Effective Business Continuity Planning
Catastrophic events can inspire clear-cut business continuity and achieve
the greatest business benefit, says Marsh’s Gary S. Lynch
What just happened? Suddenly an unimaginable (and unplanned) event, with
catastrophic consequences has been thrust upon your organization and your
stakeholder community. Suddenly everybody in the value chain finds themselves
in an unfamiliar, volatile, and unpredictable operating environment.
This was the case at 2:28pm, Monday 12 May when a magnitude 7.9
earthquake struck Sichuan province. Beyond the heart-wrenching human tragedy
and massive social disruption, the processes, people, technology, physical
assets, and network of relationships that represent the economic infrastructure of
that area has changed - forever. The carefully connected links in thousands of
value chains have been broken or, worse yet, disappeared, along with the ability
of the organization or business community to create value.
As disasters become more frequent and, given the way companies now
structure their value chains, more relevant; and in an age where global
interdependency and interconnected markets thrive, we find that change does
not affect only the disaster’s epicenter and surrounding areas.
Rather the aftershock is broadly dispersed over thousands of organizations
and communities: a SARS outbreak in Hong Kong disrupts trade finance flows
and inventory in transit destined for Australia, a hurricane in the US impacts
poultry farmers in South America because transportation bottlenecks prevent the
export of corn and soybeans and imports of their product, an earthquake in
Japan halts the export of automobiles because of the inability to source a critical
part, a heat wave in Europe reduces the fruit harvest by 25 per cent thus
affecting the production of wine, and now a mega-earthquake in China — the full
long-term impact of which is still unknown.
With so many potential threats and an infinite number of vulnerabiliti