Marsh: Business Continuity Management Increasingly Seen as Strategic Influencer

How would you rate your company's business continuity plans? Do you feel confident that your organization could adequately respond to threats to its operations, people and supply chains?

According to the 2010 Business Continuity Benchmark Report recently published by Marsh, many European firms would answer those questions with a healthy dose of overconfidence, leaving them highly vulnerable to physical disruption and economic conditions.

For instance, even though 83 percent of the respondents in Marsh's study believe that business continuity management (BCM) was integral to their risk management and that it was understood and supported by senior management, only 41 percent said that it had given them a better understanding of their business. Just 29 percent felt that it had led to improved risk-intelligent decision-making. These results underscore the disconnect I often observe between a company's perception of BCM integration and its actual application as a strategic influencer.

Interestingly, Marsh did uncover a slight shift towards a strategy-driven BCM focus, compared to a similar study the firm conducted in 2008. This year, more than half (54 percent) said they use BCM as a strategic influence that's up three percent from a previous study. Only 20 percent of respondents said that they do not use BCM for strategy (the same as in 2008), and 26 percent were undecided.

With regard to supply chains, I was encouraged to see that the survey showed what Marsh describes as a "huge swing in awareness to supply chain risk" over the past two years. In this year's report, 68 percent of respondents agreed that their BCM plan covers their supply chain risks that's up 14 percent from 2008. Only 11 percent said that their BCM plans did not apply to supply chains and that's a drop of 11 percent from the previous study.

From the report:

Those organizations using BCM as a strategic influence are often the ones leading their respective industries, with integrated BCM work as part of holistic ERM programs. This shows organizations where risk considerations influence the location of new sites and the nature of business carried out on those sites. Some businesses are now starting to take account of resilience as one of the factors in measuring value in making investment decisions. BCM represents an opportunity for organizations, since, when used correctly, BCM can be a useful factor in making strategic decisions. The understanding of the business, the dependencies on key resources, and the impact of change all help towards a strategic understanding of the organization, and better decision making. When used as part of an integrated ERM approach BCM can achieve its full potential as a strategic influence.