The relationship between business continuity and risk management often gets changed in agreement with the organization’s perspective. Some enterprises take business continuity as a sub-domain of risk management, while others put these two concepts in two different segments.
During COVID 19 outbreak, people are focusing on overall enterprise resilience and often asking questions like whether there is a difference between business continuity and risk management? Here is an effort to address this question.
Business Continuity is a process that builds a framework for organizational resilience. It ensures that businesses are capable enough to continue its core functions and other operations without getting impacted by unplanned events.
Process of Business Continuity
The key to an effective business continuity lies in its planning and strategy implementation by understanding the intensity of the crisis and how to respond to such impacts. Five key business continuity management steps are discussed below:
Exposure of qualitative and quantitative risk intensity and its potential impact on organization under different scenarios. Identification of threat possibility and sketch out the communication plans. Creating a roadmap to mitigate threats.
Business Impact Analysis (BIA)
This process takes care of the identification of critical processes and workflows by understanding recovery assumptions, recovery points, and time objectives. Tracing of resource dependencies in the organization before setting up backups.
Develop a Business Continuity Plan
Chalk out a thorough actionable plan after completion of risk assessment and impact analysis. Segregation of plans as per departments and priorities. Detailed auditing of a plan with key stakeholders for finalization.
Framework of Strategy
Creating a strategic framework of the finalized plan to ensure that objectives are obtainable. Incorporation of employee perspective and enterprise goals before sending it to the review team for final validation. Give access to staff for ensuring that they can access it at the crisis period.
Testing & Maintenance
The testing and the maintenance phase incorporate periodic tabletop exercises to ensure the organization is satisfied with the strategy. Reviewing the performance of BC plan for assessing its impact.
Risk Management is the process to identify, assess, and control risk or threats related to an organization’s earning & capital. In the framework of risk management, the possibility of threats from different sources is considered carefully. The risk could be anything, from accidents, legal liabilities, errors to financial uncertainty.
Process of Risk Management
Often organizations have confronted our experts about the efficacy of building extensive planning and implementation structure that covers all the processes of risk management. Here is the break down into five key sections for easy understanding.
Identifying the Risk
Identification of risks in the operating environment and pinpoint threats the organization is exposed to. Documentation of such information is recorded through the system and given access to key stakeholders.
Analysis of Risk
The scope of the risk is determined before analyzing the connectivity between these threats with the different internal factors of the organization. A thorough assessment of risk severity and its impact on business functionalities.
Ranking of Risk
Evaluation of risks is set as per its prioritization in enterprises. Assembling threats levels as per its effect on an organization for ensuring that key stakeholder knows for which risk they should intervene immediately.
Treating the Risk
In the risk management solution, proper action plans are formed through the system. During this period, risks and its possible resolving functions are discussed. Every personnel gets a direct update from the system.
Monitoring of risks through the risk management framework of the organization for ensuring effective business continuity.
Relationship between Business Continuity and Risk Management
These two are the distinct standards when applied together can result in effective and efficient business management systems that lower risk and the potential negative effects of a crisis situation. Business Continuity management and risk management are interconnected.The survivability of enterprises often gets threatened by severe risks. Using risk management solutions at this time reduces threat intensity to facilitate effective business continuity planning. Once the risk is mitigated, business continuity makes it certain that your business suffers no consequence due to crisis, disaster, or any type of risk. Some thought leaders say that the proficiency of business continuity can be seen through effective risk management. At the same time, others say that risk management can’t be done effectively without implementing an appropriate business continuity planning and strategy framework.