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.
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