What is a Business Impact Analysis?
A business impact analysis (BIA) predicts the consequences of disruption of a business function and process and gathers information needed to develop recovery strategies. Potential loss scenarios should be identified during a risk assessment. Operations may also be interrupted by the failure of a supplier of goods or services or delayed deliveries. There are many possible scenarios which should be considered.
Identifying and evaluating the impact of disasters on business provides the basis for investment in recovery strategies as well as investment in prevention and mitigation strategies.
The BIA should identify the operational and financial impacts resulting from the disruption of business functions and processes. Impacts to consider include:
- Lost sales and income
- Delayed sales or income
- Increased expenses (e.g., overtime labor, outsourcing, expediting costs, etc.)
- Regulatory fines
- Contractual penalties or loss of contractual bonuses
- Customer dissatisfaction or defection
- Delay of new business plans