Business Impact Analysis: What to Know [2021] - Security Boulevard

Business Impact Analysis: What to Know [2021]

Risk is inherent to any business. And as your business grows, those risks multiply and have greater potential to cause harm. While you can’t completely insulate your business from every possible worst-case-scenario, a business impact analysis can prepare you to handle the fallout of those risks coming to fruition and give your business the best chance at recovery.

What Is Business Impact Analysis?

A business analysis is a structured process your organization uses to determine and evaluate the potential impacts of an interruption to critical business operations, due to disasters, accidents or emergencies. A business impact analysis is a key element of a company’s business continuity plan.

A business impact analysis will allow you to see how your business would be affected if your business processes were taken down by a business interruption. Conducting a business impact analysis also gives you a chance to evaluate each process and department independently and in relation to each other, determine which functions are the most crucial to your business’ continued operation, and create a plan for recovery.

While a business impact analysis isn’t required for compliance with any major data security frameworks (although it is a requirement for ISO 22301 compliance), it’s the first step in developing a strong business continuity plan for your business. Ultimately, the financial and reputational health of your business depends on your ability to recover from a disaster, whether it’s a data breach, a natural disaster, or some other kind of business interruption. 

Additionally, a business impact analysis will give you the tools to ensure you’re compliant with legal and data security requirements and recover from a business interruption while operating ethically and legally. While individual departments may understand the effects of a broken process or function, you can’t fully comprehend those effects for your entire business until a business impact analysis is conducted and all of that information is collected in one place. 

Use A Business Impact Analysis Template

A business impact analysis template is a tool used to store and present all data gathered from a Business Impact Analysis Questionnaire (or another source) on the potential impact of a disruptive event on an organization’s business processes. Templates provide a useful framework to document, evaluate, and prepare for the potential impact of disruptive events on an organization. 

These tools can help calculate the potential financial and operational losses, minimum recovery time, and resources required to return processes to normal. They also help organizations create strategies to minimize disruption and maintain continuity.

Templates can be spreadsheets or cloud-based layouts presenting all business impact analysis data in a comprehensive and correlated fashion. The information is categorized in a practical and meaningful way to help you assess the impact for potential disruptive events on business processes and develop a recovery plan.

Download Your Free Business Impact Analysis Template (csv)

Get The Template ›

Business Impact Analysis Template Features

Templates can differ in design based on the industry or department conducting the business impact analysis. Still, all contain valuable features for identifying the areas and severity of potential impact from specific disruptive events. All business impact analyses gather information for targeted recovery planning to maintain business continuity, so similar features like priority ranking, impact category, target recovery timeline, and recovery strategy are often common across industries.

Below are some standard features of business impact analysis templates:

Business process name: The name of the business process such as “technology replacement” or “policy revision.”

Process description: The details of where the process is performed and further process explanation such as “an upgrade in employee training software.”

Priority ranking: The business process is ranked (minimal, moderate, severe) regarding the severity of downtime impact in the context of business continuity.

Impact category: The category of significant impact (financial, operational, regulatory/compliance) is listed.

Inputs and outputs of the process: The basic operations of the process are discussed.

Resources and tools used in the process: All resources and tools used in the process are described.

Process users: All personnel involved in the use of this particular process are listed.

Description of how the loss occurred: The actions resulting in the loss are described. For example, “production server goes down, customer data becomes unavailable to customers.”

Loss amount (quantified as much as possible): The estimated amount of loss resulting from the disruptive event is calculated and listed.

Target recovery timeline to return process operation to normal: The estimated time it will take to return the process to a normal state of function.

Recovery strategy and key steps: The action steps recommended for process recovery are explained in the context of the comprehensive recovery strategy.

Business Impact Analysis Templates Help Your Business Recover Faster

Business impact analysis templates foster understanding by aggregating data into meaningful and usable formats, birthing the recovery strategies and action plans that keep businesses up and functioning through inevitable periods of disruption. 

Templates deliver value by transforming collected business impact analysis data into actionable insight, allowing organizations to quickly assess the impact of disruptive events and prepare management and recovery strategies well in advance. This knowledge and preparation can make all the difference between a business disruption that is easily solved in minutes and one that derails your entire operation for an extended time.

Business Impact assessment vs Risk Assessment

Before we outline how to conduct a business impact assessment, it’s important to understand the difference between this process and a risk assessment. People often get the two mixed up or see them as interchangeable, but they are two different processes with different outcomes.

A business impact analysis identifies and analyzes business processes and the effect of those processes being out of commission, and the ultimate goal is to create recovery objectives that dictate how to prioritize each of your business functions in the event of some kind of disaster.A risk analysis determines how likely an adverse event is to happen — so that your organization can put risk treatment processes in place to minimize the damage those incidents would cause.

Put very simply, a risk assessment will show you what risks your business faces and a business impact analysis will show you how quickly you have to get business processes up and running after an incident to avoid further damage.

Both processes are important, and both are ultimately necessary for a business to successfully plan for incident recovery, but they are two different processes and should be performed separately. 

Related: How to Avoid Control Deficiencies That Can Impact Your Audit Results

Common Loss Scenarios In A Business Impact Analysis

A vector showing the profit and losses in a business impact analysis

It would be impossible for us to list every business interruption scenario here, and it’s improbable that your business would be able to develop and implement a plan for every possible loss scenario. 

Instead, focus on the most common loss scenarios and the ones that are most likely to affect your business. For example, if your business has a manufacturing component, accidents resulting in loss are something you need to plan for. Fires, burst pipes, and machine malfunctions are very real possibilities. Or, if your business sells CRM software, customers expect their sales/customer data to be available to them whenever they need it. So your engineering team would need to make sure that your application is highly available and you may need to add redundancy to your systems to withstand failures and closely monitor your application and the systems it runs on to ensure that your clients experience the least disruption possible.

Business emergencies are something every business needs to be prepared for. Production servers going down, suppliers not delivering materials on time or at all, labor disputes, utility failures, loss of a key employee, and cyberattacks are all likely to have a harsh impact on your business.

Natural and man-made disasters are also a common business interruption to plan for, and depending on where your company has offices, storage facilities, servers, or other critical business functions located, you should prepare for the disasters most likely to affect you. Earthquakes, hurricanes, wildfires, terrorist attacks, or massive power outages would affect your operations in various ways, and you need to prepare for those possibilities.

Five Phases of a Business Impact Analysis

There isn’t one single method for performing a business impact analysis. It will be different for each business, and every company needs to customize their process to their organization’s unique needs. However, there are a few components of a business impact analysis that need to be present for it to be successful.

An infographic showing the 5 steps of Business Impact Analysis

1. Preparation

Before you can start your business impact analysis, you’ll need to form a project team that will carry out your business impact analysis. This can be a team made up of current employees or an outsourced team dedicated to performing business impact analyses. To prepare for the actual work of the business impact analysis, this team, working with upper management, should define and document the objectives and scope of the impact analysis. 

Which departments will be involved, how information will be collected and stored, and the project timeline should all be determined before you begin.

2. Information Gathering

Gathering the raw data about your business processes is the next step in your business impact analysis. The two most common methods to collect this data are interviews with the people who manage and execute each process and a business impact analysis questionnaire. A business impact analysis questionnaire is the most efficient method of collecting information. If you were to utilize interviews instead, you would collect the same information discussed below, but it would be less standardized than a questionnaire.

ProjectManager provides a solid list of questions that make up a questionnaire:

  • The name of the process
  • A detailed description of where the process is performed
  • All the inputs and outputs in the process
  • Resources and tools that are used in the process
  • The users of the process
  • The timing
  • The financial and operational impacts
  • Any regulatory, legal or compliance impacts
  • Historical data

Essentially, your list should include questions that employees from several different departments can answer: managers will likely understand the financial and operational impacts, while lower-level employees performing processes will be able to provide a detailed description and all of the inputs and outputs. Regulatory and legal impacts can be answered by your compliance team, in-house counsel, or division management. You might also give the survey to outside business partners who may have insight into this process or members of upper management who are involved or have a stake in it.

In short, you should have anyone who performs or manages any part of the process complete the business impact analysis survey to create the most comprehensive plan possible.

Once all surveys are collected (or interviews completed, if your team is taking that route), you should consolidate all the data into one document that clearly lists the information listed above for each process. Make sure you’re not missing any information and that the collected data is concise and clear so that anyone reading it can understand the process and the most important information about it. You can even create flowcharts of each process if that’s helpful.

3. Information Review And Analysis

Once you have collected all of the information needed about each business process, the impact analysis can begin.

Looking at each process, the business impact analysis team will look at each process to determine three things:

  1. Which functions and processes are most important to your business’ continual operation? A prioritized list of every process is the eventual outcome of this determination. If there was a large-scale disaster tomorrow, this list would tell your business which processes to get up and running first and which ones can wait.
  2. What human and technology resources does each process need to operate successfully? This will allow you to prioritize people and technology in the event of a process going down; instead of involving too many people or unnecessary tech, your business can identify the critical players and get them involved until the process is up and running normally.
  3. What is the recovery timeline for bringing the process back to operation normally (or as close to normal as possible)? When making this determination you should consider both how much time it will take in practical terms, and how quickly your team will need to recover the process to avoid further reputational or monetary losses and identify any large disparities between these two. 

If there is a process that you determine needs to be up and running within 12 hours to keep your company in operation, and your current resources can only get it operational within 24 hours, that is an issue that needs to be addressed in the recommendations section of your business impact analysis.

In the end, you should have a prioritized list of processes and recovery sequence for critical functions so that in the event of any kind of business interruption, your company can make a quick determination about how to prioritize recovery. Whether the incident affects every department, one single department, or a few departments throughout the company, leadership will be able to determine what to focus on first.

This prioritized list should be reviewed with some of the stakeholders that were involved in the information collection phase so that the business impact analysis team can confirm they’ve correctly prioritized processes and aren’t missing any crucial information. Department heads, upper management, and compliance, financial, and IT leaders can help you make sure you’re understanding the impacts of each process being down and how important each one is in the larger context of your business.

A vector character sits in front of a symbolic Business Impact Analysis template

4. BIA Report Creation

Once all of this information has been analyzed and confirmed, you’ll prepare a business impact analysis report to present to senior management and other stakeholders in disaster recovery. This report is the most important outcome of your business impact analysis because it’s what you will use to communicate your findings and recommendations to the people in your business who have the power to make changes to the disaster recovery process. 

Your business’ disaster recovery process can’t be fully developed and effective without a business impact analysis, because without it, your disaster recovery process won’t be built on reality. If your company’s leadership doesn’t understand which processes are the most important to get up and running and what resources are needed to make that happen, they cannot create a fully informed disaster recovery process. It’s important to make sure that your business impact analysis team and your business’ leadership team understands this when you’re creating and delivering your report.

Your final business impact analysis report should contain, at a minimum, the following information:

  1. Executive summary
  2. Objectives and scope of the business impact analysis
  3. Methodologies used in collecting information
  4. Summary of findings
  5. Detailed findings on each department, including:
    1. the most crucial processes or functions
    2. the impact of the disruptions to the various areas of the business
    3. the acceptable duration of the disruption
    4. the tolerable levels of losses
    5. comparison between the potential financial costs and the estimated costs for recovery strategies that may be employed
  6. Supporting documents for the findings
  7. Recommendations for recovery

This report is what you’ll provide to management and stakeholders to give them insight into the process, help them understand your findings, and learn what the best options for recovery of each process are. Take the time to make sure it is thorough, well written, and easy to understand.

5. Business Impact Analysis Recommendation Implementation

The final step in this process is implementing recommendations. Once your team has conducted the business impact analysis and communicated the findings, it is ultimately up to leadership to act on it, but your team can help promote the findings of the analysis and encourage leadership to move forward with your recommendations.

This final step should also include updates and changes to the recommendations when you find that any of your previous recommendations aren’t working as intended, new processes are implemented, or new departments are formed. Your business isn’t a static entity; it is changing and growing all the time, and your business impact analysis should change with it. 

Related: Third Party Risk Management: Best Practices for Protecting Your Business

Keep Your Business Continuity Plan Centrally Located and Organized

A vector showing characters checking off boxes of a to-do list.

Whether you’re utilizing your business impact analysis for compliance measures like an ISO 22301 audit, or simply storing it for future reference, it should be saved in a place where your compliance, IT security, and leadership teams can access it easily.

Hyperproof’s compliance operations application provides a central, secure place for all of your compliance documents (e.g. business impact analysis, information security policy, cybersecurity incident response plan), making them easy to find in the event of a business interruption event or an audit. Within the application, you can set policies and due-date reminders on your documents, so you or your colleagues automatically get alerted when it’s time to review/revisit a document, policy or an analysis. 

Hyperproof also offers a secure, intuitive risk register for everyone in your organization. With the application, risk owners from all functions and business units can document their risks and risk treatment plans. You can link a risk to a control and gauge how much a specific risk has been mitigated by an existing control versus the residual risk that remains. With this clarity, your risk management, security assurance, and compliance teams can focus their energy on the risks you truly need to worry about.

Want to learn how to streamline your risk management and compliance operations?

Sign up for a demo of Hyperproof ›

The post Business Impact Analysis: What to Know [2021] appeared first on Hyperproof.

*** This is a Security Bloggers Network syndicated blog from Hyperproof authored by Jingcong Zhao. Read the original post at: https://hyperproof.io/resource/business-impact-analysis/