Business Impact Assessment
A business impact assessment (BIA) is the process of determining the criticality of business activities and associated resource requirements to ensure operational resilience and continuity of operations during and after a business disruption.
BIA predicts the consequences of disruption of a business function and process and gathers information needed to develop recovery strategies. Potential loss scenarios are identified during a risk assessment. Operations may also be interrupted by the failure of a supplier of goods or services or delayed deliveries. There are many possible scenarios which should be considered.
Identifying and evaluating the impact of disasters on business provides the basis for investment in recovery strategies as well as investment in prevention and mitigation strategies.
The BIA should identify the operational and financial impacts resulting from the disruption of business functions and processes.
Impacts to consider include:
- Lost sales and income
- Delayed sales or income
- Increased expenses (e.g., overtime labor, outsourcing, expediting costs, etc.)
- Regulatory fines
- Contractual penalties or loss of contractual bonuses
- Customer dissatisfaction or defection
- Delay of new business plans
Business Disruption Scenarios
- Physical damage to a building buildings
- Damage to or breakdown of machinery, systems or equipment
- Restricted access to a site or building
- Interruption of the supply chain including failure of a supplier or disruption of transportation of goods from the supplier.
- Utility outage (e.g., electrical power outage)
- Damage to, loss or corruption of information technology including voice and data communications, servers, computers, operating systems, applications, and data
- Absenteeism of essential employees