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Business Impact Analysis

The standard for Business Continuity Management (BCM) is ISO 22301:2012 which specifies requirements to plan, establish, implement, operate, monitor, review, maintain and continually improve a documented management system to protect against disruptive incidents when they arise.

Business Impact Analysis (BIA) involves BCM steps 1-3 below.

BCM involves:

  1. Being clear on the organization’s key products and services and the activities that deliver them;
  2. Knowing the priorities for resuming activities and the resources they require;
  3. Having a clear understanding of the threats to these activities, including their dependencies, and knowing the impacts of not resuming them;
  4. Having tried and trusted arrangements in place to resume these activities following a disruptive incident; and
  5. Making sure that these arrangements are routinely reviewed and updated so that they will be effective in all circumstances.

In the Incom system the activities and resources involved in operating the business are mapped to the products and services so that dependency ratings are clearly identified.

The activities and resources upon which the business is very dependent are further analysed to determine the most critical assets to the business and taking steps to ensure their continuity.

We think of steps 1-3 above as being Business Impact Analysis while steps 4 and 5 involve doing something about critical dependencies.

When is BIA performed?

Business Impact Analysis (BIA) may be done:

  • By people responsible for Business Continuity Planning (BCP) and overall Business Continuity Management (BCM)
  • By purchasing officers to determine the dependency on suppliers and the impact of supplier delays
  • Before or after a business acquisition (takeover) to determine synergies; what product or service gaps will be filled or maximized; what products or services that should be discontinued or sold off
  • When trying to cut costs out of the business by outsourcing activities upon which the business has a low dependency

Supply Chain Impact Analysis

Type “supply chain business impact analysis” into Google and you will be lucky to find any information or software that can help you do supply chain BIA.  The reason is that this is a new area of formal analysis.

With the Incom system you will be able to:

  • Specify the Maximum Acceptable Outage (MAO) and Impact for each of your company’s products, services and processes
  • Analyze which of your products, services and processes depend on supplier products, services, activities or raw materials
  • Graphically show the areas where your business is most vulnerable
  • Decide and schedule actions to reduce dependency or expand MAO
  • Decide and document what response and recovery actions you need to take if a negative event does happen

Apart from providing the above-mentioned software, and because the Incom BIA software is built upon Incom’s Enterprise Risk Management software, Incom is able to provide Supply Chain Risk Management (SC-RM) software.

In other words, after doing a SC-BIA it is an easy step to do a SC-RM analysis.

Merger and Acquisition Analysis

Undoubtedly the M&A process is mainly about financial analysis and pricing of the target company, but it makes no sense to takeover another company unless there are synergies resulting from the merger.

How do you determine synergies? 

Are you only looking at product and services, or including intellectual property, production processes, supply chain or distribution arrangements, skilled workforce, international operations, etc.?

Maybe you can see your good international distribution arrangements has spare capacity and the target company products are a good fit with yours.

How do you analyse all this?  Do you guess the synergies and benefits?

With the Incom software you can do a quick analysis of the target firm’s products, services and processes to determine what target firm’s activities, resources and assets you need to keep after the merger.

The reasons for M&A include:

  • Economies of scale production cost efficiency after the merger
  • Reduced administrative costs, better financial leveraging
  • Increased market share, new markets, new products, improved competitiveness
  • Combined intellectual property, research and development

It is expected that during the takeover stage the level of target firm information will limit the level of analysis, but after the legal merger the Incom software would allow a thorough business impact analysis so that costs can be ripped out of the merged business.

Of course the Incom software would be invaluable for de-merger (or divestiture) analysis to ensure the de-merged businesses are not left with gaping dependencies.

Outsource Impact Analysis

In this fiercely competitive international business environment all businesses need to reduce operating and administrative costs and maximize productivity.

Major businesses may be doing things they do not need to do such as:

  • Expert and specialized tasks - employing highly skilled and expensive people when those skills are only needed part-time
  • Repetitive tasks – data entry - payroll administration

Some business units that may not be needed are:

  • Some IT teams and infrastructure may be hosted externally
  • Accounting, invoicing, credit checks, debt recovery
  • Legal department for background and criminal checks
  • Printing, graphic design, web design and maintenance

With the Incom system you will be able to:

  • Analyze which of your products, services and processes depend on which activities, resources and assets
  • Graphically show the areas where your business is most dependent on resources and assets so you can consider other resources and assets as candidates for outsourcing
  • After consideration, flag outsource candidates for further analysis including cost-benefit analysis and buy-build analysis
  • Manage action items be they in-house or external supply

What System is right for you?

Incom provides various ways to manage business impact analysis depending on each client’s requirements.

The Incom system may be hosted in the cloud, and therefore can handle the situation if your company has international operations.