Prudent managers should always remember about the probability of crisis events while carrying out their business activities. Ignoring such probability may lead to disastrous consequences so, the managers should do their best to provide the company with the plan for continuous development and functioning and minimizing the losses in the case of the possible crisis.
In the case of crisis, the organizations take actions designed to “sustain and/or resume operations impacted by the crisis event” (Engemann & Henderson, 2012, p. 4). Such measures are referred to as business continuity, and the management activities aimed at forecasting potential crisis events and developing a framework for reacting to such events and protecting the stakeholders and the brand of the company is known as business continuity management (BCM).
In general, business continuity comprises of five phases that are a set of particular steps the company takes before, at the time, and after the crisis. The stages include prevention, mitigation, response, recovery, and restoration (Engemann & Henderson, 2012, p. 4). Prevention is a set of activities aimed at reducing the probability of the crisis. If it is impossible to avoid the crisis event, the company falls back upon mitigation, lessening the impact of the downturn. Response is the phase of reaction to the event and its immediate impact. Recovery and restoration are the activities taken after the crisis. The only difference between the two is that recovery is aimed at stabilization of the company’s operations, and it is followed by restoration, i.e. returning to the normal state that the organization was in before the crisis.
Business continuity phases are closely related to risk management. As risk management “consists of the processes of risk assessment, risk communication, and risk treatment” (Engemann & Henderson, 2012, p. 4), it is often considered to be similar to BCM. Nonetheless, there is one crucial difference between the two as risk management is a set of preventive measures while business continuity management is a combination of tools aimed at working with the consequences of the crisis event.
Moreover, risk management is an input for the BCM as it not only manages risks but also plans company’s response to the inevitable crisis. Together with that, “risk management is the foundation of the comprehensive BCM and provides an analytic basis and economic justification for decision making regarding the allocation of resources” (Engemann & Henderson, 2012, p. 4). That said, risk management and business continuity management are closely intersecting fields of the organization’s operating.
Speaking of BCM, it is a management program involving three major stages: development, implementation, and maintenance (Engemann & Henderson, 2012, p. 7). What is significant about these stages is that they are closely related to the business continuity phases mentioned above, as the latter are the parts to the BCM stages because both involve actions taken before, during and after the crisis event. Putting it down schematically, prevention and mitigation are parts of implementation while response, recovery, and restoration are the parts of maintenance. The stage of development is omitted because it consists of totally theoretical activities with no real action.
Nevertheless, it includes the formulation of the strategies for all business continuity phases. What should be born in mind is that BCM stages comprise an endless cycle that is why the stages flow from one into another in the course of the development of the organization while BC phases are similar to a ladder so once the company faces a new crisis event, the process starts from the very beginning.
Providing an example of putting business continuity management principles to practice might help in understanding the theory mentioned above. History has demonstrated that disasters such as earthquakes, floods, fires, wars, terrorist attacks, tsunamis, hurricanes, etc. have a direct influence on the companies’ performance entailing tremendous losses. It has also shown that preparing for the possibility of such disastrous events helps in recovery (Balaouras et. al, 2011).
I would like to focus on Pitney Bowes, American shipping and mailing company and a provider of eCommerce solutions. What is significant about this organization is that it pays a lot of attention to business continuity management and recovery from potential disasters. The company’s position is that in case of a crisis event, it is crucial to respond to it within first 72 hours as it can critically influence long-term performance (Pitney Bowes, 2015).
Pitney Bowes proved that attention to BCM is crucial in February 2011 when one of its facilities was on fire. As the result of the disaster, the company lost one of its presorting building and equipment that was there. Nonetheless, the company recovered from the disaster within a few hours, and in the morning, it continued providing the services as if there were no fire. What the organization did to respond to and recover from the crisis event was did not stop operating.
It redirected the employees to another facility, rerouted the mail, and mailed the deliveries from another presort warehouse guaranteeing the safety of its workers and customers’ data (Pitney Bowes, 2011). So, Pitney Bowes’ experience proves that even though natural or man-made disasters are impossible to predict, a deliberate business continuity plan is a key to fast response and recovery.
Balaouras, S., McClean, C., Koetzle, L., & Coit, L. (2010). Business continuity and disaster recovery are yop IT priorities for 2010 and 2011. Web.
Engemann, K. J., & Henderson, D. M. (2012). Business continuity and risk management: Essential elements of organizational resilience. Brookfield, CN: Rothstein Associates Inc. Web.
Pitney Bowes. (2011). Best practices in business continuity: How planning for the worst can be the best thing for your business. Web.
Pitney Bowes. (2015). Creating a blueprint for sustainability, success and long-term survival. Web.