- Business continuity plans keep business operations running in the event of an unexpected disruption.
- Business continuity planning involves documenting specific processes and designing contingency plans to mitigate risk across several scenarios.
- All businesses can benefit from performing business impact analysis and a risk assessment to understand how a disaster or emergency can affect their business operations.
When building and maintaining a business, savvy business owners expect the unexpected. Disruptions to your business operations mean your company could sustain significant losses or financial damage. However, entrepreneurs have developed methods to hedge against problematic, unanticipated situations, including creating a document called a business continuity plan (BCP).
What is a business continuity plan? These comprehensive documents help companies prepare for unexpected emergencies and disasters. Business continuity planning helps businesses mitigate both short- and long-term risks by handling bumps in the road with minimal disruption.
What’s a business continuity plan, and what’s it used for?
Companies of all sizes experience business disruption. Sometimes, disaster strikes without warning or affects business operations more negatively than expected. The idea underlying business continuity is to hedge against unfortunate situations: proactively solidifying processes and procedures helps a company function through business interruption and get back to business as usual as rapidly as possible.
This means businesses need to put a solid business continuity plan in place. What is a BCP, or a business continuity plan? It’s a clearly defined set of actions and processes — generally outlined in a document — that helps ensure business continuity (in other words, stability in the face of operational interruption).
Companies should write business continuity plans to encompass a wide variety of unexpected occurrences. This may include:
- Natural disasters
- Power outages
- Supply chain issues
- Reputational damage
- Acts of terror
A business continuity plan encompasses multiple parts, covering every facet of critical business operations and establishing contingency plans for several scenarios. A plan should include policies for dealing with unexpected events and methods for testing those policies, and it should name the people responsible for the actions each policy requires.
Business continuity planning is often part of the same conversation as disaster recovery, as the two concepts work hand in hand. They are not exactly the same, however, and knowing the differences between the two is important.
Business continuity vs. disaster recovery
Despite the similarities between business continuity and disaster recovery, important differences should be noted:
Business Continuity Plans
- A precise, proactive plan for how a business will act during and after disaster scenarios or unexpected business disruptions
- Covers a range of scenarios, both minor and major
Disaster Recovery Plans
- Proactively outlines processes for responding in the event of a disaster
- Documents how a business will respond to a major catastrophe so as to return to safe, normal operations
- Concerned with information technology and data security, as well as plans to restore both data access and access to data backups after a disaster
What does a business continuity plan typically contain?
Business continuity plans can look fairly different among companies. However, at a high level, business continuity programs should encompass clear policies, recovery strategies and contingency plans for restoring critical business functions and quickly returning to normal business processes.
Business continuity plans often include:
- Responsible parties: A list of employees and team members responsible for executing the business continuity plan
- Key business functions: An outline of critical business operations that need to be maintained in the event of an unexpected disruption
- List of possible threats to key business functions: A rundown of the most likely threats specific to the business. A business impact analysis (BIA) and risk assessment can help identify the key potential threats
- Policies for averting and recovering from business disruptions: Documentation of specific operational and contingency plans that detail approaches and processes for restoring critical business operations
- Methods for testing business continuity policies: An outline of processes for testing a business’s contingency plans and ensuring they will work in the event of a disaster or emergency
- Contact information for key employees, first responders, vendors, etc.: A list of business continuity team contacts who will help enact contingency plans and restore business operations
Keep in mind the actual contents of a business’s continuity plan will vary depending on the business. Businesses often perform a risk assessment and business impact analysis to identify the largest and/or most likely potential risks to their operations and develop the best path to their own business recovery.
Why are business continuity plans important?
Business continuity plans are an important part of a company’s overall risk management strategy. They provide a foundation for a business’s approach to disaster preparedness and emergency management in all contexts.
Without a sound business continuity plan — and associated documentation, such as a disaster response plan — a company may find itself scrambling to regain stability in the aftermath of an unexpected event. Business continuity plans exist to provide a path back to stability and generally help in the mitigation of both short-term and long-term risks.
As comprehensive proactive protection, other documentation in the risk management realm, like succession plans, should complement business continuity plans. The more angles from which businesses can shore up their operations in the event of an emergency or disaster, the more effectively they can mitigate risk. In fact, doing so can help protect your business’s profitability during a catastrophe.
Choose a dependable business banking partner
Developing a business continuity plan can help ensure your business is ready for anything and can help support financial success. Working with a dedicated banking partner with personalized approaches, such as First Republic’s Business Banking services, can help make tough times a bit easier.