Edition No. 10

EHS Return on Investment: Assessing Your Business Continuity Plan

Plan, Act, Check, and Modify are key components of a comprehensive environmental, health, and safety (EHS) management system. This article focuses on the Check element, in Business Continuity Planning. It is the third in a 4-part series that defines and discusses these four concepts.

Environmental, Health, and Safety (EHS) professionals continually look for ways to enhance the value of their function by measuring what they do and its impact on their organization. Too often the EHS function shows up on the bottom line as merely an expense or an overhead cost. BCP (Business Continuity Planning) / Emergency Response Planning is a prime example of a function within EHS where there has been a lack of business objective-based metrics to gauge effectiveness. For the most part, BCP professionals have failed to develop a high quality set of metrics which management could use to understand the true value-added contribution of the BCP processes to the enterprise. Too often, and it could be said almost entirely, BCP has depended on financial measurements.

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A strong trend emerging in the profession is the ability to measure BCP in more than just financial terms. Tying the consequences of business disruption back into the organizational values of the company is just one way of assessing BCP. Of course, defining the actual value drivers of the company is often a difficult task. Some companies may have a strong sense of their values, but they may not have articulated them to the rank and file employees. Other companies may in fact, not realize the real values that drive the organization.

The Importance of Value Drivers

What are a company’s value drivers? Value drivers are the forces that influence organizational behavior, how the management team makes business decisions, and where they spend their time, money, and other resources. Granted, most companies have financial value drivers at the top of the list, including revenue generation and cost containment, for example. But today, many companies also include customer satisfaction, workforce development, expansion of the business, environmental impact, etc. as value drivers.

When tying BCP into business values, measuring more of the soft costs of business interruption becomes a key focus. Developing both quantitative and qualitative metrics based on the value drivers and objectives of the enterprise are part of a Balanced Scorecard process. This process not only measures the financial impact, but also the impact on the people, process, and technology of the enterprise. A primary advantage to measuring organizational effectiveness using a Balanced Scorecard approach is that not only are the hard financial/qualitative metrics utilized, but also the more visceral qualitative metrics often termed as customer service or brand recognition, for instance.

Defining BCP Metrics

In hands-on workshop sessions recently conducted by Contingency Planning and Management Magazine (CPM), three factors in defining BCP metrics have become clearly apparent. First, to understand the BCP process, an EHS professional must understand the value drivers of the company. Second, to have an effective BCP metric you have to be able to understand how BCP sub-business processes (risk review, BIA, plan development, training, testing, for example) tie into the value drivers. Developing a matrix showing what those sub-processes are and how they relate to the value drivers is a concise and clear way to do this. See the example at the end of this article. And finally, you must develop qualitative and quantitative metrics that can be used to demonstrate how well you’re doing.

CPM and Carl Jackson, EORM Business Continuity Planning principal, are conducting much of the research into how these metrics can be most effectively developed. If you are interested in being involved in this process, there are several sessions planned that focus on this topic during Contingency Planning and Management Magazine’s November conference, CMP 2004 East (November 8-10 in Washington, DC). For more information on this event, visit www.contingencyplanningexpo.com.

Contingency Planning During a National Crisis

As painful as it is to review the events of September 11, 2001 in New York City, that disaster offers an illustration in how we can look at BCP in more than financial terms. In the aftermath of the first World Trade Center bombing in 1993, where a handful of people perished and many more were injured, how do you think the Port Authority personnel were measured in their BCP or Emergency response efforts? It was most likely financial. As they increased their fire drills and evacuation plans for future disasters, they measured increased headcount to do more drills, interrupted time away from work for evacuation drills, percentage of time that people were out of the building for evacuations, etc., all financially-based metrics.

But, as the events of 9/11 unfolded we realized that instead of the deaths of tens of thousands of people working in the Twin Towers, the number of casualties was much less than feared. The Emergency Response and Preparedness effort of the Port Authority actually worked and it was very effective. Look at how many people were able to escape the critically crippled buildings before they fell.

In retrospect, management from any of the businesses located in the Twin Towers would likely agree that BCP / Emergency Response is measured in more than just financial terms. The value drivers centered on people were of major impact to those businesses. In that particular instance, an EHS professional could easily prove the worth of BCP planning completely outside of financial boundaries.

For More Information on Measuring BCP

There are many innovative ways to measure the contributions and develop metrics to demonstrate the value-added benefits of Business Continuity Planning / Emergency Response. This process can be done in individual enterprises and is a valuable service to the company to determine the metrics. At EORM, we help companies do exactly that. If we can offer guidance on how to evolve your BCP from a strictly financial-based experience to include the value drivers of your corporation, please contact us.

Review the other articles in this series.

Act: Developing and Prioritizing Your EHS Management Strategy - April 2004
Plan: Planning Your EHS Strategy - February 2004