Business Continuity Management

12/01/2006
10 January 2006

Disasters are unexpected. New Yorkers on 11 September 2001 did not know what their day would bring. Central Auckland businesses in 1999 weren’t aware of how tenuous their power supply was.

Disruption of some kind at some point is business as usual, and can profoundly impact the performance of an organisation. In addition to the horrifying loss of life, the World Trade Centre disaster resulted in monetary losses of almost $200 billion. Smaller-scale disruptions will occur at some point in the life of almost any organisation.

Preparation makes the difference between disruption and catastrophe. Some companies, including Morgan Stanley, Cantor Fitzgerald and American Express were able to resume business within several days of September 11. Other companies suffered severely, many of them going out of business. In many cases, there were no backup communication systems and some companies didn’t even have an accurate count of employees. 150 businesses out of the 350 directly affected failed to survive the event.

According to a 2004 study by the University of North Texas, almost 50% of small to medium-sized companies, which lack business continuity and disaster recovery plans go out of business within two years of suffering a major disaster.

Business Continuity Management

Current thinking on business continuity recognises the importance of business continuity planning (BCP) and disaster recovery, but places it as an essential aspect of sound risk management, corporate governance and quality management. Understanding of business continuity has evolved substantially from the historically narrow concepts of BCP in specialised areas, such as information technology, disaster recovery and crisis management, to a more holistic approach embracing all aspects of strategic and operational areas of an organisation.

Business continuity management (BCM) now includes the concepts of business resilience and long term performance. BCM today, and in the future, should provide a substantial benefit to the continuity of an organisation before, and following, a major disruption.

SAA/SNZ HB 221:2004 Business continuity management

Standards New Zealand offers a powerful set of tools for ensuring business survival.

The Business Continuity Handbook aligns with the Risk Management Standard (AS/NZS 4360:2004) and outlines a BCM framework that can be developed by any organisation. Along with detailed discussion of BCM steps, the handbook contains a number of templates and provides an easy-to-follow process that can be implemented at all levels of the organisation; whether at a specialist area, such as information technology (IT), or at an organisation level, linking the risk management, corporate governance and BCM programme.

“The Business Continuity Handbook is a toolkit for any business.” says Bryan Westbury, General Manager Corporate Services at Standards New Zealand. “Beyond disaster preparation, BCM can assist organisations, regardless of size, to sustain good corporate governance, maintain their market position, and assure their ability to provide goods and services to their customers.”

Avian Influenza

Avian influenza (bird flu) is everywhere - on paper, tv, and the internet, that is. The potential for a new flu pandemic has spawned both concern
and exaggeration, a blend of genuine planning and worst-case headlines.

There are many different strains of bird flu. Concern has mounted over the H5N1 strain, which is particularly virulent and has spread widely among birds in parts of east Asia and beyond. As wild birds migrate, they spread the disease to domestic flocks.

At the moment, H5N1 can spread to humans, but only in very limited circumstances. This usually involves very close contact with live infected birds, and is very uncommon. With hundreds of millions of birds potentially infected, fewer than 200 humans have been diagnosed with bird flu.

H5N1 has not been shown to spread between humans, and cannot be caught by eating properly cooked bird meat.

However, each of the three major human flu pandemics of the 20th Century (1918, 1957, and 1968), has occurred when a strain of animal flu has mutated into a form capable of human-to-human transmission. In New Zealand, the 1918 pandemic is estimated to have infected a third to half of the entire population, causing approximately 8000 deaths.

Impact

It is right to assume that normal business activities, regardless of their
nature, will suffer during a pandemic.

The New Zealand standard planning model (which tends toward the high end of possibilities) assumes a pandemic wave in which 40% of the NZ population become ill over an 8-week period. The model indicates that over 1.6 million people could become ill over this time. The peak incidence is over weeks 3 – 5, when about 1.3 million people, around a third of New Zealand’s population, would be ill, convalescent, or only just recovered. The model assumes a total case fatality rate of 2%, which would see about 33,000 deaths over the 8 week period, peaking at about 10,000 in week 4.

“But in most bird flu scenarios, you are simply not looking at bodies in the streets or an apocalypse,” comments Bryan Westbury. “Much more likely is a two-month period of much higher than usual staff absences. This would be a robust test of business processes, and illustrates the value of continuity planning. More widely, preparing for a bird flu pandemic using the Business Continuity Handbook will yield valuable information and analysis on the state of an organisation in general, its self-knowledge, and its ability to deal with external impacts.”