Business continuity and crisis management
Business impact analysis
A business impact analysis (BIA) is a key step in business continuity planning. It helps you identify critical business functions and understand how disruption could affect them.
How to carry out a business impact analysis
To carry out a business impact analysis, you shout:
- identify all business processes and functions
- prioritise critical activities
- analyse the potential losses
- select recovery solutions
- identify dependencies, such as IT systems
- evaluate operational, financial and legal impacts
- define recovery time requirements
BIA report and outcomes
A BIA report is the written output of a business impact analysis. It shows what could happen to your business if important activities are disrupted, so you can plan for recovery. This report usually:
- looks at severe disruption scenarios, including worst-case situations
- estimates the financial cost of downtime or interruption
- explains how disruption would affect day-to-day operations, customers and service delivery
Disruption to your business can result in:
- 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
Why is BIA important?
A business impact analysis helps you understand how your business would cope during downtime. It also helps you set recovery time objectives and identify the resources needed to keep critical functions running. This forms the basis of your disaster recovery and business continuity plan.
Business impact analysis vs risk assessment
Both BIA and risk assessment are important business continuity tools, but they have different roles.
BIA doesn't focus directly on the likelihood of events. Instead, it assumes worst-case scenarios. A risk assessment analysis identifies potential risks, how likely they are to happen, and their possible impact. In practice, risk assessment often uses BIA findings to prioritise risks and support decision-making. See how to evaluate business risks.