Business Continuity Mythology 101

As opined by Lawrence Wenzel

How to handle business continuity may not be one of those things that appear on the corporate radar screen very clearly.  That’s too bad because it may be one of the most important blips when it (unhappily) does show up. It’s a bit mind-numbing when I think of the numbers of people who still need to be convinced of the necessity to take additional steps to try and guarantee the future of their business.  But before I get pushed off my soap box, perhaps these folks have been fed a pile of misinformation on the subject of continuity management.  Let me – in my own inimitable fashion – dispel the myths in which BCP may be mired and separate Disaster Recovery fact from fiction.

Myth Number One

"I have insurance that covers a business loss – it’s called business interruption insurance."  Makes sense. Interrupting the business flow is probably not good for any organization. Maybe the Risk Manager or the CFO-types get a warm fuzzy feeling from having this insurance but – like so many other things – this is definitely up for interpretation.

Business interruption insurance generally pays for the loss of sales due to a "covered" incident brought on by some perilous event specified in the contract.  There are a number of forms this takes and can include such things as paying key salaries during the time the facility can’t operate, and covering extra expenses the facility may incur for things like the costs of transferring business to a sister facility.  All good stuff…as far as it goes.

We’re living in a world of downsizing, rightsizing, and generally trying to run leaner.  This means that options are fewer – and the chances of quick recovery slimmer. 

Let’s look at this situation in what I consider a more realistic light.  This time, there is no sister plant, or there is but it’s running at capacity at the time the incident occurs. There’s no recourse but to bite the bullet, lose production while rebuilding takes place, and try to start again.  You think you’ve covered your bases: your accountants have diligently kept track of all the expenses and all the lost sales, and the insurance company has just handed you a check for the loss of business.  Put it in the bank: you’re going to need that money to buy back customers who went to the competition while your firm was not there – they couldn’t wait.

Myth Number Two

"The Information Technology part of my business has a great BC/DR plan, and we test it all the time.  We have a contract with a hot site, our BC/DR vendor has all the stuff we need – we’re all set."  News flash: There aren’t many dishwashers, garage doors, pre-fabricated houses, surround sound systems or coffee mugs coming out of a facility’s IT function. There are a number of companies out there that do a super job in IT solutions relative to BC/DR planning. However, today’s business management stakes have been raised to where emphasis needs to be on the total operation, not just the IT portion.

The business continuity management of the manufacturing processes can represent a big list of unique (redundant) challenges.  There is a good chance that the company (if one has been hired) doing IT business continuity doesn’t have the operational knowledge of how the plant floor of that organization works.  It’s just not "their thing" and if they try and jump into it, the results could be disastrous.  In many corporations, operations represent a markedly different world, and what works for IT will not work for the manufacturing part of the business.

Myth Number Three

"My operations are so big, we can’t get our arms around this thing called Business Continuity Planning – it’s just too much to tackle, and to bring someone in will cost a fortune."  Well, folks, it’s time to think about that thing called a "business decision." 

No planning is an option – just not a very good one.

In a large, complex manufacturing facility, putting together plans for disaster and business recovery management isn’t going to be easy, it’s going to take awhile, and it’s going to cost bucks. But if the place is worth a billion dollars, isn’t a couple of million – smartly spent and budgeted over a period of time a good investment?  Especially since it’s as close as you’ll get to a guarantee the place stays viable and the customers stay happy. Therein lies the business decision "rub."

You could really cut to the chase with just three words – "Follow the money!"  Every operation has a path that yields the dollars, and every corporation knows how this path goes.  Financial folks are the key here.  They lead to the path - find the path and follow it.  Chances are if something isn’t on that path, it’s probably not that important.

Myth Number Four

"My suppliers will never let me down – I know all of them and they’re good, solid companies."  They probably are – but does that mean they can’t have problems? The supply chain is critical for manufacturing operations.  That’s why you try to never end up with a single source for anything, especially critical components.  Just remember suppliers face the same thorny issues you do – and their headaches will become yours. Make sure they have solid game plans for handling business continuity and disasters in their operations, and there are arrangements in place for supply handling in case there is a problem – either at your end or theirs.

Myth Number Five

"All I have to do is find a vendor with good software and I’ll get this business continuity stuff out of my hair."  Well maybe – but probably not.  Some of the software packages, and there are a few out there now, are really slick tools. Your organization’s needs will largely determine whether commercially available software or a proprietary program is right for you.  But software – in either "flavor" – isn’t necessarily (and probably shouldn’t be) the only tool in your BCP toolkit.

Whatever your organization or BCP planner decides, make sure it’s because they know the full extent of what they’re dealing with.  You can’t come up with a solution until the process has been scoped out – the whole process.  This is no small task.  You’ll most likely need sage advice from experts in property loss protection and risk mitigation planning.

So many more myths…so little time. 

About the Author
Larry Wenzel. P.E., CBCP, CFPS, is an IRI Senior Loss Prevention Training Consultant with almost three decades of fire protection experience.  He is also a noted author and speaker in the areas of loss prevention and BCP/DR.

About GE Global Asset ProtectionSM Services
GE Global Asset Protection (GAP) Services are a range of business continuity planning and risk management services that meet the strategic, assessment, and tactical needs of large manufacturing, healthcare, and service organizations throughout the globe. For more information on our business continuity solutions, contact Rob Quaranto, consultant, GE GAP Services, at 216-241-3493 or email him at anthony.quaranto@industrialrisk.com

GE GAP Services are provided by Industrial Risk Insurers (IRI), a member of ERC’s Commercial Insurance division, a GE company.