More businesses than ever planning for the worst

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Managers respond as disruption from riots, strikes, weather and BlackBerry outage hit UK in 2011

2011 presented a wide range of unexpected threats to the operations of UK organisations, according to research published by the Chartered Management Institute (CMI) today. While winter weather was the most common cause of organisational disruption for the third year running, other significant business disruptions included the public sector strikes (which caused problems for 55% of managers), the Blackberry outage (39%), the summer riots (26%), natural disasters such as the Japan earthquake and tsunami (19%), and international social and political unrest such as the Arab Spring uprising (18%).

Planning for the Worst, published in association with Aon, the British Standards Institution (BSI), the Business Continuity Institute (BCI) and the Civil Contingencies Secretariat in the Cabinet Office, examines how prepared organisations were for unexpected and damaging disruptions to their day-to-day operations over the past year.

The findings, released ahead of Business Continuity Awareness Week, suggest that this wide range of threats has prompted Business Continuity Management (BCM) to become increasingly adopted in the UK. After a sharp increase in BCM uptake over the past two years, the 2011 figures show another rise – 61% of managers now work for an organisation that has BCM in place, up from 58% in 2010. These improvements are exemplified by the fact that, learning from the past two years of heavy snow, 37% of organisations have now formalised their arrangements for managing the impact of severe weather.

Looking forward, many organisations are already thinking about how to minimise the impact of the Olympic Games: 25% of managers will allow staff to work flexible hours; 17% of staff will be able to work remotely; and a further 17% of managers have prepared for an increase in annual leave requests.

With the launch of the report, CMI is renewing its calls for small and micro organisations to follow the example of medium and large organisations by putting robust and proportionate business continuity plans in place. At present, just 31% of micro organisations and less than half of small organisations (48%) utilise BCM, compared to 61% of medium and 74% of large organisations. BCM continued to be most prevalent in the public sector in 2011 – 73% of public sector managers reported BCM arrangements, compared to 52% in the private sector and 60% in the not-for-profit sector.

Christopher Kinsella, Acting Chief Executive of CMI, said of the findings:

“Today’s report shows that UK organisations are affected by a huge range of organisational challenges, many of which are entirely out of their hands. Yet with good management, the impact of these disruptions can be kept to a minimum. It is encouraging to see that Business Continuity Management is increasingly becoming a key part of organisational good practice, but there is clearly more to be done – especially in the private and not-for-profit sectors, and amongst micro and small organisations. With major events such as the Diamond Jubilee and the Olympics on the horizon, as well as continued international unrest and the threat of further strikes, no organisation can afford to be complacent.”

The report also shows clear advantages for organisations which do have plans in place to deal with crises when they hit. Of those who had to activate plans in 2011, 81% agreed it reduced disruption and the same number stated that any cost in developing plans is justified by the business benefits they bring.

As part of its commitment to revitalising management and leadership in the UK, CMI is calling for all organisations to learn the lessons of the last 12 months in line with the report’s recommendations. These include:
· When developing BCM, the business impact analysis should take precedent over the risk assessment.
· Organisations can change rapidly, so review your BCM regularly, checking that it remains relevant to your current operations.
· Only one fifth of managers expect their business critical suppliers to have BCM, and only 7% expect all of their suppliers to have BCM. Review which suppliers are critical to your operation and examine whether they have BCM. If not, you may want to find out why not.
· Use BCM based on a common framework (such as BS 25999 or the forthcoming International Standard ISO 22301 / ISO 22313) and follow recognised best practice – it improves understanding and resilience, and can also give you competitive advantage.
· Managers throughout organisations need to be fully competent and confident in understanding their role in BCM – but senior managers must take ultimate responsibility for the quality and robustness of their organisation’s BCM.
Stuart Sterling, Assistant Director – Corporate Resilience at the Cabinet Office’s Civil Contingencies Secretariat, said: “For the second year running, the report shows an increase in the number of firms with business continuity arrangements in place. There will always be speculation as to the reasons for this, such as the winter weather or summer disruptions on the streets making more businesses think “what would I do if that was my business?” However, the most compelling finding in this year’s survey is that over eighty percent of organisations that activated their business continuity arrangements in the past year said that they were effective in reducing disruption. In summary: business continuity works.”

Hugh Leighton MBCI, ACII, Senior Consultant, Aon Global Risk Consulting – Enterprise Risk Management, said:
“It is encouraging to see that more organisations are implementing BCM each year and those who are, and who find they need to activate their arrangements, clearly see the benefits of doing so. However, we are disappointed that insurers are not seen as a major driving force in influencing an organisations decision to implement BCM and strongly feel that this must change. Insurers should ensure that their staff are familiar with what good practice in BCM looks like, and be constructive in encouraging their clients to seriously consider implementing it. Aon is delighted to be involved in sponsoring the CMI 2012 BCM survey for the second year and we hope our involvement will help insurers take action.”

Shirley Bailey-Wood, Director of Publishing at BSI said: “Over the past few years, Britain’s businesses have experienced many unexpected incidents and I am sure 2012 will be no exception. So it is very positive news that more and more organizations are addressing the issue of business continuity, with many using BS 25999 as their framework. There remains however an alarming percentage which still have no contingency plans in place. The reality is that Business Continuity Management is not a complicated science but a critical part of best practice management and business excellence.”

Lyndon Bird FBCI, Technical Development Director & Board Member at the BCI, said: “Although, the research shows an improving picture across the UK economy, if we break this down into sectors, we soon establish that there are still some industries that are lagging behind in terms of BCM. Manufacturing is one such sector. As a backbone industry of the UK economy, it is critical that organisations in this sector engage in BCM to develop the capacity to respond effectively to unexpected interruptions and improve their operational resilience. The impact the Blackberry outage had on organisations shows that business must look beyond their own boundaries in their business continuity planning, identifying single points of failure in their supplier base and finding solutions which mitigate the damage caused by such interruption. ”

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