A new approach to surviving the worst

If you lose your customers, the best insurance solution won't be able to save your business. That's why Zurich's Business Continuity Management (BCM) starts by asking how long it will be before customers leave, and ends with solutions to prevent them from doing so.

Fortunately, major business disruptions are rare. Yet if they happen, they all too often result in the bankruptcy of the affected company. While business continuity management may not be able to prevent incidents, it can lessen their impact and make sure that the company gets back to business in due course.

Establishing a business continuity plan within 80 man hours

Like other business continuity management methods, Zurich BCM aims to develop a business continuity plan. This exercise can be fairly time-consuming, yet thanks to Zurich's considerable experience in this field, and by making best use of existing exposure information, the time to be budgeted per location can be reduced to 80 man hours for the customer's experts.

The BCM process step by step

1. Specify the needs
   The process starts by asking how long customers would wait for supply before turning to a competitor. This time span is called customer loyalty days and varies considerably depending on the industry.
2. Select business continuity team and team leader
   To achieve the desired result by the time limit stipulated above, the customer's team should be coached by an experienced team leader from Zurich Risk Engineering.
3. Analyze potential disruption times and define GAP interval in days
   (GAP interval = disruption time minus customer loyalty days)
   • Define possible damage scenarios
     The Zurich Hazard Analysis is a useful tool to support this process.
   • Assess restoration times for various scenarios
   • Define GAP intervals. This is the time when competitors have the best opportunity to lure away customers
   • Management decides which GAP intervals are acceptable
4. Integrate critical suppliers into the process
   A company should not only focus on potential disruption to its own business, but also to that of critical suppliers. To make sure that no link in the delivery chain fails, the process also integrates suppliers, customers and sometimes even competitors.
5. Business continuity team members list responsibilities and match them with each other
6. Close GAP intervals
   The Zurich Risk Engineer supports the BCM team in a process to identify the most economic measures to close those GAP intervals that are not acceptable. This might include back-to-back agreements with competitors.
7. Draft business continuity plan (BCP) based on all information available
   The BCM Team and the Zurich Risk Engineer coach compile a draft plan. Every BCP should include an emergency plan, which most companies already have in place.
8. Test the BCP
   It is important to stress-test the plan's viability in an exercise of one to two hours. This not only tests its value but also shows whether fine tuning will be necessary.
9. Complete the BCP taking into consideration lessons learnt from test
10. Summarize BCM capability status for external use
    Appropriate business continuity management inspires confidence among customers, suppliers, employees, shareholders and other stakeholders. The company should use its BCM concept as a marketing tool to create confidence in its reliability.
11. Regular update
    As the environment and conditions change over time, it is important to periodically review and, if necessary, update the BCP to reflect actual needs in the event of a major event.

Successful implementation of BCM at Nespresso

The BCM methodology has been successfully tested in several pilot projects, one of them with Nespresso, a subsidiary of Swiss food giant Nestlé. Georgios Solomos of Nespresso gave a presentation entitled "Establish business continuity management and keep it" at the Zurich Risk Engineering Global Workshop 2004 in Noordwijk, in the Netherlands.

For further information on Business Continuity Management please contact:

Felix D. Hauri
Head of Risk Engineering Switzerland

or

Hansjörg Kuhn
Senior Risk Engineer