unless it is your primary way of doing business. Make a list of the minimum things you can do business on.
- Update/Dust Of Your Business Continuity Plans - I’ll bet “economic calamity” is not a scenario in your Business Continuity plan, even if you have one. As a Certified Business Continuity Planner, I have developed and/or reviewed dozens of plans from clients. I don’t recall any of the analysis or response models including a provision for the potential of economic chaos. Now would be a good time to go through that exercise. In my next piece, I will detail how that analysis should be performed and what it should do for your organization.
Like many people, I come from a very poor background. My parents were Depression-era children and clearly are seeing the similarities between their youth and today. Coupled with the onslaught of bad data and continuing downward trend on almost every indicator, the likelihood of some sort of upheaval is now far greater than before.
But, we know this cycle will end. Historically, the deeper the recessionary cycle is, the bigger the rebound. Some of the greatest economic expansions have come after severe turbulence. From the Great Depression through World Wars and uncounted crisis, we have demonstrated our ability to respond and recover. I believe this cycle, as well, will result in a far better future and way of life for us all.
Next week, I will get specific on the analysis and approach for people that have a Business Continuity Plan as well as people that do not.