If we are to take the phrase “business continuity” for its surface value, the most obvious meaning would be the ability of the business or enterprise to continue operating as a going concern for a very long time.
But the term actually means more than what the words literally mean.
Reduced finished goods inventory means reduced number of products to be sold, which will ultimately result to reduced sales and revenues.
What the company is looking at is a profit level that is much lower than their usual level of earnings.
The International Organization for Standardization, in ISO 22300, defined “business continuity” as the capability of an organization to continue the delivery of its products or services, at acceptable predefined levels, following a disruptive incident.
It implies the responsibility of the business owners and management for the business in ensuring that it stays afloat and “on course” despite any obstacles or stumbling blocks it encounters along the way.
In a study of mid-sized companies that suffered a major disaster and had no contingency planning in place, it was revealed that, on average, their downtime cost amounted to ,000 per hour. When their usual source of a specific product or service becomes unavailable, or unable to deliver their goods, customers will naturally look elsewhere for other sources.
Even the most loyal customers may be swayed out of their loyalties if the business fails to rise to the occasion.
The worst case scenario for businesses without BCP is the permanent end of operations.
According to Agility Recovery’s Paul Sullivan, 80% of companies that have no plans whatsoever and were subsequently hit with a crisis or major disaster had to call it a day without having gone past 18 months of operations.