business impact analysis

A business impact analysis (BIA) is the procedure used to assess the importance of business activities and the corresponding resource needs in order to ensure operational resilience and continuity of operations both during and after a disruption to the business. The BIA measures the effects of service delivery disruptions, risks to service delivery, recovery time targets (RTOs), and recovery point objectives (RPOs). The development of strategies, solutions, and plans is then guided by these recovery criteria.

How to conduct a business impact analysis

To carry out a business impact analysis, you will typically follow several steps:

  • identify all business processes and functions
  • prioritise those that are critical to your business operations
  • analyse the potential losses
  • select recovery solutions
  • determine if any interdependencies exist - eg with IT systems
  • evaluate operational impacts of disruption - eg on people, processes and technology
  • evaluate financial and legal impacts
  • develop recovery time requirements

The output of this work is the business impact analysis report. This report:

  • assumes worst-case scenarios
  • considers the amounts your business stands to lose in a crisis event
  • recognises the magnitude of financial and operational impacts from disruptions

Types of crisis impact

The types of impact you can expect from a potential business crisis or the loss of business functions include:

  • lost sales or income
  • higher costs and expenditures - eg overtime, outsourcing, etc
  • regulatory fines or contractual penalties
  • loss of customers and greater customer dissatisfaction
  • decline in business reputation

What is the purpose of a business impact analysis?

The BIA will help you to understand how your business would cope during downtime. It will also help you to calculate recovery time objectives for your services and understand the resources you need to keep those functions running. This information will form the basis of your disaster recovery and will help you to create your business continuity plan.