The Business Impact Analysis (BIA)

I know this is a well known concept and BIAs are part of almost every Business Continuity Program, but I happen to think that many, if not most, people get this wrong – just a little.

Many practitioners, in my way of thinking, overcomplicate or overextend what the BIA is supposed to include and result in.  In many instances, the BIA is performed to establish the equally well known recovery objectives, the Recovery Time Objective (RTO) and Recovery Point Objective (RPO).

One of the issues that I have is what the RTO measures – is it the recovery time objective for a business process or the recovery time objective for an application or IT infrastructure?  Often, people use it for both and I think that can confuse things.  The RTO grew up as a disaster recovery, implying technology recovery, measurement and I think that is where it should stay.  The BIA, by definition does not measure technology recovery objectives it measures exactly what the words say – business objectives.

So let’s back up a bit.  What does (should) the BIA do for us?

The BIA measures and records the “impact” on an organization should a “business” process cease to operate.

The BIA answers questions such as:

What is the impact to our company if we cannot settle trades?  Or, what is the impact if we cannot provide customer service?  Or, if we cannot sell tickets.  Or, if we cannot pick raw materials from our inventory warehouse? …

The BIA measures the impact on WHAT you do, not HOW you do it.  The HOW questions come later in the methodology.  Most companies are not in the business of running computers.  They are in the business of providing financial services, or selling insurance, or flying airplanes, or making consumer goods, …  Now, most also rely on technology and business applications to support what they do but these tools are recovery requirements and are looked at downstream in our analysis.

Once we know the impacts of not performing discreet business processes, we can determine how long the company can survive before these impacts become so severe that they jeopardize the solvency of the organization or pass some other pre-established pain threshold.  To avoid confusion with RTOs, I like to call this the Maximum Acceptable Downtime – now you may say I am MAD, but that’s the result of my BIAs.

And that ends the Business Impact Analysis.

Now, focusing on those business processes with the most demanding MADs we can start looking at how we perform those processes; start analyzing the required technology to support those processes; and, start assigning RTOs and RPOs.  This, we might call our Technology Impact Analysis, although I don’t see too many people using that term.

Many times, MADs and RTOs for applications that support that business process are equal, but, then again, many times they are not.

For example:

In conducting a BIA, a trading company may discover that they must be able to execute a commodity trade within 4 hours of a business interruption, i.e. the MAD = 4 hrs.

In defining how they trade commodities, they identify the Commodity Trading Platform (CTP) as an application that supports this activity.  However, in evaluating contingencies, they decide that they could actually execute trades manually, by filling out a manual trade blotter, like the old days, and enter them into the system within 24 hours of the trade.  So, as long as they have a telephone and a pad of paper they can, with great inconvenience, execute trades.  So, the RTO for the phones might be 4 Hrs, but the RTO for the supporting application, the Commodity Trading Platform is 24 Hrs.

Now, if you want to argue that you get that, but in order to not keep going back to your business partners over and over again in the planning process you collect BIA, Recovery Requirements and Technology Objectives information all in the same interview, I can accept that.  But, I think it is important to differentiate the results of the BIA, business process MADs, from the results of the Recovery Requirements Analysis and subsequent disaster recovery requirements.

Even though most planning professionals preach that there is a difference between business continuity and disaster recovery, I think that the distinction often gets blurred in the execution of our methodology.

Just one man’s opinion, for what it is worth.

Thank you for your input.