Earlier Published in Magazine Issue: Vol.9 No 23, June,2016
Business Continuity Management (BCM) is a management process that seeks to ensure organizations are capable to resume or continue operations under adverse or abnormal conditions (Source: Business Continuity Institute, United Kingdom). In recent years, a pressing need of BCM has risen to keep businesses and organizations safer from the probable catastrophic impacts of increasing number of disasters; natural or otherwise.
Our businesses can’t be safe and sustainable unless they are resilient to disasters. Looking at the recent disaster trends in Nepal, I sincerely hope that the previous statement does not sound an overrated remark.
BCM emphasizes that organizations of all types and sizes need to engage in a comprehensive and systematic Risk Management approach for their businesses to continue smoothly after enduring a disaster. It essentially facilitates us take adaptive as well as proactive measures to reduce the likelihood of loss after a disruptive event. In the event of a natural, technological or a human-induced disaster, BCM helps businesses to lessen the disaster impacts, resume critical business functions ASAP, timely recover business activities and finally it equips us with adequate capability to continue the business as usual.
Putting BCM in perspective
Up to 40% of businesses affected by a natural or human-caused disaster never reopen (Source: Insurance Information Institute, USA).
Nepal faces high frequency of natural hazards and we have generated extremely high level of risks out of those hazards. In Nepalese context, the rising frequency and ferocity caused by natural disasters are not only threatening the growth of businesses but also questioning the sustainability of the entire country’s economy as the average annual disaster loss is in the rise with every passing year.
Disasters caused by natural hazards take a toll of 2 deaths, 4 injured and 30 destroyed houses per day in our country. The resulting annual financial loss is more than 940 million Nepali Rupees per year (Source: National Society for Earthquake Technology-Nepal).
The figures are even more pronounced after the advent of the Gorkha Earthquake in 2015. As per the Post Disaster Needs Assessment (PDNA), the total damages and losses caused by the earthquake, around NPR 706 billion, was about one third of the GDP of the country in FY 2013-2014.
It is also worth noting that out of the total sum, private sectors sustained over 3 times in damages and losses i.e. NPR 540 billion compared to the public sectors (Source: National Planning Commission, Government of Nepal).
Increasing number of disasters is already a global phenomenon which is also evident in Nepal from the chain of disasters that took place in the recent past. Flood, landslide, avalanche and earthquake are some of the high risk natural hazards the nation is facing for a long time now. Meanwhile, disasters in the form of power outage, fuel crisis, human error, equipment failure, IT interference, social unrest, blockade, fraud, fire, theft and even terrorism are not beyond scope these days.
It is clear that the threats will remain here no matter what, but with BCM in place, various businesses and organizations will have opportunity to lower their vulnerabilities and increase capability to stay resilient.
Before we explore further, there are few specific questions that businesses and organizations of Nepal today should ask themselves undisputedly. What are the worst risks faced by our organization? Do our employees know what to do during a disaster scenario? What are the most critical business functions that need to survive an extended interruption? Do we have any written plan to execute? How about safety and security of our valuable data? Are the employees taught and trained to face such painful surprises? Do we practice our emergency response and business recovery plans (if any) to see if they really work? To understand the gravity of above queries we need to delve little further into the BCM process to see what exactly it has to offer.
So, what’s the plan?
Business Continuity Plan (BCP) is a comprehensive written plan to maintain or resume business in the event of a disruption (Source: Federal Financial Institutions Examination Council, USA).
In plain English, BCP is the primary outcome of the entire BCM process. The concept of BCP is relatively new in developing countries such as ours but simply put, BCP helps businesses to better prepare for disasters, mitigate their impacts and reduce overall loss.
A BCP is a management approach to ensure that critical business functions are operational under adverse condition and the organization has adequate plan and resources to complete the recovery process in the event of a natural, technological or human-induced disaster. In another words, BCP bundles together all the documents required for an effective execution of Risk Prevention & Mitigation, Emergency Preparedness & Response and Disaster Recovery plans to re-establish critical business functions after a disaster such as Flood, Earthquake, Fire break out, Supply-chain disruption, Power failure, etc.
The purpose of any organization is to create value for its customers, employees, investors, shareholders as well as the community in which it operates and for the country’s economy as a whole. In the event of a serious disaster; natural or otherwise, when business operation is damaged or disrupted, it would cost money to companies due to extended downtime. Business would suffer lost revenues on one hand and extra expenses for emergency resource management on the other. Insurance might not cover all the costs and certainly would not get back valued customers. Under the chaotic circumstances, company’s image would be at stake while it could lose competitive edge due to delayed recovery or no recovery at all. In a country like ours, quick recovery and continuity of business is critical as it helps reduce socio-economic stress as well as keeps supply-chain moving in the event of a disaster.
Safety, security, survival, competitive advantage, brand/image protection, minimized downtime, disclosure of inefficiencies, reduced disruption costs, enhanced supply-chain relations, insurance & regulatory benefits and international business compliance are some of the recorded benefits to organizations that have been developing and routinely updating their BCP worldwide.
Besides, fulfilling the growing need for Disaster Risk Management (DRM) strategy and satisfying the yearning for a sustainable Corporate Social Responsibility (CSR) value together, BCP implementation could be a pivotal initiative by every small, medium and large organization in Nepal.
Does it really make sense?
It is sad that, being a developing country, we still depend on conventional Disaster Management approach which is mostly reactive and creates unrealistic expectations from the Government / Foreign Aid Agencies in the event of any major disaster. More often than not, businesses fail to identify their vulnerabilities and potential of loss beforehand. Also we do not seem to seriously consider the short and long-term impacts of such disasters on the critical operations of our organizations. Compared to the conventional post-disaster management approach, BCP introduces rather pragmatic approach to manage the disaster risks proactively.
As the country is paving its way towards global market, it makes more sense for private sector businesses to pursue competitive edge by adopting BCP as organizations’ core DRM program.
It would be quite encouraging to see the organizations of all shapes, sizes and types coming forward and engaging in a systematic process of Hazard Identification, Risk Mitigation, and Emergency Preparedness & Response (EPR) planning of their businesses to quickly recover after a catastrophic event, often inevitable.
Earlier Published in Magazine Issue: Vol.9 No 23, June,2016