Implementing BCM through complexity

Thomas Puschnik
Zurich Financial Services

Leading a BCM framework in a complex and challenging operating environment is no easy task but one potential key to success is effective relationship management. There are at least two key components to achieving this.

First is in terms of the BCM workforce. Having a team identity or common purpose, a set of agreed goals and clear roles and responsibilities all help to form the basis of a good team. Going from 'good' to 'great' requires a focus and commitment to building strong trusted relationships and recognising there will be setbacks along the way. This requires strong leadership and the will to take time out to listen and get to know team members and to understand their needs and concerns. This is especially true in regions where languages and cultures differ significantly.

Second is in terms of establishing regular engagement with your key business partners. Knowing who your key stakeholders are i.e. those who have or should have a vested interest in BCM, is relatively straightforward but the challenge often comes in determining how best to engage with these people. Selling BCM as a shared goal and using different levers to do this is fundamental. It is important to answer the question "what’s in it for me?" so that both parties understand the benefits for freeing up time and budget to support the activities within the framework.

Building an effective BCM team and support network is a critical success factor for any BCM implementation - one cannot deliver without the other!

Thomas will be discussing this and the issue of rolling out a global BC programme within the 'BC in Action' stream at the BCM World Conference on Wednesday 6th November, starting at 11:15.

The return on investment of a BCM programme

Rainer Hübert
HiSolutions AG

When will the investment for a BCM programme pay off? Most people think that the only correct answer is when a damage scenario has taken place. Hopefully then an effective BCM programme will reduce an otherwise much more costly, or even possibly fatal financial impact to a bearable amount. Then, and only then, will the investment in BCM be paid off – just like insurance policy.

In our finance driven business world however, investment in BCM needs to be justified in financial terms, unless a BCM programme is forced upon an organization by its clients or by regulatory authorities.

While the cost of a BCM programme is widely known, many people will have no idea what the returns will be. During my presentation at the BCM World Conference, I will discuss what I believe are four sources of return for those investments that go some way to justifying a BCM programme.

Insurance premiums and interest rates are the most obvious candidates; however they are the least effective ones. One can reduce the business disruption insurance premium by reducing the time coverage of the business disruption pay out. At banks, it is possible to negotiate the interest rates with by providing additional information about a reduced credit default risk due to a working BCM programme.

More potential for a return of investment however stems from the lowering of process costs by improving process efficiency. When discussing contingency procedures and measures, the way the business operates is more closely scrutinised and so the opportunity is provided to generate ideas as to where efficiencies and savings can be made. These ideas may find their way into day to day operations of a company with the potential to improve the effectiveness or efficiency of business processes across the board.

The largest effect however will actually come from the new ISO 22301 standard. This standard will become instrumental to comply with purchase regulations of clients, especially the larger ones. More often than not, contingency planning will become a requirement of critical suppliers. In future, one may lose existing contracts or fail to win new tenders without a certified BCM programme. BCM will be fundamental to winning or sustaining these contracts.

BCM leaders often struggle with justification for investment in a BCM programme in general or individual BCM measures in particular. Especially when discussing with economists or business administrators, those working in the BC industry are regularly confronted with standard business case approaches to justify BCM, which require a detailed explanation of the return on investment. My talk offers a way to meet this demand and outlines in more detail an approach on how to calculate and demonstrate a return on investment of a BCM programme.

Rainer will be discussing this and the issue of measurement within the 'BC in Action' stream at the BCM World Conference on Wednesday 6th November, starting at 13:30.

Supply Chain Vulnerability: Resilience versus Interdependence

David Hawkins
Institute for Collaborative Working

Over the past three decades the sourcing programmes and supply chains have increased exponentially not simply in terms of commodities and products, but also in a wider variety of outsourcing and service propositions. These extended networks have now bridged the traditional boundaries between organisations and in doing so introduce a significant spectrum of risk to business continuity and reputation. At the same time the implications for both natural and manmade disasters highlights the interdependence of companies of all sizes and in all sectors. Reliance on these extended relationships to deliver business performance raises the prospect that resilience and business continuity is no longer simply an internal issue for companies and prompts consideration for a much greater awareness in the identification of risk, selection of suppliers and increased focus on collaborative working and the capability of third parties to jointly perform when necessary.

The last two decades of the 20th century saw major changes in the business world, perhaps more so than ever before. Pressures on costs, diminishing traditional markets, the explosion in information technology add complex influences on the potential success of business strategies. This is combined with perhaps the most crucial of all – the dramatic growth in globalisation. These trends continue into the 21st century and will likely remain key factors for the future. Over the same period we have witnessed major changes to weather patterns and their impacts, increased political unrest, escalation of cyber crime and fraud on unprecedented scales and networked terrorism introducing wide ranging threats. Not to mention the implications of financial interdependence as seen through the banking crisis and its impacts on sovereign currency stability and contagion.

Ensuring the resilience of the supply chain, whilst harnessing the benefits of greater external engagement means that management of sustainable arrangements and their inherent risks must be integrated into operating practices. Sourcing strategies now have to balance the more historical parameters of completion with a greater understanding of the associated risks. The extended supply chain has now become an integral aspect of many businesses, but perhaps less focus is being given to the potential of third party risk flash back. The impact of the Tsunami on Japan’s nuclear industry highlights the potential reverse domino effect, as did the backlash from Rana Plaza.

Clearly the key to supply chain resilience and for that matter business continuity is clarity of potential impacts and risks. Seeking to simply have visibility or contractual commitments around these issues is likely to leave some aspects to assumptions which are perhaps even bigger risks. Developing the right kind of collaborative relationship with suppliers not only will help to broaden the perspective of risk but in many cases will, through greater openness, likely bring about wider and more effective solutions. Not only increasing openness but also building trust and commitment to jointly work together when challenges arise.

David will be discussing this and the issue of supply chain resilience within the 'Thought Leadership' stream at the BCM World Conference on Wednesday 6th November, starting at 15:20.

Managing Information - Speeding Up Your OODA Loop

Alan Elwood
Risk and Resilience Ltd

In my last post I talked about the need to manage the process by which crisis decisions are taken and talked about the OODA Loop (read Decision Making Under Pressure – The OODA Loop). In this post I’m going to present some concepts around how you can speed up the time it takes you to complete the OODA Loop. If you can get your decision making processes to happen at a greater speed than that at which the crisis is unfolding then your decisions stand to be more effective. On top of that, making a larger number of quicker decisions, each one correcting the errors of the previous one, is likely to help you reach an optimum solution faster than if you wait for total clarity and try to take one right decision. So what to do?

CRIP: Establish and maintain a full understanding of the situation. This is sometimes referred to as the Common Recognised Information Picture (CRIP). It is built up of all available validated information. It is not a chronological list but a contextualised picture that can inform decisions. Date/time stamp it and keep it up to date, even when the decision makers are not meetings. Use information pull (gathering information in) and information push (people and organisations knowing instinctively to forward information) to achieve this.

Strategic Aims: Make sure the Crisis Management Team establish the strategic aims for the crisis early on. They may even be drafted in a plan for confirmation or adjustment on the day. These won’t change very often but they set the tone for the response, driving information management and response. If the top aim is ‘safety and staff welfare’ this will determine that things progress differently for any given situation than if it is say ‘corporate client entertainment events’. Sounds obvious and simple, but it is often overlooked.

Key Issues: Identify the key issues of the moment and when decisions have to be made by. Remember that people need time to carry out the actions that result from the decisions, so you have less time than you think. Key issues are those that arrive from looking at the CRIP through the lens of the strategic aims. They require management as they reflect the priorities that have been set. Use talented managers to select key issues and identify options prior to the CMT meeting up.

Manage Actions: Decisions need actions to make them a reality. Taking a decision is not the same as things happening. Have a process, team and resources to break decisions down into actions, allocate those actions and monitor performance. Update the CMT on progress so that they can adjust decisions accordingly.

In my final post in this series I will be looking at the reality of translating decisions into actions and all that this entails.

Decision Making Under Pressure – The OODA Loop

Alan Elwood

Risk and Resilience Ltd

This post relates to a presentation that I will give at the BCM World Conference on the 6 Nov 13 about Control Centre Design. It is one of three posts I will make before then and I hope it is of interest to you.

When United States Air Force pilot John Boyd studied the manner by which those engaged in combat took decisions in time to increase the chances of victory he developed the OODA Loop. From its origins in military doctrine the concepts around how to take decisions in time such that the actions they result in can be effective have made their way into business life. Being able to ensure that, in a crisis, an organisation is able to alter the speed at which it completes the OODA Loop can be the difference between success and failure. Ask yourself the question “Are the world’s governments able to take decisions that result in actions that are ahead of the pace at which problems in the world’s economy unfold?” It might be argued that they are not as their OODA Loop is too slow. So what is involved?

Observation: We need to be aware of what is going on around us in a crisis. That information will come from varied sources, many of which will lie outside of your organisation. Your view of the situational picture must reflect the reality of what is going on. If it does not your decisions will be ill informed and likely as not ineffective or simply too late.  

Orientation: Once a handle on the situation is achieved then its implications must be determined. Clearly you need to know that has happened, you should be clear on what is currently going on but the real trick is anticipating what might change and how that could impact you and others you rely on.  One way of doing this is to be clear on your strategic objectives for the crisis.

Making Decisions. Decisions must be taken in time to allow the actions they produce to be effective. To take decisions you need accurate and timely information, options to choose from and guidance on the time available to do so. You also need the right people.

Taking Actions. Decisions are really just expressed desires as to what should happen. Taking a decision is not the same as the actions it requires taking place. Decisions need to be translated into actions, allocated to teams and performance monitored. Feedback on progress influences our Observation aspect once more.

The nature of the crisis will determine how quickly you need to able to get round the OODA Loop. It is not the other way round!

You can read some more about this subject here. I will post the next blog on how to process information to achieve a suitable tempo of decision making soon.