Business continuity plans are a reaction to an extreme change in the business environment. They are activated as a result of natural disasters (flooding, hurricanes, earthquakes, or disease) or due to a change in the market rendering a material impact on business operations. What does management do when these things happen? How will we ensure that we can keep our business going?
The going concern
Companies operated under the going concern assumption and makes clear that there are no concerns of a company’s failure. It assures stakeholders that their investments are safe, payment will be made to suppliers for services rendered, and goods or services will be received by customers.
The business continuity plan ensures sure that this assumption is true during periods of extreme change and uncertainty. Business continuity planning plays an important role in maintaining the going concern assumption.
What is business continuity planning?
Business continuity planning is the process of keeping the business running. Isn’t this something that always should be the case?
The answer to this question, is yes! Corporate governance (protocols, policies, and procedures) govern how a business reacts to changes. By setting the right governance structure, the company can ensure that business continues under normal circumstances and allows for organic changes. Business continuing planning considers extreme changes in the environment which require quick decisions to make changes to processes and corporate policy.
Business continuity planning is part of a cycle. We'll review this cycle over the course of this series. It is important to remember that business continuity planning is not static, rather it is something which must always be considered as the business changes.
When to make a change
The unforeseen circumstances require fast changes.
Updating protocol – Who will take decisions? Should the management team take all decisions or are there decisions that staff must take. Are there decisions that only the Chief Executive Officer take?
Changing policies –What steps should be taken to ensure that our staff are safe? Should the company no longer take certain business or restrict the types of purchases it makes? Is this the time to use reserves?
Updating procedure – How will the company provide customer services if the phones are not working? Are there applications which the company will no longer use because of increased IT risks of hacking? How will procedures change to deliver goods and services? What is appropriate action if the supply chain is disrupted?
In our next article, we will discuss implementing and making changes to the governance structure.
If your company needs a business continuity plan or trying to determine what changes need to be made, contact us at chayimconsulting@gmail.com or send us a chat below!