Business continuity and enterprise risk management are both broader terms than many would initially believe. Some take a more holistic approach in understanding the connection between the two, as risk management encompasses several other domains, including business continuity. Others see them as being separate topics of discussion, especially during a formal presentation or lecture setting.
What Is Business Continuity
Business continuity is a process that aims to build a framework for organizational resilience. The foundation of business continuity is risk management – and knowing how to plan for both unexpected and unplanned disruptions. Business continuity planning entails identifying vulnerabilities, assessing risks and formulating responses, such as emergency procedures. A disaster recovery plan is the next step – which includes developing plans A, B and C going forward. Testing these procedures is important!
What Is Risk Management?
Risk Management is the ability of an organization to anticipate risk and capitalise on opportunity that are vital for its businesses. Enterprise risk management services use various processes to identify, assess and contain risks or threats that can negatively impact an organisation’s earnings.
Sometimes, despite everything we do as leaders, our businesses face unexpected setbacks because of unforeseen and uncontrollable events beyond our control. Fortunately, these set-backs are relatively few in number and all organizations tend to recover, although some may have a tough time getting back on their feet.
Risk management audits help businesses to understand the magnitude of risk they are facing. This allows them to take necessary steps to mitigate risk while also helping them plan for contingencies that are not foreseeable at this time. One of the foremost benefits of enterprise risk management is that it helps businesses identify risks and develop strategies that protect their balance sheets and profitability as well as facilitate growth.
Many organisations have sought our advice regarding the efficacy of building extensive planning and implementation structures that cover the various processes of risk management. The process of risk management involves identifying risks, analysing risks, ranking risks, treating risks and monitoring risks.
How Are Risk Management And Business Continuity Related?
Though both terms are different when applied together, they can create practical and efficient risk management systems that lower risks and the potential adverse effects of a crisis.
The survivability of enterprises is impacted by severe risks. Enterprise Risk management services lower the intensity of threats thereby promoting effective business continuity planning. Once the risk is taken care of, business continuity makes sure that businesses are not impacted by a crisis, disaster or any other threat for that matter. Some leaders believe that the proficiency of business continuity can be seen through effective risk management. Some others feel that risk management will not be that effective without a business continuity planning and strategy framework in place.
Organisations that have successfully implemented enterprise risk management into their planning efforts have reported that it enhances their value creation and protection objectives. The confidence they get from identifying and addressing risks allows them to execute their strategic plans boldly but to get that confidence, an enterprise risk management solution and BCM need to be intertwined.