The%20Value-Driver%20Approach%20to%20Business%20Continuity

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The Value-Driver Approach to Business Continuity
A Cost-Effective Variation Tamara Nolan, Senior
Associate
New York, NY March 18, 2009
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A cost-effective, swift way to build business
continuity management capability begins with
embracing leaderships view of critical value
drivers
Traditional BCM Approach
Value Driver Approach

• Adopts a bottom-up, comprehensive perspective to
  evaluate functions and processes
• Systematically examines all of the organizations
  business processes and then determines
  criticality
• Cold data gathering involves multiple meetings
  to get the answers
• Often a complex one size fits all methodology
  that does not easily incorporate dynamic changes
  to the business environment
• Scenario-based planning
• Can exhaust program resources by lasting 8- to
  12-months

• Adopts a top-down, strategic perspective to
  evaluate sources of value and generate buy-in
• Examines only those business processes that
  leadership sees as critical to
• Revenue/Operations
• Brand
• Reputation
• Hypothesis-driven data gathering with limited
  demands on executive time
• Customizable and flexible approach based on
  organizations specific value chain
• Effects-based planning
• Generates savings in development costs based on
  8- to 12-weeks timeline

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Recent experience demonstrates that complex risks
and massive impacts have heightened the need for
resilient businesses
Indirect Impact
Business Consequences

• Deteriorating operating performance
• Decreased revenue due to loss of customers
• Reliability issues
• Lack of visibility
• Slow recovery
• Brand/Reputation damage
• Lack of contingency planning
• Increased costs (e.g. over-time payments to
  reduce backlog or penalty payments to customers)
• Legal exposure
• Declining confidence of citizens and public
  officials
• Adverse employee relations

AdverseMedia Exposure
Tightened Credit Markets
Facility Disruption
Financial Crisis
Direct Impact
Distribution channels
Network Intrusion
Natural Disasters
Terrorist Attacks
Inability to Pay Suppliers
Pandemic
Large Employee Absence
Public Infrastructure Disruption
Intellectual Property Theft
Change in Customer Demand
Equipment Damage
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With the adverse effects that poor planning can
have, robust BCM capabilities make sound business
sense

• Poor planning can lead to a wide range of
  problems, from human casualties deemed the result
  of management negligence to loss of market share
  due to unsafe products
• Strong planning, on the other hand, is a vital
  standard of strong corporate governance because
  it has
• Major immediate impact on shareholder value
• Long term impact on reputation/brand and
  therefore market share

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However, BCM managers continue to have challenges
building the business case for needed plans and
capabilities

• Although BCM is a cornerstone of well-structured
  risk management programs, many companies struggle
  to initiate, develop, and maintain needed
  capability
• Typically, this is not because of a lack of
  interest but a lack of resources, training, and
  buy-in from senior leadership
• In todays cost-constrained business environment,
  BCM leaders must take a take an actionable
  approach to protecting value drivers
• The customary bottom-up BIA requires an intensive
  and time-consuming effort to identify the
  functions and processes that are truly critical

as cost pressures and the need to demonstrate
immediate results demand a new way of thinking
about BCM Planning
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Our value driver approach to BCM guides BCM
capability development from initiation through
exercise and maintenance
Business Analysis
BCM Strategy Development
BCM Plan Development
BCM Plan Exercise
BCM Program Maintenance

• Keep it all aligned with the changing business

• Conduct tabletop exercise to validate plan
  content
• Validate interdependencies

• Document the BCM plans
• Outline proactive initiatives the business can
  take to improve its resilience and to mitigate
  identified risks

• Identify critical products, services, functions
  and work locations
• Identify key dependencies and resources
• Identify key risks
• Set recovery objectives

• Develop strategies to address risks for critical
  business functions managed resources
• Identify initiatives / actions to effect
  strategies
• Validate strategies through a workshop

• Keep it all aligned with the changing business
• Conduct annual plan reviews / updates

• Develop options to de-risk the business through
  changes in three dimensionsprocess, operating
  model, or geographic dispersion
• Identify a set of mitigation strategies

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Our approach employs proprietary techniques to
help BCM leaders quickly gain traction and
sustainable momentum by
Business Analysis
Illustrative High-Level Value Chain
Distribution
Sales
Production
Design
Production
Commercial
Administration/
Traffic
Operations
Operations (Logistics and Support)
Engineering (Logistics and Support)
Shared Services (Legal, IT)
Shared Services (Legal, IT)

• The value chain allows us to get to the answer
  quicker by
• Identifying and prioritizing value drivers
• Identifying and mapping critical
  interdependencies
• Identifying and prioritizing vulnerabilities and
  gaps

focusing resources on protecting the
organizations value drivers
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The approach then examines each value driver
based on the impact of a risk, not the cause
BCM Strategy Development
Causes

• There are infinite disruption scenarios, but
  effective planning requires looking at potential
  operational impacts

Natural Disasters
Effects
Pandemic
Unable to access building
Injury or death
Impacts
Loss of Primary Facility Loss of IT Operations Reduction of Available Workforce Loss of Key Business Partner
Loss of key supplies
Financial Crisis
Loss of Power
Utility Outage
Source BCG Analysis
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The insights gained from the Value Driver
Approach are then incorporated into strategies
and aggregated into BCM plans
BCM Plan Development
Analysis and BCM Strategies
Analysis and BCM Strategies
Critical services and functions
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Critical services and functions
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Dependencies and resources
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Dependencies and resources
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Key risks
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Key risks
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Recovery objectives
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Recovery objectives
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Business Continuity Management
Strategies to address risk
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Strategies to address risk
4
Mitigation initiatives
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Initiatives/actions to effect
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strategies
Options to de-risk business
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-
Options to de
-
risk business
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Strategies that drive change
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Strategies that drive change
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INTERNAL USE ONLY
INTERNAL USE ONLY
INTERNAL USE ONLY
STRICTLY CONFIDENTIAL
STRICTLY CONFIDENTIAL
CONFIDENTIAL
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The tabletop exercise is a key next step to
validate plan content
BCM Plan Exercise

• The tabletop exercise is a discussion-based
  exercise based on a simulation of actual
  disruptions
• Because plans are often developed in silos,
  tabletop exercises allow you to examine or
  validate interdependencies
• They allow for the free exchange of ideas and
  provide participants an opportunity to identify
  conflicts or areas of confusion within plans, and
  examine plans and procedures in a simulated,
  low-stress environment
• They also help to reinforce corporate memory

In todays cost-constrained environment, a
tabletop exercise is also a low-cost way to
energize the BCM program, identify areas of
focus, and drive leadership awareness
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The final step is developing a program
maintenance strategy to ensure that the BCM
capability remains current in a dynamic operating
environment
BCM Program Maintenance

• Provides a roadmap for maintaining a viable BCM
  capability
• Outlines exercising, maintaining, enhancing, and
  managing BCM capability
• Identifies and documents BCM Program objectives,
  resource requirements, specific actions, and
  timelines

BS 25999-12006 BS 25999-22007
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In summary, the Value Driver Approach offers
reduced project costs, increased development
speed, and demonstrated results

• By quickly identifying the vulnerabilities
  associated with the value drivers and outlining
  disruption strategies to minimize losses, BCM
  leaders can focus on protecting the business
• The value-driver approach includes the following
  key features
• Maintaining a focus on key functions and
  processes that drive value
• Engaging senior leadership upfront to promote the
  BCM program
• Establishing a greater degree of buy-in at
  functional levels of the organization
• Promoting program efficiency throughout the BCM
  life cycle
• Generating tangible savings in overall
  development and maintenance costs
• However, the value driver approachs true value
  proposition is the ability to leverage
  leaderships experience and insight to quickly
  identify the important business resilience issues
  along with potential solutions