In these turbulent times, it is no longer the case that business continuity management is a nice to have part of a companys overall strategy. On the other hand, it has become an integral component of a companys strategy. Nowhere is this more evident than in the recent cases of the Japan Earthquake in March 2011 and the Indonesian Earthquake in April 2012. In both these disasters, the need for companies to have business continuity management programs in place was felt keenly. This is because the disruptions to the service of the companies were acute and only by having a disaster preparedness plan in place could companies mitigate the overall risks involved.
For instance, the Indonesian Earthquake did not cause that much damage but still, there were evacuation drills and staff of companies moving to backup locations. This is indeed the aspect that we are talking about when we mention the need for business continuity management.
Moreover, the frequent disruptions to the operations of businesses worldwide due to civil unrest, natural disasters and other events means that unless companies have a failsafe disaster management plan in place, it would be difficult for them to tide over the crisis that strikes them in sudden and unanticipated ways. Indeed, one of the key tasks for any risk management professional is to anticipate blindsides and black swans meaning that the risk management team has to have a concrete plan in place to deal with the unexpected. This makes the need for business continuity management as an essential part of a companys overall strategy that much more critical.
Companies need to have business continuity management plans as a means of anticipating financial and market risk as well. For instance, the fluctuations in the international foreign exchange market or the currency swings that have become wild these days coupled with volatility in the equity markets means that companies have to budget for these uncertainties as well. Particularly those companies that deal with foreign suppliers and consumers have to ensure that their foreign currency exposure is properly hedged and that they do not lose out because of instability in the financial markets. This is another side to the risk management plans that companies ought to have when one considers the turbulent global economic situation.
Before wrapping up the article, it would be pertinent to note that many companies like Sony and Apple have started to list business continuity plans as part of their annual reports. This makes it easier for investors and other stakeholders to understand what the companys approach is towards risk and unanticipated events. Indeed, this is a welcome step towards introducing greater transparency and accountability as far as corporate governance is concerned. What better way to increase investor confidence than to let them know that their company has a proper and calibrated response to the disasters as and when they arise. Hence, it is the case that business continuity management should become an essential part of a companys overall strategy.
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