How Business Continuity Management Can Help an Organization Manage Risks and Challenges - Essay Example

BUSINESS CONTINUITY MANAGEMENT (BCM) by Student’s name Code+ course name Professor’s name University name City, State Date Business Continuity Management (BCM) Introduction With the rate at which globalization is taking root in all sectors of human life, business has become a volatile economic activity. With globalization comes a wave of change. The wave embraces such things as changes in demographic factors, changes in technology, culture, as well as international trade. A rapidly changing business environment can best be described in one word – risky. With risks arising in both the internal and external environment of business, planning becomes necessary since risks put the going concern concept of a business at stake (Sikich 2003). Apparently, the going concern concept is a crucial factor as it concerns itself with the business’ ability to continue operating into the foreseeable future. Apparently, proper planning takes various efforts. Such efforts are a combination of functions and are collectively referred to as Business Continuity Management (BCM). This has become a primary concept in business management as organizations venture into the global market, exposing their processes to various risks. This paper is an effort to explain the role of Business Continuity Management in reducing the risks to which organizations are exposed as a result of globalization and catastrophic happenings. How BCM Can Help an Organization Manage Risks and Challenges BCM has been variously described as a combination of efforts aimed at identifying and evaluating probable threats, both internal and external, to an organization’s continuity, and providing a framework for the development of resilience and effective operations. The same framework provides responses for the risks and unforeseen uncertainties that may come in the course of everyday operations. Investors are concerned with the going concern concept of a business. This is a measure of the ability of a business organization to continue carrying out business normally into the foreseeable future (Blyth 2009). BCM concerns itself with such things as sustainable existence in times of adversity. This means that the business should be capable of operating normally in times of hardship, be it economic or environmental. Worth noting is the actuality that BCM is an all embracing concept as it touches on such assets and resources as the human resources, the fixed assets, as well as the data and information that is essential for the normal running of business operations. BCM encompasses such concepts as project management, customer service, system backups and change management. BCM can help an organization overcome various risks and challenges in many ways. The most prominent ways in which BCM can be of essence is through identifying and evaluating potential threats. BCM employs mechanisms that evaluate the business environment, both external and internal, with an aim of establishing the existence or otherwise of risks and hazards. Upon identification of the possible hazards, the framework will enable the management to come up with proactive measures that will possibly mitigate the chances of the risk affecting the organization or eliminating the risk factor in totality (Osborne 2007). Worth noting is the fact that an organization has no control over external threats. The best an organization can do is to restructure the vulnerable function of business in such a way that it will absorb the shocks occasioned by the external threat. Conversely, an organization has full control over risks that are inherent of the everyday operations for instance; an organization has full control over all risks emanating from the human resource department. As such, an organization will use the BCM plan to do away with the unproductive members of the workforce. BCM is concerned with ensuring all the objectives are met. Constantly meeting and exceeding shareholders’ expectation is the core of the efforts aimed at making the organization a going concern. The objectives to be met so as to make an organization are long term goals. Apparently, business continuity concerns itself more with long term existence than short term results. As such it ensures that the business objectives are structured in such a way that long term existence is certain. The framework provides strategies that will enable an organization survive hardships. The capacity of an organization to survive hard times is referred to as resilience (Burtles 2007). Such resilience is the best explanation of business continuity since resilient businesses continue to operate when other organizations have been kicked out of business by hard conditions. BCM helps an organization overcome challenges and potential risks by ensuring constant availability of resources. This is achieved through devising reserves as well as buffer stocks much like the material stocks an organization can have backup plans in the human resource function. This can be done through staffing in such a way that normal business activities can continue running in the absence of a number of employees. Such stand by plans ensures that the stakeholder’s interests are catered for despite unfavorable condition in the market. Lack of resources can be a major limiting factor as far as the going concern concept is concerned. Constant availability of resources ensures the business continues operating as a going concern into the foreseeable future (Matthys & Landtsheer 2010). This upholds shareholders confidence attracting more potential investors since the average investor is risk averse. Resource availability is a key element in the business continuity plan, more so, in a manufacturing concern. This is especially so when the resources concerned is material in nature. Business continuity management has been described as one of the most effectual ways of mitigating laws in the event that an unforeseen uncertainty occurs this is especially the case when the uncertainty is physical and extensive for instance in the event that a fire occurs within the premises, business continuity management tools will, directly or indirectly reduce the loss anticipated. For instance, where keeping firefighting equipment is part of the fire continuity management, the laws will not be as intense since the equipment will be used to reduce the intensity of the fire. Similarly where an organization maintains an information and data backup system, the loss will be minimal, especially if such system is updated at short regular intervals (Deveson 2003). Essentially where an organization updates its backup system on a daily basis the data lost will be information relating to a period of less than 24 hours. This may be insignificant in real terms since it can be fixed from historical data as well as forecasts. The loss in this case will be minimal compared to a situation where the organization has no backup system at all. This increases resilience and continuity by making the restructuring period short and the reconstruction activities relatively easy. Business continuity management creates strong links between the internal management and the external business conditions. Worth noting is the fact that an organizations internal environment is affected to a great extent by changes in macro factors that make up the external environment. For instance, such macro factors as inflation will affect an organization’s accounting policies to the extent that important ratios and deductions like depreciation are altered. Similarly, changes in the legal-political environment will affect the activities and operations of the business substantially. Clearly an organization has no control over external macro factors. The only way through which an organization can respond to such changes is through creating a link between the external and internal environment (Kildow 2011). This link will assist the management predict changes and uncertainties in the external environment and this will enable the managers to device pro active measures in preparation for the anticipated risks. The fact that business continuity management creates a link between the internal and external environment is exceptionally important in that it helps the organization respond favorably to changes or foreseeable risks in the external environment. This way all challenges and potential risks are catered for effectively. Another important way in which business continuity management can be useful to the management in managing challenges is creating room for change and providing backup system. An organization can not be in operation without relevant information. Making backups ensures continuous operations take place as far as transactions and decision making is concerned. Information stored by an organization relates to important records such as data transactions as well as all dealings with the creditors. Such information is particularly important as it relates to credit management – an essential part of large scale transactions (Gulati 2009). By creating backups business continuity management ensures that such information is continually available to be used in making critical decisions and transactions. Talking of change, resistance to change is among the most serious impediments in the process of continuous improvement. To reduce such resistance, business continuity management creates an aspect of change management which prepares the human resource function as well as other resources and stake holders for progressive change. With such concepts as kaizen and business process reengineering, business continuity management becomes a critical integral part of a modern organization. Benefits that accrue to a well embedded program of BCM Enhanced corporate image An organization that survives the test of time gains a reputable image as opposed to one that operates seasonally according to changes in the business environment. Simply put, an organization that remains stable in times of economic adversity is more appealing and respectable to the clientele. An organization that fails during such difficulties as inflation times or low season are dimmed unstable and are associated with weak systems which are characteristic of an unreliable business partner. The effect is that the psychological impact will send the customers to their resilient organization to which they will remain loyal during both the favorable times and the adverse period (Hiles 2011). Customer loyalty is particularly important in the contemporary business world considering that competition has become inevitable and stiff in all sectors. Gaining loyalty in the current times, where differentiation and modification of products has become a key strategy. Arguably, business continuity management is one of the most effectual ways of achieving the rare advantage of consumer loyalty in the present, competitive world of business. Safeguarding the employees Research indicates that employees are the second most important stakeholders after the customers. The major reason as to why this is so is because without the human resources functions, the organization is virtually nonexistent. Worth noting is the actuality that, much like the shareholders and other stakeholders, the employees’ interests. Apparently, the most important interest of an employee is to be assured of job security in the long run (Hiles 2011). Having a business continuity plan ensures that an organization remains stable for a long time. This way, the employees are assured that they will be working and earning into the foreseeable future. This makes the employees feel protected and affiliated to the company. This motivates them and boosts performance. Protecting the employee, therefore, not only works for the employee, but also for the organization. Potentially life saving BCM is potentially lifesaving as it covers such tragedies as fire and such-like calamities. In the event that a fire occurs in the premises, there are chances that people will lose their lives. The presence of such things as fire extinguishers and sprays may save lives and property. BCM considers physical gadgets like firefighting equipment. In other words, business managers consider the welfare of the property assets and resources of the organization (Gulati 2009). For this reason they institute safety measures that help the organizations keep working smoothly. In making such considerations, they consider the employee as one of the resources and assets that need to be protected. They as well consider human life as being a valueless property that needs to be respected. This way, business continuity managers save life. Employees feel secure working for such organizations. This reduces labor turnover. Compliance benefits Most governments make it a requirement that every organization, especially those in the manufacturing industry should fix safety gadgets in their premises. They further make it mandatory that the employer should provide a good working environment for the workers (Kildow 2011). Apparently, there are some benefits that accrue to an employer complying with these requirements. Compliance is a positive response to legal requirements and is usually rewarded. Noncompliance is a punishable offence. Among the most common benefits of compliance is the fact that governments issue tax holidays and reliefs for compliance. Getting such benefits may help an organization make tax savings. Tax savings may increase the profits of an organization. Compliance can as well boost the corporate image of the organization. Globalization Globalization has brought about an aspect of stiff competition in all sectors. This is because firms – including the SMEs – have become multi-national business this has increased the level of competition due to new technologies and novel ways of marketing and increasing productivity. With this situation gaining and maintaining a market share becomes substantially difficult for any multi-national firm, especially if it does not have a business continuity plan (Deveson 2003). The essence therefore, is that a small deviation from normal operations may cost a firm a significant percentage of its market share in the global scene. For instance if a mobile service provider goes out of business due to failure to cope with conditions, its clients will definitely shift to its competitors. Worth noting is the point that regaining a market share is comparatively difficult than gaining market entry in a competitive industry. Therefore the loss of market share could be a sign of doom since failure to regain market share could mean the beginning of failure on the part of the corporation. Competitive advantage Competitive advantage can be described as the unique ability of an organization to be more productive than another organization having the same resources and is in similar circumstances. For instance two companies having five hundred members of staff could produce at different levels due to other factors not related to the amount of resources. Resilience can give an organization competitive allowance especially in hard economic times as well as in times of calamities (Burtles 2007). In other words, an organization having five hundred employees could be more productive than another organization having the same number of employees because the employees in the former organization work in a more stable environment compared to the latter. Competitive advantage comes with many benefits to an organization. The primary benefit being high market share coupled with customer confidence. Customer confidence is the root f consumer loyalty, the one thing that makes an organization a market leader therefore there is a connection between market leadership and business continuity management. Eliminating structural problem One of the most fundamental functions of business continuity management is the identification and evaluation of possible threats from within and without the organization. In analyzing the internal environment, business continuity managers get the unique opportunity to identify weak points and structurally unfit functions (Osborne 2007). This helps the management to come up with pro active measure aimed at eliminating the weakness and the threats leaving the organization with more strengths and exposure to more opportunities. In straight forward terms, business continuity management carries out a SWOT analysis and comes up with appropriate and contextual recommendations. The implementation of such recommendations works to eliminate foreseeable threats and weaknesses making the organization to be in a position to pursue the best interest of its stake holders. Shareholder’s wealth maximization The ultimate goal of business in the contemporary world is to maximize the wealth of the shareholders. This goal has long replaced the profit maximization goal. Business organizations ensure shareholder wealth is protected and maximized through sustainable continuity shareholders are low risk investors because they want to commit their funds to those investments that will generate income for a considerably long time with consistency (Blyth 2009). Safe guarding the wealth of the shareholders not only upholds the goal but also attracts prospective investors. The stability associated with business continuity management ensures consistency in the appreciation of the share price. A constant increase in share price is an indication that the organization is a good investment to those willing to commit their funds to low risk investments. Business continuity management through stabilizing the share prices gives the organization a good corporate image which places it a notch higher in the market as far as consumer preferences are concerned. Safeguarding information Research indicates that business continuity managers have turned to such novel technology as cloud computing as a way of backing up their information systems. Information stored in hard copy and other soft copy devices can easily be lost in the event that a fire or a tragedy befalls the organization. In the event that such things occur the organization is bound to loss. Since information, both historical and predicted is the foundation of decisions making (Sikich 2003). Loss of records will virtually paralyze organizational functions since incomplete transactions will be unenforceable on grounds of missing records. Therefore, backup systems become particularly critical in picking up after the occurrence of a tragedy within an organization. This way business continuity management saves the organization from extinction by providing information that will be used in reconstruction of transactions and decisions. Other benefits include mitigation of financial laws as well as reduction of chances of financial exposure. Additionally business continuity management enables an organization decisions making systems become proactive hence containing foreseeable threats, and be prepared for unforeseen disturbances. Rapidly accelerating technological change Continuous advancement in technology is a factor affecting all organizations, especially those that employ the use of advanced technology and those engaging in such concepts as ecommerce and digital marketing. Business continuity management is an integral part of change management. It therefore follows that for there to be accelerated technological change within an organization, the organization must embrace business continuity management. Apparently, such technological advancement is among the many benefits accruing to the adoption of business continuity management. Change, being an inevitable aspect of an organization, should be integrated into all management activities and decisions. Worth noting is the point that change is a rapid variable when it comes to technology. All modern organizations need to keep abreast with changes advancements in technology. Managing shifting demographics Demographic changes are part of everyday life. Apparently, population changes in many aspects, the most prominent being size and structure. In so changing, the organizations get affected both positively and negatively. One of the ways through which demographic changes impact on the organization is through prompting changes in the structure of the human resources. Human resources of a company are a sensitive issue in the contemporary business world considering that globalization is fast taking root and cultural diversity is becoming an integral part of managing resources. In embracing business continuity management, an organization will be in a position to properly manage its resources and customers through making demographic analysis a part of market research. Keeping abreast with changes in population size and structure can help an organization properly manage its market share. Enhanced connectivity All organization that embrace comprehensive business continuity management, are well connected in the sense that they deal with organizations from all sectors, including the public sector and the central and local governments. In implementing business continuity management, an organization works in collaboration with such organizations as insurance companies, government agencies concerned with compliance. As a way of guarding themselves from unforeseen changes in the local economy, they organize for such things as imported resources, capital and technology. This helps the organizations remain connected. Being connected makes the organizations remain resilient as they can effortlessly obtain resources in the event that there are business risks and unforeseen disturbances. Shifting power structures One of the primary objectives and benefits of business continuity management is to see an organization through the periods of changes in management and authority. Apparently, changing the management of an organization causes changes in all processes structures and ways of doing things. Such change in power and authority may result in business failure due to lack of continuity. It is beneficial that during such changes, business continuity managers put in place structures that will enable an organization to continue operating normally. This will see the organization through the uncertainties of shifting power structures. Conclusion In conclusion it Is clear to note that business continuity plan is critically important in any organization operating in the world today since globalization has brought so many challenges and hick-ups associated with stiff competition. Resilience and going concern concept forms the basis and rational for business continuity management. Business continuity management identifies potential uncertainties and enables the organization to plan on how to handle such risks. Similarly BCM ensure constant resource accessibility. Additionally BCM minimizes losses during uncertainties and calamities. This is especially so because BCM creates close link between the micro-environment and the macro factor environment. This prepares an organization for change. Among the fundamental benefits of BCM is the point that it is a potentially lifesaving procedure. Similarly it protects the interest of the employees, shareholders as well as other external and internal stakeholders. BCM can make an organization gain competitive advantage an enjoy compliance benefits. It can also be an effective way of reducing financial losses and exposure. BCM can enable an organization to retain market share through employing proactive measures. This works to gain both consumer and investor confidence. Such confidence not only promotes the sales of the organization but also its own expansion. It is no puzzle then why BCM has become an integral part of business planning in contemporary organizations. Reference List Blyth, M. 2009. Business Continuity Management Building An Effective Incident Management Plan. Hoboken, N.J., J. Wiley & Sons. Burtles, J. 2007. Principles and Practice of Business Continuity: Tools and Techniques /Cjim Burtles. Brookfield, Conn, Rothstein Associates Inc. Deveson, A. 2003. Resilience. Crow’s Nest, NSW, Allen & Unwin. Gulati, R. 2009. Reorganize For Resilience: Putting Customers At The Center Of Your Business. Boston, Mass, Harvard Business Press. 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