Managing Crisis in an Efficient Way - Report Example

Business Continuity Management and managing crisis in an efficient way Business Continuity Management ensures the continuity and uninterrupted functioning of the business operational activities. It is an on-going process which ensures elimination of business failure by using techniques like risk management and other important sciences. The comprehensive business continuity management includes disaster recovery, business recovery, and contingency planning. It is defined as “A management process that provides a framework to ensure the resilience of your business to any eventuality, to help ensure continuity of service to your key customers and the protection of your brand and reputation” (Smith, 2008). As an entity grows and develops, newer and more potential threats begin to emerge and the businesses have to develop newer immunities to cope with these kinds of risks. After such incidents occur, the organization began to investigate into them and necessary preparation takes place so that at least in the future, the business can easily deal with such risks. The business does not become immune to such risks but the loss is reduced. This essay relates risk with business continuity management in the first part and how businesses indulge in post incident investigations in the case of crisis in the final part. Risk can be defined as “the threat or probability that an action or event, will adversely or beneficially affect an organization’s ability to achieve its objectives” (Luhmann 1996:3). Risk Management is defined as "making the most efficient before the loss arrangement for an after the loss continuation of business" (Fischer & Green, 2004, p.130). It is one of the important process that involves steps that are to be taken at a regular basis to ensure that the business carry on without any problems and can reach towards its objectives and goals. The following steps can be taken to ensure the smooth flow of any business and organization: 1. Context establishment. 2. Risk identification. 3. Risk analysis. 4. Risk evaluation. 5. Risk treatment. 6. Monitor and Review. Risk Management is not absolute and it is based on chance. It creates more certainty on the chances of different outcomes and reduces the probability of failures. The primary objective is to eliminate unfavorable risk events to the extent where it is possible and under the ambit of control of the organization. This is most effective on the pockets in terms of cost. In other words, such measures are commonly and most popularly known as preventive controls. Even the best of Preventive controls are not immune and can fail. The day to day operations can come to a halt and the business may suffer losses. Therefore, Business Continuity Management also aims to ensure that the key and important business resources are in uninterrupted supply for the critical business activities. Depending on the professional employees in the organization business continuity management can be approached, by means of how they can comprehend the organizations business and business risks (Australian National Audit Office, 2000, p.9). Business continuity plan is what is extremely important for a firm. In fact, any organization engaging in business continuity management practice should make this plan as the first step. It identifies the potential problems and threats to the business. Not only that, it also determines the processes and the necessary steps to be taken to make the organization to come back on track. The plan and its proper implementation needs to be synchronized properly by the organization. This makes sure that the risks are accurately identified beforehand. The continuity plan generally covers the following parts: Disaster Recovery Plan Business Resumption Plan Service Area Contingency Plans Part 1: Risk management and business continuity management relationship: As already discussed earlier, the primary objective of Business Continuity Management is to ensure the uninterrupted flow of the business objectives to make profits and move the business closer to its goals and objectives. Every adverse risk-be it small or big has some negative impact on the organization’s business and on its financial data. The activities should always go on and on. Risk management must be carefully adopted by the organization to avoid high risks and eliminate or reduce their harmful consequences. As popularly said, “Prevention is better than cure.” These risks are the biggest enemies of any business and every organization should safeguard against them and use appropriate measures to mitigate them through efficient and effective Risk management. It lays down the path for identifying, analyzing and reach the business aims, and in the long run, works towards reaching its aim. Risk management must be undertaken by every department within the organization and used appropriately at every management level. Business Continuity Management without risk management is incomplete and may not give the required results. They serve as the two legs to an organization, and help it to walk continuously through good and bad times to reach the ultimate aim. In fact, some of the stages of risk management will serve as the platform of business continuity plan and finally and more broadly, to the Business Continuity Management. As mentioned in (AS/NZS 221:2004) "In practical terms there is commonality in the content and conduct of ‘Step 1: Commencement and Context’ undertaken for BCM and ‘Establish the Context’ for the risk management process in AS/NZS 4360:2004. What is needed is an integrated approach which ensures that the work undertaken and done in the initial stages of the risk management process goes directly into the starting of the Business Continuity Management process. The difference lies in the context which is somewhat narrowly defined for Business continuity management because it tends to identify and stress on only those elements which lead to the disruption of the business. Step 2: Risk and Vulnerability Assessment This step looks at vulnerabilities of the risk management’s context and then analyzes the risks. As already discussed earlier, every adverse risk, big or small will have a negative impact on the business and may be take it to the point where the business is disrupted or even needs to be stopped. What is required is the right is the good preparation and even better reaction. This alone will help the business to survive, be nurtured and grow handsomely. Business continuity management can handle the disruption of the organization and make the best plans to keep it up by going to back to AN/NZS 4360:2004 "Treat risks" and the main treatment plans consist of avoid, share, retain or reduce the likelihood and/or consequence of the risk (AS/NZS 221:2004). The most important strategic risk that is faced by any organization in the world is that whether it will remain operational. The best treatment to such a risk is to take such steps that at least reduce the probability of happening of events which leads to disruption of operations. This is not all. What if the disruptions do occur? The plans for dealing post incident scenario will be equally important. These plans aim to reduce the adverse impact on the organization and the business. They are designed to manage the continuity of the organization. High impact/low probability risks and low impact/high probability risks may need to be separately taken care of. For e.g, the high impact risks have lower chances of occurrence but if they do occur, they can cause total disruption and the business may come to a standstill. Therefore, the strategies to reduce their impact should be implemented. The strength of correlation between risk management and business continuity depends on the individual organization. For e.g, a newer firm may not have such an integrated approach between the two. The tools, techniques and assessments used for the two may be quite different. Part 2: Crisis management post incident A crisis cannot be totally avoided. It is very common to an organization- be it new or very mature, large or small, though the scale and the intensity of such crisis may differ. The hard days do come and the firms which come out fighting such times will eventually reap the benefits of the greener times. A crisis may try to pull the business back but the progress must never be stopped at any cost. Here comes the point of preparedness-the firms which are better prepared to undertake and live through this crisis period develop and reach its goals. Pearson and Clair (1998) stated that, “An organizational crisis is a low-probability, high-impact event that threatens the viability of the organization and is characterized by the ambiguity of cause, effect, and means of resolution, as well as by a belief that decisions must be made swiftly”. “Man learns from his mistakes.” This is what makes the post crisis period most important. The proper investigations must take place and the organization must rise again. Having learnt what are the things that went wrong and to avoid them in future, the firm is now more robust and better prepared for such eventualities. The post crisis period is the recovery stage. Also, it holds so much importance because the business tends to learn from this phase. This learning ensures that in the future, the causes of such a crisis are avoided. Finally, to conclude: the essay clearly illustrates the relation between risk management and Business Continuity management. Business Continuity Management is incomplete without Risk Management. In fact, many of the stages of risk management form the basis of Business Continuity Management. They go hand in hand with other. The second half of this assignment discussed the post crisis phase. What is important is the learning in this part which can be done through proper investigations. This will improve the organization in the future, and take it on the path of success. Risks are properly managed, awareness is increased and the business becomes prepared to face and effectively handle threats and other eventualities in its lifetime. Any business should be like a going concern which can only be made possible by such necessary steps which the organization takes from time to time to grow. In other words, Business Continuity Management ensures the uninterrupted functioning of the organization. References: 1. Pearson, C., & Clair, J. (1998). Reframing crisis management, The academy of management review 23 (1), 59-76. 2. Andersson, M. G, & Waldén, A. (2008). How a bank organization handles robberies: A question of crisis management. Jonkoping University, Jonkoping International Business School. 3. Fischer, R.J., & Green, G. (2004). Introduction to security (7th ed.). Boston: 4. Standards Australia. (2004). AS/NZS 4360:2004, Risk management. Standards Australia. 5. Standards Australia. (2004). HB 221:2004, Business continuity management. Standards Australia. 6. Pearson, C., & Clair, J. (1998). Reframing crisis management, The academy of management review 23 (1), 59-76. Read More