The Why for BCM Risk Controls
It makes sense to consider the value of risk controls for business continuity. As we see Organizational and Operational Resilience gain traction in the industry, it is vital to understand risk controls for Business Continuity Management (BCM). In a previous blog, I talked about Resilience And Risk Advantage, sharing that risk is the first step in the management process. Another aspect of mitigating risk is cataloging, ranking, and monitoring what is most impactful to your organization. We put specific controls in place for business continuity to reduce the possibility of issues developing into incidents.
Risk controls, or risk management controls or risk mitigation measures are strategies or actions implemented to minimize or eliminate the potential negative impacts of risks. Their application extends to business, finance, project management, and safety domains. Risk controls are essential to the risk management process and aim to reduce the likelihood or severity of risks. Historically, BCM was put in place as a protective discipline to react when interruptions occur. Now, being proactive and doing more to prevent adverse events to is a foundational aspect of resilience.
All in for Resilience
Business Continuity is one of the foundational pillars of building a resilient organization. If you missed my write-up on Resilience Program Pillars, it details the four functions that underpin a successful strategy. Regardless of where you sit within a company, business continuity must be at the table for resilience to flourish. Along with this, your business continuity program should strive for best practices to obtain the highest level of credibility. If you haven’t certified or aligned with ISO 22301, which provides a baseline for business continuity systems — it’s an excellent place to start.
Now, you want to double down on the risk controls inherent to a BCM program. We all understand that not only have risks expanded over the past year, but the cadence in severity is increasing. Additionally, the cost of not shifting to a risk mitigation stance is exponentially higher today than several years ago. Taking a risk-first approach provides your organization with an increased level of protection.
The Value of Risk Controls
Risk controls aim to identify, assess, and manage risks effectively, ensuring an organization can achieve its objectives while minimizing potential losses or disruptions. These controls can be proactive or reactive. Typically, they are implemented based on the identified risks and their potential impact. Enterprise Risk Management is a holistic approach encompassing identifying, assessing, and managing risks organization-wide to enhance decision-making and protect its value.
However, most employees are helping to avoid or decrease risk daily. That is the reason for processes, standards, workflows, and regulations. Some tactical examples of business continuity risk controls include implementing backup power generators, establishing alternate work locations, maintaining off-site data backups, and developing comprehensive crisis communication plans.
Business Continuity Specific Controls
So, what are the business continuity-specific controls? The risk assessment is a systematic evaluation process that identifies potential threats, assesses their impact on critical business functions, and develops strategies to mitigate those risks. Next, the business impact analysis process considers the possible financial, operational, and reputational consequences of disruptions to critical business functions and helps prioritize recovery efforts. The BIA data is used to create the business continuity plan that outlines strategies and procedures to enable an organization to continue operating and recover quickly from a disruptive incident or disaster. Recovery strategies, teams, and exercises are also risk controls.
As mentioned earlier, following ISO 22301’s recommendation for program governance, including leadership participation, are forms of control. Resilience is achieved through ongoing training of program participants and employee awareness efforts. Finally, the risk is further reduced through strong third-party vendor ongoing partnerships within IT to mitigate the likelihood of cyber-attacks and technology incidents. But, a BCM itself has controls as part of its entire program.
More on Risk Controls
Here are some common types of risk controls:
Preventive Controls: These controls focus on eliminating or minimizing risks before they occur. Examples include implementing safety protocols, conducting thorough background checks for employees, implementing fire safety measures, or using redundant systems to avoid single points of failure.
Detective Controls: These controls are designed to identify risks or issues as early as possible. They involve monitoring and surveillance activities, such as regular audits, inspections, or using security systems to detect unauthorized access attempts.
Corrective Controls: Once risks or issues are detected, corrective controls are implemented to mitigate the impact or resolve the problem. Examples include incident response plans, disaster recovery strategies, or implementing contingency plans to minimize the impact of disruptions.
Compensatory Controls: These controls provide alternative measures or safeguards when primary controls are not feasible or practical. They help to compensate for the limitations of other controls. For instance, compensatory controls may involve additional manual checks or increased supervision if a technical control fails.
Mitigating Controls: These controls are specifically designed to reduce the severity or impact of risks if they do occur. They involve implementing redundancies, diversifying investments, or purchasing insurance coverage.
Transfer Controls: Risk transfer controls involve shifting the risk management responsibility to a third party. Examples include outsourcing certain activities to specialized service providers or purchasing insurance policies to transfer the financial burden of specific risks.
Consider what aspects of your program or partnerships within the other Resilience pillars lessen overall risk.
An Evolving Perspective Grounded In Practice
Indeed, there’s recognition that business continuity management can lead or must participate in any form of resilience. Recognizing that many traditional programs already provide channels to reduce risk is essential. Although our view of risk is expanding and the need to understand it proactively is increasing, BCM programs’ bedrock is based on risk reduction.
Mitigation is sometimes a difficult concept to grasp. On the one hand, business continuity was developed to ensure a framework for recovery from adverse events. Yet, mitigation refers to the proactive actions and measures taken to minimize or reduce the likelihood and impact of risks for adverse events. And although our focus is shifting to front-load risk controls, it is valuable to ground our organizations in the understanding that risk aversion is already built into what we do. I hope you’ll join me in grounding resilience in these key attributes as we continue the resilience journey.
Are there other risk controls you leverage for business continuity? Please share them in the comments section below.
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