Business Continuity Management 


    The frequency of man-made and natural disasters has increased in recent years. The nature of disasters has also changed: who could have imagined five years ago that civilian passenger airplanes would be used as a weapon of war? More important, the impacts of disasters on companies have greatly increased and intensified thanks to technological advances, progressing globalization and the extension of the supply chain. Companies of all sizes are "connected" to their suppliers and customers to a much greater degree today than ever before. When a disaster occurs, its effects quickly ripple up and down the supply chain.

    As a result, management teams and corporate boards face much more pressure to make their organizations more resilient when disasters, ranging from simple power outages to Category 4 hurricanes to synchronized suicide bombings, strike. To date, however, the corporate BCM capabilities necessary to establish that resiliency generally have ranged from absent to insufficient. This deficiency has a high cost: a University of Minnesota study finds that 93 percent of companies that lose critical systems for more than 10 days quickly file for bankruptcy; another study finds that 90 percent of organizations that experience a catastrophic loss of data and equipment" without a business continuity plan in place go out of business within 24 months of the loss (Kahan, 2005).

    The 9/11 Commission's exhaustive investigative research concludes that the Sept. 11, 2001, terrorist attacks revealed failures in imagination, policy, capabilities and management.

    The purpose of this guideline is to help organizations address and prevent those failures while providing finance and accounting managers with a foundation on which to further develop their BCM thinking, strategy and processes. The purpose of this Management Accounting Guideline is not to fear monger (a tactic practiced by some BCM service providers that should be recognized and disregarded), but to help finance and accounting professionals enable their organizations to make the most effective and cost-efficient investment in the BCM capabilities that best meet the needs of the business.



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