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The Purpose and Value of Business Impact Analysis

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When discussing Service Design I am often asked the purpose and value of a Business Impact Assessment (BIA).  The purpose of a BIA is to quantify the impact to the business that the loss of a service would have.  It is a valuable source of input when trying to ascertain the business needs, impacts and risks that the organization may face in the delivery of services.  The Business Impact Assessment is an essential element of the overall business continuity process.  It identifies the most important services to the organization and therefore will help to define the overall strategy for risk reduction and disaster recovery.  At a more granular level these assessments enable the mapping of critical service applications and technology components to critical business processes.  It is an invaluable input for Continuity Strategy, Availability Design, and Capacity Management. 
The BIA’s strategic purpose is to show which parts of the business will be most affected by a major incident and what affect it will have on the company as a whole.  The form these damages or losses may come in are:        
  • Loss of income
  • Additional costs
  • Damaged reputation
  • Loss of goodwill
  • Loss of competitive advantage
  • Breach of law, health or safety
  • Immediate and long term loss of market share
  • Political, corporate or personal embarrassment
  • Loss of operational capability
As part of the design phase of a new or changed service the BIA should be conducted to help enable a greater understanding about the function and importance of a service.   This will allow the organization to define:
  • Acceptable levels and times of a service outage.  How the degree of damage is likely to escalate after a service disruption, and the times of day, week, month or year when a disruption will inflict the greatest damage.
  • The staffing, skills, facilities and services necessary to enable critical and essential business processes to continue to operate at minimum acceptable levels.
  • The time within which all required business processes and supporting staff, facilities and services should be fully recovered.
  • The cost the loss of a service has to the business.  This is critical for Financial Management.
Additionally, it has been shown that the BIA can be a useful input to a number of other areas across ITSM and the business and would give a far greater understanding of the service then would otherwise be the case.
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Comments

Unknown said…
When to do the BIA? Just at DESIGN stage or at STRATEGY STAGE too? I am reading about BIA at FINANCIAL MANAGEMENT PROCESS. So BIA is a "tool" used in which processes?
November 15, 2011 at 2:38 PM
Jayne Groll said…
BIAs can be done at various stages of the lifecycle and are activitiess particularly important to processes such as Availability and IT Service Continuity Management. I would suggest performing a BIA during Service Strategy as part of the business case. Not only does this help make decisions on whether to proceed, it also avoids multiple BIAs later in the lifecycle.
December 14, 2011 at 10:24 AM
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