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Business continuity: how well are Indian businesses prepared?

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  • Business continuity: how well are Indian businesses prepared?


    Business continuity: how well are Indian businesses prepared?

    Ramesh Narasimhan talks about the importance of business continuity planning and how it can help make an organization resilient

    The list of natural and man-made disasters like the tsunami in Tamil Nadu, the Mumbai floods or bomb scares in Gujarat and the rest of India has increased dramatically in the last few years. Many organizations have felt the devastating effects of terrorist attacks, pandemic disease (like the plague outbreak in Surat in 1994), power blackouts and weather related disasters. In fact, a study by Oxfam ?Rethinking Disasters? states that climate related disasters will result in 9-13% of loss of GDP in India by 2010 and will be a key factor in preventing the economic growth in South Asia. Another frightening statistic: Power outages alone cost Indian business nearly 7% of sales?nearly six times the rate in China.

    The Asian Development Bank (ADB) assessment report estimated that overall damages to assets in India on account of the 2004 tsunami were about $575 million and productivity losses about $450 million. The reconstruction estimate is in addition to this cost and significantly higher. State-wise, Tamil Nadu was the worst affected with reconstruction needs estimated at $868 million, followed by Kerala $158 million, Pondicherry $114 million and Andhra Pradesh $73 million.

    Disruptions resulting from these types of disasters have rippled across supply chains, shaken entire industries and taken their toll on employee, customer and partner relations. Small-and-mid-sized businesses are the most vulnerable in the event of an emergency, according to the Small Business Administration. Small Businesses in India contribute to 45% of the total exports from India and is the second-largest employer of human resources after agriculture. Small businesses play a vital role in our economy and a widespread business disruption from a disaster could reap havoc on the local and national economy, as was the case with tsunami in India.

    When a disaster strikes, numerous factors affect the ability of employees to continue working. Employees may stay home out of concern for their health; childcare centers and schools may close temporarily; or employees may be displaced temporarily or permanently. Public transportation disruptions, fear of travel after terrorist events or international travel restrictions can restrict employee mobility. Even smaller-scale events, such as transit strikes and blizzards, can significantly affect employees? ability to get to work.

    In addition, damaged power or communication infrastructures can prevent businesses from sharing critical information with employees. Mobile phone, landline and other communications networks can be destroyed or become dysfunctional in a disaster, making it difficult to locate employees and share critical information with them. Further, if offices or other facilities are unsafe to use or inaccessible to some individuals, employees who are used to working in close proximity will find it more difficult to collaborate and tap into their existing social networks.

    In such a scenario, having a business continuity plan increases the likelihood of operational continuity and minimizes adverse impact thereby working to help mid-sized businesses support employees, customers, the community and the regional economy. Simply put, Business Continuity is the ability of a business to continue its operations with minimal disruption or downtime in the advent of natural or intentional disasters. BC begins with a plan that addresses all risks and secures systems that are vital to business operations.

    Incidentally, the Security Exchange Board of India and the Reserve Bank of India have developed business continuity initiatives. Another element that is affecting the growth of BCP in India is of MNCs encouraging their Indian subsidiaries to have a business infrastructure that is interrelated with BCP. Larger Indian firms are also embracing BCP.

    However, one area of concern is that the majority of small and medium sized businesses have not yet initiated initiatives related to business continuity planning. This is even more disconcerting given that this sector accounts for over 50% of exports and is the second largest employer after the government. BCP in India is still in many respects not under consideration if the employee base of a corporation is less than one thousand employees, unless the business unit is part of a larger foreign company.

    Even in organizations adopting Business Continuity, the trend until recently was that it was limited to the confines of the IT department. However, it is widely accepted that to be truly effective, business continuity needs to take an enterprise-wide view. Senior management needs to encourage an integrated, organizational-wide approach and this need to be merged with a business continuity culture that goes beyond general awareness and embraces a culture of proactively towards business continuity. This is the sort of culture where staff have all the information they need to react positively to an incident; the sort of culture where staff take personal responsibility for identifying and reporting risks and see the need to go the extra mile to help implement aspects of the business continuity plan which affect them.

    When business continuity plans do not include contingencies for human capital, businesses may be insufficiently prepared for a disruptive event. During an emergency, businesses need to be able to issue status reports to the workforce, communicate operational plans and enable key members of staff to continue working. Doing so can have a profound positive effect on an organization?s productivity, revenue and reputation.

    A business? ability to respond in a timely, relevant manner to a crisis depends, in part, on how well it has identified and documented?ahead of time?the policies and activities that will be most important to employees. Organizations should consider how policies overseeing sick leave, travel and flextime could be adapted to apply specifically to times of disaster. It is important to have clearly defined immediate response capabilities, roles and responsibilities, and a crisis communication strategy. When a disaster hits, policy and situation updates need to be clear and concise, leveraging as many different avenues of communication as possible, including voicemail, intranet sites, conference calls, and television and radio.

    To weather a disruption with minimal impact to business, midsize businesses must take the time beforehand to identify pivotal business processes and key employees?and make provisions for these critical elements to continue uninterrupted. They need to determine which human capital elements are most important to business operations, and then prioritize the actions in a written plan to enable them to work through a disruptive event.

    Organizations that can build resiliency into their human capital are more able to protect their most valuable resources and maintain continuous operations in the event of a crisis. Many forward-thinking companies are already considering the impact of short-term interruptions in normal business activities and identifying appropriate actions to sustain vital business processes in the event of a crisis.

    While it is important to build resiliency into business operations, it?s just as important, if not more important, to build resiliency into human capital. One way to achieve human capital resiliency is to ensure that your organization has addressed the people-related components of business continuity planning.

    The author is Director ? General Business, IBM India/South Asia