Regulation offers a safety net, not a tangle of red tape

Category Business Continuity Management - news regulation

THE HOT breath of the regulator is being felt on the necks of those managing companies and public bodies across a range of sectors, as a business continuity plan (BCP) becomes mandatory for more and more of us... and not before time.

Almost one in five businesses can expect a major disruption in the next five years. Currently, of those businesses affected by a major incident, 80% close within 18 months. Of those that lose data, 90% cease trading within two years.

The risks of serious disruption are steadily increasing due to the greater complexity of modern business and the burgeoning range of potential threats.

Just as we experienced the 'Winter of Discontent' almost 30 years ago, so the UK has faced a 'Summer of Disruption' in 2007. Terrorist attacks, landslides, severe flooding, foot and mouth - all in the space of a few weeks - have impacted on thousands of businesses and public sector bodies.

Regulators responsible for monitoring private sector companies and public sector bodies are accelerating the speed with which they will insist on organisations having a fully developed and tested BCP in place. Across the sectors in which I operate - public, commercial, financial services, charities and housing - the same trend is developing; key regulators are looking to reduce the time horizon in which they expect BCPs to be obligatory from five years to three.

Regulatory bodies such as the FSA, OSCR (Office of the Scottish Charity Regulator) and Audit Scotland are no longer willing to accept that business continuity planning is simply 'good practice'. They want it to become mandatory.

Regulators in diverse areas all appear to be taking a similar approach. Businesses can no longer get away with just paying lip service to BCP.

And this is not simply 'red tape' rearing its ugly head - it is basic commercial sense. This is exemplified by influential supermarkets that are increasingly driving suppliers to have BCPs. Integrity of the supply chain is fundamental to their ability to operate, and suppliers will either have to demonstrate they have a comprehensive BCP in place or face being de-listed.

The public sector has taken a lead in business continuity planning with its response to the Civil Contingency Act, which placed a requirement on organisations such as Fire, Police, Ambulance and Local Authorities to have a BCP in place. The impact of this legislation has cascaded through the public sector and we now see Local Authorities placing a similar BCP requirement on those not-for-profit organisations supplying many of their services.

Some private sector companies may see the accelerating drive towards obligatory BCPs as another imposition on over-stretched resources, but this is a 'head in the sand' approach to management.

Some doggedly adhere to the 'keep the head down, work towards that next pressing deadline and keep your fingers crossed' approach. The regulators' move to introduce mandatory BCPs could be the salvation of their business.

Such 'dinosaurs' have to look beyond the immediate challenge of producing their BCP and appreciate that the discipline of creating such a document has the major benefit of helping identify operational bottlenecks and weak points in their organisations. Addressing these stress points can make them operate more effectively. So the BCP is not simply a 'safety net', or a way of keeping your regulator happy, but a fundamental means of analysing your organisation.

It will enable management to understand the key business processes, improve the organisation's resilience, identify business-critical information and, importantly, provide the confidence that the business can recover from disruption.

Once developed, the most important thing to do is keep the BCP up to date. It should be reviewed at least once a year - not to keep the regulator off your back, but to make sure your organisation is fit to face the unexpected, and survive.

Robert Mackenzie is a partner in the business technology and consulting division of accountants Scott-Moncrieff

This article: http://scotlandonsunday.scotsman.com/business.cfm?id=1311462007

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