In today’s fast-paced business environment, organizations face numerous risks and uncertainties that can disrupt their normal operations. What do you do and how do you respond when a disaster hits that causes a disruption or outage of your services? From natural disasters to cyberattacks, these unforeseen events can have devastating consequences on business operations and financial stability. This is where a business continuity plan (BCP) comes into play.
What Is a Business Continuity Plan (BCP)?
A BCP is a structured and comprehensive strategy outlining how an organization will continue to operate and provide essential services in the midst of unexpected disruptions, such as natural disasters, technological failures, or other emergencies. The plan typically includes measures to ensure the safety of employees, maintain critical operations, and minimize financial and reputational losses during times of crisis, aiming to swiftly recover and resume normal business activities.
An effective business continuity plan helps to maintain normal operations during and after a disaster. This blog is intended to provide you with an overview of what a business continuity plan is, why it is important, the general components every BCP should have, the risks of not implementing a BCP, how to test your BCP, the difference between a BCP and DR plan, and finally, what SOC 2 auditors focus on when auditing an organization’s BCP.
What Is the Purpose of a Business Continuity Plan?
The purpose of a business continuity plan is to continue critical business operations functions during and after a disaster. Often, a business continuity plan is confused with a disaster recovery plan. We will discuss what a disaster recovery plan is later in this blog (since they go hand in hand). A BCP addresses the question – how can the business and its services continue operating if a disaster strikes? A BCP outlines procedures and instructions that a business must follow at the time of disaster so that the business can continue operation. Before outlining the elements of a BCP, below are key points and best practices to consider when establishing and then maintaining a BCP:
- Senior management needs to approve the plan (in order to obtain buy-in from the entire organization).
- The plan needs to be reviewed and updated regularly – at least annually.
- The more detailed and up-to-date the better it is.
- Update the plan when roles change or there is turnover within the BCP team.
- Update the plan after each test and capture the lessons learned.
- Update the plan when there is a change in infrastructure, architecture, processes, policies, staff, or anything that would have an impact on the execution of the plan.
- The most important factor is people and ensuring their safety, as well as having them understand the plan!
What Are the Elements of a Business Continuity Plan & How Do You Write One?
Below is an outline of the general components every business continuity plan should have:
- Scope and purpose of the BCP.
- Identifying assets and their location (including critical systems, business functions/processes), and data.
- Risk Assessment: Identify and assess potential risks and threats that can disrupt business operations. This includes evaluating both internal and external factors such as natural disasters, cybersecurity breaches, supply chain disruptions, and more.
- Business Impact Analysis: Determine the potential impact of each identified risk on critical business functions. This analysis helps prioritize resources and recovery efforts based on the severity of the impact.
- Emergency Response Procedures: Define step-by-step instructions on how to respond to an emergency situation, ensuring the safety of employees, minimizing damage, and initiating appropriate recovery measures.
- Business Continuity Strategies: Develop strategies and tactics to maintain critical business functions during a disruption. This includes identifying backup systems, alternate locations, and contingency plans for various scenarios.
- Communication Plan: Establish a comprehensive communication plan that ensures timely and accurate communication with employees, customers, suppliers, and other stakeholders during a crisis. This helps manage expectations and maintain transparency.
- Training and Awareness: Conduct regular training sessions and awareness programs (such as security awareness training or compliance training) to educate employees on their roles and responsibilities during a crisis. This ensures that everyone is prepared and knows what actions to take in different scenarios.
- Testing and Exercises: Regularly test and evaluate the effectiveness of the BCP through simulations and exercises. This helps identify any gaps or weaknesses in the plan, allowing for fine-tuning and continuous improvement.
Who Is Responsible for Owning the BCP?
In most organizations, the responsibility for owning and overseeing the BCP typically falls to senior management or executive leadership. This might include roles such as the Chief Executive Officer (CEO), Chief Operating Officer (COO), Chief Risk Officer (CRO), Chief Information Officer (CIO), or another relevant executive-level position. These individuals are accountable for the overall strategic direction of the organization, including its preparedness for disruptions and the implementation of effective BCP strategies. In larger organizations, there might also be dedicated teams or individuals responsible for the ongoing maintenance, testing, and updates of the BCP.
What Are the Risks of Not Having a Business Continuity Plan?
What if there is no BCP? Failing to have a business continuity plan in place can lead to significant risks and negative consequences. Some of the key risks associated with not having a BCP include:
- Financial Loss: When a business experiences a disruption, the financial impact can be severe. Without a BCP, the organization may struggle to recover the financial losses caused by the interruption, potentially leading to long-term instability.
- Operational Disruption: A lack of a BCP can result in a halt in operations, preventing businesses from serving their customers and fulfilling their commitments. This can damage the organization’s reputation and lead to the loss of valuable clients or customers.
- Legal and Regulatory Compliance: Many industries have specific legal and regulatory obligations that organizations must adhere to. Failure to meet these obligations due to a lack of a BCP can result in legal repercussions, penalties, and even lawsuits.
- Damage to Reputation: Disruptions can create a sense of vulnerability and lack of reliability in the eyes of stakeholders, including clients, customers, and business partners. Without a BCP to navigate through these challenges, the organization’s reputation may be irreparably damaged.
- Competitive Disadvantage: In today’s competitive business landscape, organizations that can demonstrate a strong BCP have a competitive advantage. Without a BCP, an organization may struggle to maintain or regain its competitive edge, potentially losing market share to competitors.
Importance of BCP Testing
The continuity plan team must be trained and tested on the BCP. Testing would include members of the team completing exercises that go over the plan and strategies to increase preparedness. Additionally, if the team is trained on the plan, it can be executed quickly and effectively in cases where the documented plan may be inaccessible for reference by the team during a disaster. Conducting tests can help the team understand and help create a mindset on what to do if the office is inaccessible and/or your systems are inaccessible when a disaster strikes (where your plan is stored). The overall objectives of BCP tests are to improve the response process, identify gaps or weaknesses in the plan, and develop team readiness and response as noted above. Again, tests should be conducted annually, at a minimum.
A few of the common types of BCP drills/tests are the following: Tabletop exercises, walkthroughs, and simulated testing. Additional details on each type of these noted tests can be found here from NIST and here.
When Should a BCP Be Activated & How Do You Classify a Disaster?
A BCP should be activated when a significant disruption occurs threatening the organization’s ability to operate normally and deliver essential services. This could include various types of disasters, emergencies, or unexpected events impacting the organization’s operations, resources, and functions. The decision to activate the BCP is typically based on predefined triggers, such as the severity of the event, its potential to disrupt critical operations, and the level of risk it poses to employees, customers, and stakeholders. Types of disasters that could impact critical business operations are (but not limited to) as follows:
- Material cyber-attack on your systems (where a hacker breaks in and shuts down everything and/or removes everything).
- Natural disaster (hurricane, flood, fire, snow/ice storm) – damaging an office and/or data center causing critical infrastructure or services to become unavailable or unresponsive.
- System failures supporting critical business processes.
- Cloud services outages.
- Hardware failures.
- Network and internet disruptions.
- Supply chain disruptions, such as supplier failures, transportation disruptions, and shortages of essential resources.
Business Continuity Plan vs Disaster Recovery Plan
To reiterate, business continuity is the continuation of the business process during and after a disaster strikes. DRP, on the other hand, is the plan for the recovery of computer operations (and is usually a subset of the BCP). Overall, the purpose of the DRP is to get technical operations back to normal in the shortest time possible. Below is a list of key factors to consider as part of a DRP:
- DRP includes the step-by-step procedures to conduct in order to restore services.
- The DRP will also ensure that data and critical applications are restored from backup so that the business can continue regular operations.
- DRP is a short-term plan to recover systems and data.
- BCP is a long-term plan to maintain continuity of operations
- DRP takes into account the specific RTO and RPO which is determined through a BIA.
What Do Auditors Focus on When Auditing a BCP?
Business Continuity and Disaster Recovery would be focused on in a SOC 2 audit if the “Availability Criteria” is included in the scope of the examination. The availability criterion/requirements are listed below (pulled from the AICPA Trust Services Criteria).
“A1.1: The entity maintains, monitors, and evaluates current processing capacity and use of system components (infrastructure, data, and software) to manage capacity demand and to enable the implementation of additional capacity to help meet its objectives.
A1.2: The entity authorizes, designs, develops or acquires, implements, operates, approves, maintains, and monitors environmental protections, software, data backup processes, and recovery infrastructure to meet its objectives.
A1.3: The entity tests recovery plan procedures supporting system recovery to meet its objectives.”
- Does your organization have a documented BCP plan?
- Does your organization have a documented DR plan?
- Have you tested your BCP plan within the last year (at a minimum)?
- Have you tested your DR plan within the last year (at a minimum)?
- Your critical data backup procedures (configurations including retention of backups).
- Have you tested the recovery of your backups?
- Are you maintaining and monitoring your services and supporting infrastructure for performance, availability, and security?
- Are you alerted when services and supporting infrastructure meet certain thresholds?
- Do you have a cybersecurity and business interruption insurance policy?
Business Continuity Planning (BCP) FAQs
Here are some additional questions that typically come up when businesses are beginning the process of developing a robust BCP.
How Long Does a BCP Last?
The BCP should be reviewed at least annually, after any significant change in business operating conditions, or after it has been activated to account for any new lessons learned.
What Can Go Wrong with BCPs?
The most common mistake related to the creation and maintenance of BCPs is inadequate planning, leading to gaps in preparedness, and leaving critical aspects of the organization’s operations unaddressed. Additionally, if a lack of buy-in and support from senior management is a factor, the BCP might not receive the necessary resources, attention, and commitment to ensure its success.
Do All Businesses Need to Have a BCP?
While having a Business Continuity Plan (BCP) is highly recommended for all businesses, the extent and complexity of the plan can vary based on factors such as the size of the organization, the nature of its operations, the industry it belongs to, and the potential risks it faces. The larger and more complex the business, the larger and more complex your BCP will most likely be.
A business continuity plan is the backbone of an organization’s resilience and ability to withstand disruptions. It minimizes the risks associated with operating in today’s unpredictable environment, ensures the continuity of critical functions, and builds trust and confidence among stakeholders. By thoroughly assessing risks, implementing robust strategies, and regularly testing and improving their plans, organizations can confidently navigate through disruptive incidents and secure their future success.
This article was originally published on 4/13/2022 and was updated on 8/23/2023.
John has over 15 years of experience focused on IT security, governance, risk, compliance, and privacy. He started his career in 2006 with Protiviti and later went on to run IT audit and GRC functions for several Fortune 500 companies within the financial services, energy, hospitality, and software industries. John is also a certified information systems auditor (CISA) and holds a Bachelor of Science degree in Management from Colorado State University.