If a cyberattack were to get through your defenses tomorrow, or if civil unrest suddenly broke out in the country of a major third-party supplier, would you know what the impact would be? Can you confidently say how long it would take for operations to be back up and running? A business impact analysis – or BIA – helps you identify your organization’s critical functions, vulnerabilities, and potential impact of a disruption, so you can take defensive measures now and act faster later.

A BIA systematically analyzes each department’s functions to identify those that are most critical and the potential impact of a disruption. A business impact analysis also will help you understand dependencies and vulnerabilities to prioritize actions, coordinate compliance activities, and make more informed decisions.

With a BIA in hand, you can focus on effective recovery strategies that will save time and resources during a crisis.

When to Conduct a Business Impact Analysis

A BIA is the first step in disaster preparedness. A BIA will arm you with the information you need to develop accurate recovery objectives, as well as realistic steps for meeting those objectives. This analysis helps pinpoint dependencies and vulnerabilities, so you can fortify weaknesses in advance and recover faster from adverse events. Review your findings periodically as your business evolves, so that the document maintains its relevance and accuracy.

Also reexamine your BIA during times of major change – like the departure of key personnel, a merger, or global events, such as a pandemic. A BIA offers a lens through which you may discover valuable insights regarding the potential impact on your critical functions. You can use these insights to develop appropriate strategies for maintaining operational stability under any conditions.

How to Get Started with a Business Impact Analysis

Here are seven steps to develop a thorough business impact analysis:

1. Determine the goals and scope. Pinpoint what the departments to target and what your goals are upfront to help you focus on what is most important.

2. Identify critical business functions. Gather data from each department to determine essential activities and services.

3. Determine dependencies. Conduct interviews with each department to understand resource dependencies to current-state business continuity risks and controls. Summarize alternate procedures and manual workarounds, estimate likelihood of failure, and describe other possible risk treatments.

4. Assess impact. Analyze the potential impact of disruptions on each business function, and rate the impact as minor, moderate, major, or catastrophic. Consider various factors, including downtime, financial loss, reputation damage, and customer impact. Also consider the likelihood of loss on a scale ranging from certain to unlikely.

5. Set recovery objectives. Define each critical function’s specific recovery time objectives (RTOs) and recovery point objectives (RPOs). Consider the timeframes within which each function should be restored and the acceptable data loss. Additionally, identify manual workarounds and alternate suppliers for each dependency to ensure contingency plans are in place.

6. Prioritize functions. Rank the functions based on their criticality and time sensitivity. This prioritization will guide your response efforts during a disruption, helping you focus on the most critical areas first.

7. Document your results. Prepare a detailed report containing the findings, recommendations, and recovery priorities. This report will serve as a crucial reference for your business continuity team and other stakeholders involved in developing and implementing continuity plans.

What to Do with Your BIA

Once you have completed your business impact analysis, incorporate the findings in your business continuity plan. The analysis can help you close gaps in your plan and establish accurate recovery times. Your BIA can also inform recovery plans that are tailored to specific disruptions.

When shared with leaders, a business impact analysis can help integrate business continuity efforts with strategic planning and get everyone working toward the same goals – which can save you valuable time and money when faced with a real disruption.

For more on conducting a BIA, download our Business Impact Analysis Template, and check out Riskonnect’s Business Continuity and Resilience software.