Business Impact Analysis (BIA): BCM’s First Step

The Functional Business Impact Analysis (BIA)
Creating a functional Business Impact Analysis (BIA) can be a daunting task for any organization.  As a foundational requirement of any continuity program, it must be completed in order for you to understand risk and drive the development of plans, identification of recovery strategies, and implementation of solutions. 

As a company, MHA has conducted well over 2,000 BIA interviews. Our goal is to make sure that the information gathered and the process used are built around ensuring the functionality of the BCM Program.  Over the years, we have developed a highly-refined process to plan, conduct and report the results of a formal BIA.  That process allows for 3.5 to 4.0 hours of a business unit’s time to complete the BIA.  This includes 45 minutes to complete the pre-work, 2.5 hours or less for the interview, and 0.5 hours to validate the results.   Often, organizations are now asking us to finish interviews in as little time as possible – often in the 1 – 1.5 hours time frame!

We have learned that while it is possible to perform a BIA efficiently, it is still a time-consuming process, especially when the data is significantly out of date ( > 2 years). Your questionnaire should be in compliance with best practices, but be tightly focused, have limited questions, and be objective. The goal is always a functional outcome, not just “checking the box.”

A Functional and Best Practice Business Impact Analysis

1. Management & Participant Awareness

Involve management and participants from the beginning. Ensure they have a clear picture of what is expected from them in planning, implementation, validation, and approval of the BIAs, and that they understand the end result and the benefit it will provide.

2. BIA Pre-Work

Distribute easy-to-complete pre-work to participants at least 2 to 3 weeks before interviews.  Ask them to identify their core business processes, system/application dependencies, and legal/regulatory requirements for each process. Pre-load the data to the BIA tool to speed up the interview.

3. Logistics

Stage conference rooms for each interview. Use a projector or monitor to display the BIA tool and data to participants as they walk through it.  Participants see the results of their efforts real time. Appropriate breaks and snacks can boost overall participation and comfort.

4. BIA Participants 

Choose participants based on their knowledge of the business unit and processes; titles are irrelevant if the participant doesn’t know how the processes work or what they depend on. They must understand the process and impacts, as well as how the process impacts the overall organization.

5. BIA Tool 

The tool should be easy to use. A good tool calculates Recovery Time Objectives (RTOs) and Recovery Point Objectives (RPOs) based on input and is easy for participants to follow.

6. Facilitators

Choose a facilitator with high energy and enthusiasm to lead the participants. Keep the energy up and they will respond in kind.  Bring a bag of chocolate; people love it.  At MHA, we use two facilitators, one to lead the discussion and the other to enter the data and take notes.

Remember a functional business impact analysis is never perfect, but as you conduct the BIAs, the participants will gain knowledge and refine results.  We know we have done our job and performed a functional BIA when people leave smiling – saying “It wasn’t as bad as thought it was going to be!” It is even better when they say, “I learned a lot.”

Why the BIA Questionnaire is Important

A strong Business Impact Assessment (BIA) shines a light on critical business processes and identifies which business units, operations and processes are essential to the company’s survival. The BIA is also an opportunity to learn about the enterprise’s operations as well as your enterprise team.

We can use this opportunity to learn what concerns your business partners, to learn how their needs are (or are not) being met by IT and what types of risks exist. By engaging the business units in your process, you not only create a better end-product, you learn and grow, and you forge alliances that benefit your program and the business. So how do you engage your business units? With the BIA Questionnaire. 

Developing the Business Impact Analysis Questionnaire

When developing the Business Impact Analysis (BIA) questionnaire, a single department or business unit should be selected as a test case. The test department can provide feedback on the questionnaire, including its instructions, clarity or questions, and if anything is missing. The following is a list of categories critical to the questionnaire:

  1. Cumulative Financial Loss (revenue lost + costs incurred) – measured in dollars. This may include: Lost revenues, Lost sales, Financial penalties, Wages paid for no work, Overtime wages paid to catch up, Spoiled materials and finished goods
  2. Legal Compliance Impact – Yes or No.
  3. Impact on Customer Confidence – Answers can be low, medium, or high.
  4. Loss of Supplier Confidence – Answers can be low, medium, or high.
  5. Damaged Public Image – Answers can be low, medium, or high.

Each of the impact categories can be rated according to its impact over time. Once all the questions have been determined, a set of written instructions should be developed and distributed with the BIA questionnaire. They should explain how every field on the form will be used and what the respondent should fill in for each field.

For more information on building a Functional BIA questionnaire, or if you have specific questions, schedule a time to speak with our CEO, Michael Herrera for a one-on-one consultation.

Further Reading

More of our blog posts about the process of conducting a BIA:

Richard Long is one of MHA’s practice team leaders for Technology and Disaster Recovery related engagements. He has been responsible for the successful execution of MHA business continuity and disaster recovery engagements in industries such as Energy & Utilities, Government Services, Healthcare, Insurance, Risk Management, Travel & Entertainment, Consumer Products, and Education. Prior to joining MHA, Richard held Senior IT Director positions at PetSmart (NASDAQ: PETM) and Avnet, Inc. (NYSE: AVT) and has been a senior leader across all disciplines of IT. He has successfully led international and domestic disaster recovery, technology assessment, crisis management and risk mitigation engagements.

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