Minimize business interruption and supply chain risks
Business continuity is the process of ensuring the resiliency of your business in the event of a catastrophic event. It is a critical risk management function focused on helping businesses prepare to experience disruptions without spiraling into catastrophe while preserving operations and keeping personnel safe.
Every company needs to assess their business continuity risks, not just those in highly regulated sectors like health care, energy and financial services. It is critical that businesses ensure the existence of contingencies in the event of equipment, systems or utility failure. Business continuity is important to establish at your offices and facilities as well as manufacturing operations and supply chains.
Business interruption (BI) has emerged as the number one risk for 2021, followed by pandemic outbreaks and cyber threats, according to the Allianz’s 2021 Risk Barometer. Some of the top causes of BI include fire and explosion, storms and natural disasters, machinery breakdown, human operating error, and most recently – pandemics. The insurance sector is keenly interested in making sure insured companies have resiliency in this area and want more information to offer capacity and reasonable pricing.
The COVID-19 pandemic showed the vulnerability of global supply chains and value of robust business continuity plans. The pandemic led to facility closures, work stoppages, and supply shortages. Industries like electronics, appliances, and home furnishings were hit particularly hard. A semiconductor chip shortage has been incredibly disruptive, causing auto manufacturers to halt production. It is expected to cost the global automotive industry $110 billion.
The number of companies suffering business disruption has been staggering. In fact, Statista reported that 83% said that severe delays in acquiring critical supplies impacted their businesses. Meanwhile, 75% of companies say the inability to acquire critical supplies had at least some effect on their businesses. It has led executives to examine redundancies in production and manufacturing while reassessing emergency preparedness and crisis communications plans.
In response, business leaders are making sweeping changes to their business continuity and risk management plans.
Reliability trumps affordability. Companies are no longer choosing to run as lean as possible. Many are making sure to keep more products in stock. They also want to make sure suppliers or co-packers have multiple locations and redundancies in operations.
Emergency preparedness planning. Business leaders are monitoring outbreaks, complying with ever-evolving local safety standards, and implementing safety protocols in the workplace. With so many people working from home, they are updating information technology policies to ward off cyber threats.
Assessing supply chain risks. Companies are implementing redundancies into supply chains, making sure critical components are produced in facilities with different natural catastrophe risks so disruption in one area does not halt business operations overall.
There are several standards and acts that hold officers accountable and compliant.
ISO 22301 – This standard helps businesses plan for business disruptions and respond to them accordingly. It helps identify potential threats to critical business functions develop backup systems and processes to safeguard against perils like natural disasters, terrorist attacks, or theft.
ISO 31000 – This enterprise risk management framework provides a level of reassurance for economic resilience, professional reputation, and environmental and safety outcomes. It covers a wide range of risks like cybersecurity and terrorism.
NFPA 1600 – This standard addresses disaster and emergency management and has been adopted by the U.S. Department of Homeland Security as a voluntary consensus standard for emergency preparedness.
Sarbanes–Oxley – This act regulates that businesses understand all risks that may hamper financial reporting and put processes in place to impede potential financial offenses.
Identifying business interruption risk, quantifying the potential impact to your company, developing mitigation strategies, and preplanning for a disaster are the keys to successful risk management framework. These tasks are generally referred to as Business Impact Analysis (BIA) and Business Continuity Planning (BCP). Implementing a comprehensive Enterprise Risk Management (ERM) plan that incorporates Business Continuity Planning (BCP) will keep your company prepared for potential risks.
To help you build business resilience, meet regulatory compliance, and build the proper insurance program, TÜV SÜD Global Risk Consultants (GRC) offers comprehensive Business Continuity Planning (BCP) and supply chain services:
TÜV SÜD GRC will act as your trusted advisor for all your business continuity needs. Our experts will use our knowledge of your company, industry, equipment, production bottlenecks, and exposures as the key components of the BCP process. Benefits to our clients include:
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It’s imperative that global operations understand their risk exposure tied to utility failures.