An Essential Guide to Business Impact Analysis (BIA): What it is and Why it Matters

If a global pandemic has taught us anything, it is to expect the unexpected. In the business world, it is important to understand future possibilities, including worst-case scenarios, in order to minimize the impact on your business. 

This is where business impact analysis (BIA) comes in. But what exactly is business impact analysis? What is its purpose? And how do you conduct a business impact analysis? 

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What is business impact analysis?

Business impact analysis is the process of identifying potential disruptions or incidents that could have an impact on a business. Once identified, these disruptions are assessed based on their potential impact. 

It helps businesses predict the consequences of disruptions and ensure contingency plans are in place. What would happen if your main supplier went bust? What would the impact be if your main domain io server crashed? What if a global pandemic meant your employees had to work from home?

Why conduct a business impact analysis?

The data gathered during a BIA helps businesses identify and protect their critical operations. It ensures that they can put plans in place to minimize disruption to normal business functions. 

In particular, conducting a BIA can help you: 

• Identify your critical business activities and resources. 
• Analyze and understand the potential financial impact of business disruptions. 
• Strategize contingency funds. 
• Collect data to formulate contingency plans. 

The purpose is to understand risks and prepare for potential disruptions so businesses can respond quickly and effectively. 

What are potential business disruptions and their impact?

So you might be wondering what types of disruptions you might need to plan for in your business. Some examples of possible business disruptions are: 

• Data breach or loss. 
• Power outage/utility outage. 
• Extreme weather or natural disaster.  
• Loss of supplier.
• Loss of key employees. 
• Scheduling delays.

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And if any of these were to occur for your business, or indeed any other disruption, what would the impact be? The impact on your business will depend on a variety of factors, but in general, some impacts you could expect are: 

• Loss of sales.
• Loss of revenue. 
• Loss of customers. 
• Unforeseen expenses. 
• Delayed progress. 

It’s important to note that failing to prepare adequately for such disruptions can lead to business planning mistakes. So, understanding and minimizing disruptions is essential to your success. A BIA does just that. But how exactly do you conduct a business impact analysis?

How to conduct a business impact analysis

The ins and outs of conducting a BIA can differ from business to business. However, here we will briefly outline some of the general steps to conducting a business impact analysis. 

1. Get approval and create your team

The first step in the BIA process is to get approval from senior management to begin the process. Ensure you have clearly defined objectives for conducting the BIA. Have a clear idea of what you want to achieve. 

You will also need to form a team that will be overseeing the BIA. This may be a team from within your business, but you may decide that outsourcing the BIA process works better for your business. 

2. Get approval and create your team

In order to complete an effective BIA, you need to gather appropriate information. This can be gathered from interviews, documentation or a business impact analysis questionnaire. Identify a set of targeted questions. These will help glean the most essential information required to properly understand potential disruptions and their impact. 

Consider who will be involved in the information-gathering process. Including a variety of stakeholders will give you the best chance of seeing the whole picture. 

3. Analyze and evaluate the data

Of course, once you have gathered the information, you can then analyze and evaluate the data. This stage in the process should determine: 

• Critical business functions.
• Critical resources.
• Recovery timeframes.

For example, a communications business might want to understand its call center metrics analytics and reporting data. This will help them know the critical functions of their business. Ask what is required to quickly recover them back to normal following a business disruption.

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4. Prepare the report

When data analysis is complete, the business impact analysis report can be generated. Business impact analysis templates are available, and you can choose one to suit your needs. If you have outsourced the BIA process, the company likely has a standard style of report they use.

Once the BIA has been completed, it is then up to senior managers how to proceed. They will use the report to make strategic decisions about contingency plans and budgeting considerations. However, it is important to remember that business impact analysis reports will need to evolve and should not be set in stone.

The bottom line

Conducting a BIA can be critical to a business’s success. It would be ignorant to believe that your business will not come up against hurdles and challenges. Completing a business impact analysis to understand possible challenges and how you might overcome them will be essential to your long-term success. 

Francis King is the Head of Demand Generation at OnlyDomains, a domain management solution that offers global services and support that can be accessed from anywhere in the world. Francis has been a part of the team since 2009. He is our go-to guy for everything online advertising. Originally from Melbourne, Francis cannot go a day without lifting weights; he is considering taking on Jiu-Jitsu next.