To avoid significant trouble in the face of obstacles or unexpected situations in business, a Business Impact Analysis (BIA) is essential. These events can throw you off balance, and not everything that happens is positive. There may have been opportunities to handle the situation differently or prevent it altogether. A thorough BIA can identify potential risks and develop effective strategies for their mitigation, enabling you to proactively anticipate and prepare for potential issues.
In business, it’s the same thing. Therefore, being well prepared is an important aspect and, fortunately for us, there are certain methods that can help us. In this article, we will focus on one of them: Business Impact Analysis( BIA ).
- It is a report that, through a certain methodology, identifies the critical processes and activities that negatively affect an organization.
- It is an essential element of the Business Continuity Plan.
- It consists of three stages: planning, execution, and communication of results.
What you should know about business impact analysis
If you own or are part of a company, you have probably heard about Business Impact Analysis( BIA ). Thanks to this method, you can be prepared for any type of unforeseen event that may affect your business.
What is business impact analysis?
To begin with, business impact analysis is a report that, through certain methods, allows you to identify and classify all those critical processes and activities that can affect an organization (1). The data obtained are necessary to develop recovery strategies for a company in crisis situations.
For that reason, business impact analysis should be an essential element of your organization’s business continuity plan. This way, you and your company can be prepared for any inconvenience that may arise.
What is its purpose?
The main objective of this research method is to specifically identify the impacts of disruptions. Consequently, decisions are made regarding those processes that are considered critical for the organization and that can affect the business in the event of a mishap (2).
However, we can also say that the objectives cover a little more. For this reason, we have listed the most important objectives:
- Identify impacts
- Determine recovery requirements
- Identify critical areas
- Identify potential financial impacts
- Identify the gaps in the organization’s ability to recover (3).
What are the differences between business impact analysis and other analysis methods?
As mentioned above, being prepared for different situations is essential and for this, there are certain methods that are really useful. Certainly, business impact analysis is not the only tool used in business planning.
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Although in this article we focus on this single method of analysis, we feel it is essential to mention two others: risk assessment and project risk management. Below, we will mention the differences between each.
|Business impact analysis||Risk assessment||Project risk management|
|Analyzes the different critical situations that can occur in an organization.||It emphasizes the severity and likelihood of business risks occurring. In addition, a business impact analysis is basically an extension of the risk assessment report.||It is about identifying, analyzing, and responding to potential risks within a specific project. The business impact analysis has a broader scope.|
What are the impacts that are analyzed in the business impact analysis?
Before proceeding further, it is necessary to mention that, in order to perform the impact analysis, the different risks that may affect the organization must first be identified. Once all the threats are identified, it is then determined which ones are the most highly valued (4).
However, not all organizations have the same impacts. However, here is a list of examples that may coincide with them:
- Power failure
- Damage caused by internal personnel
- Erroneous audit opinion
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What should I consider when preparing a business impact analysis?
At this point, we should talk about the methodology of the business impact analysis. To do so, several aspects must be taken into account based on the assets and rights that represent a value for the company (5); these will become a useful tool for the analysis.
It is worth mentioning that the same methodology is not always used, since it depends a lot on each company. However, there are two aspects to be taken into account in the analysis: qualitative and quantitative (6).
- Loss of assets
- Loss of income
- Cash flow
- Accounts receivable
- Accounts payable
- Additional expenses
- Human resources
- Staff demoralization
- Legal aspects
- Social and corporate image
- Financial credibility
Who conducts the business impact analysis?
Now that we know how business impact analysis is performed, let’s talk about who are the people in charge of performing it. This is where two professionals come into play: business consultants and analysts.
Both of them, working together, are in charge of using all the data obtained from an impact analysis to identify the aspects that should be addressed first (7). In this way, they can help to prepare a business continuity and recovery plan for possible unforeseen events or setbacks that may occur.
What are the steps to perform a business impact analysis?
Continuing with the theme of methodology, we must know how to approach the investigation and not just the important aspects. Preparing an impact analysis is fundamental for the organization and this is because it should be an implementation tool to design a good Business Continuity Plan.
Now, the question is, what are the steps you must follow to produce the impact analysis? Let us tell you that there are only 3 simple stages: planning, execution, and communication of results (8).
The objective is to clearly identify all critical business processes, resources, and requirements to work effectively and efficiently. Here are determined the tools for information gathering, work templates, interview guides, work program, and the BIA guide.
All the tools designed in the previous stage are applied. Here the working papers are generated, workshops, interviews, and surveys are conducted, evidence is generated on the information collected and the draft report is designed.
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3. Communication of results
Once the execution stage is completed and the draft is approved, the results obtained and the recommendations based on the research produced are communicated. At this stage, the final report is delivered, minutes of the communication meeting are taken and the document stating that the report has been received is signed.
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What are the methods for obtaining information?
At the beginning of the planning process, the methods used to obtain the information needed to conduct the analysis must be determined. It is recommended that you have a structured method for obtaining the necessary data.
For this purpose, each organization should have surveys, interviews, and workshops. In this way, they will be able to collect everything necessary for the preparation of the analysis.
How to write a BIA report?
After obtaining all the information required to conduct the analysis, the BIA report is drafted. This document must contain the basic data of all the resources required and the recovery times in order to get the organizations back up and running.
In addition, it will need to comply with the requirements of ISO/IEC 27001 (it consists of the assurance, confidentiality, and integrity of data and information) and must be validated and implemented under the rules of each organization. It must also contain the following points:
- The critical processes identified in the planning phase
- A list of maximum downtimes
- A list of IT resources and priorities
- A list of non-IT resources and their priorities
- List of target recovery times
- List of target recovery points
- List of work recovery times
In conclusion, then, we recall that the business impact analysis is the fundamental basis for the development of a business continuity plan. This implies that a good performance of the BIA leads us to deliver all the necessary information for assertive decision-making.
To do this, you must plan the phases of the methodology and the methods for obtaining information. In this way, you will be able to ensure the stability of the company and better preparation for the company in case of any negative situation.
1. Díaz Montaña, Paul Alexander, Olga Lucía Mariño Martínez, and Flor Viviana Sierra Sánchez. Elaboration of the business impact analysis (BIA) as a fundamental part of the business continuity plan of the radio chain. BS thesis. Universidad Piloto de Colombia, 2016.
2. MARTINEZ, BRIAN DAVID CARO, and PROYECTOS DE GESTIONION TECNOLOGICA PGTI. “GUIDE FOR THE IMPLEMENTATION OF THE BUSINESS IMPACT ANALYSIS (BIA) BASED ON THE APPLICATION OF ITIL GOOD PRACTICES AND THE ISO/EIC 20000-1: 2011 STANDARD IN THE COMPANY IQ OUTSOURCING SAS OF BOGOTA.”
3. González Tello, Jorge Alexander, Hernán Darío Fuentes Gómez, and Diego Alexander Cárdenas. “Business impact analysis for a state-owned enterprise (BIA).” (2022).
4. Betancourt Canchignia, Erika Fernanda, and Juan Francisco Salguero Veliz. Proposal for a business continuity plan (BCP). Case of application. BS thesis. Quito: EPN, 2015., 2015.
5. Olivari Tavera, Juan Mauricio, and Carlos Elías Ramírez Coll. Business continuity plan. BS thesis. Universidad Piloto de Colombia, 2013.
6. Gaspar, Juan, and Juan Gaspar Martínez. Planes de contingencia la continuidad del negocio en las organizaciones. Ediciones Díaz de Santos, 2004.
7. Martínez, Juan Gaspar. El plan de continuidad de negocio: Una guia práctica para su elaboracción. Ediciones Diaz de Santos, 2010.
8. Benavides Araya, Ricardo. “Diseño de una guía para realizar el Análisis de Impacto de Negocio BIA en una empresa del sector comercial.”