What is a Business Continuity Plan (BCP)?
A business continuity plan (BCP) is a documented set of policies and procedures that help an organization keep operating—or resume operations quickly—after a disruptive event. Disruptive events include natural disasters, cyberattacks, infrastructure failures, and other incidents that interrupt normal business activity. A BCP focuses on protecting people and critical assets and on maintaining essential functions until the business returns to normal.
Why a BCP matters
Interruptions cost money, damage reputation, and can push firms toward insolvency if unmanaged. Insurance covers some losses but not lost customers, downtime, reputation damage, or all recovery costs. A practical BCP reduces downtime, limits financial and operational damage, helps satisfy regulators and customers, and clarifies who does what when an incident occurs.
Core components and definitions
– Business Impact Analysis (BIA): A process that identifies critical functions, quantifies the operational and financial impact of their disruption, and supports decisions about recovery priorities.
– Recovery Time Objective (RTO): The target maximum tolerable length of time that a particular process can be unavailable before severe harm occurs. RTO comes from the BIA.
– Disaster Recovery (DR) Plan: A narrower plan that targets restoring IT systems and data. DR is typically a subset of a broader BCP.
Step-by-step: How to create a BCP
1. Establish governance
– Assign a continuity leader and a cross-functional team.
– Define responsibilities and decision authority.
2. Identify risks and scenarios
– List hazards (fire, flood, cyberattack, pandemic, supply-chain failure).
– Prioritize scenarios by likelihood and potential impact.
3. Conduct a Business Impact Analysis
– For each key function, estimate the financial and operational effects of downtime.
– Determine RTOs (how quickly each function must be restored).
4. Develop recovery strategies
– Define how to maintain or restore critical functions (alternate sites, manual workarounds, offsite backups, third-party suppliers).
5. Document the plan
– Include escalation paths, emergency contacts, stepwise recovery procedures, locations of backup data, and required resources.
6. Train and communicate
– Make all staff aware of roles and basic procedures; train the continuity team in detail.
7. Test and validate
– Run tabletop exercises and realistic simulations across multiple scenarios to uncover weaknesses.
8. Review and update
– Schedule regular reviews and post-incident updates to keep the plan current.
Checklist (quick reference)
– Continuity team roster with contact numbers and backup contacts
– Inventory of critical processes and systems
– RTO for each critical function
– Location(s) of backup data and recovery media
– Alternate work locations or remote access plans
– List of required suppliers and agreements with key vendors
– Communications plan for employees, customers, regulators, and media
– Training calendar and exercise logs
– Schedule for plan reviews and updates
Small worked example: using RTO and lost revenue to set priorities
Assume three processes and the estimated lost revenue per hour if each is down:
– Process A (payment processing): $5,000/hour
– Process B (customer service): $800/hour
– Process C (manufacturing line): $2,000/hour
If budget or resources allow restoring only two immediately, prioritize by highest hourly loss. That gives order A ($5,000), C ($2,000), then B ($800). If Process A’s RTO must be 2 hours to avoid regulatory fines, while C can tolerate 12 hours, you would allocate immediate recovery capacity to A and then C according to their RTOs and loss profiles.
Notes and important points
– Testing matters: a plan that’s never exercised will fail under stress. Test variations of likely scenarios to find hidden gaps.
– BCP ≠ DR: Disaster recovery focuses on IT systems and technical restoration; business continuity covers the whole organization including customer-facing and supply‑chain processes.
– Limits of BCPs: If a disruption affects a large portion of the population (for example, a severe pandemic), some recovery strategies may be less effective. Plans should be realistic about dependencies outside the organization.
Bottom line
A BCP turns uncertainty into an organized response: it identifies what matters most, sets recovery priorities, documents who does what, and creates repeatable procedures. Regular testing, training, and updates keep the plan practical and usable when an incident occurs.
Sources
– Investopedia — Business Continuity Plan (BCP): https://www.investopedia.com/terms/b/business-continuity-planning.asp
– Federal Emergency Management Agency (FEMA) — Business Continuity Resources: https://www.fema.gov/emergency-managers/national-preparedness/business-continuity
– ISO — ISO 22301: Business continuity management systems: https://www.iso.org/standard/50060.html
– NIST Special Publication 800-34 Rev. 1 — Contingency Planning Guide for Federal Information Systems: https://nvlpubs.nist.gov/nistpubs/Legacy/SP/nistspecialpublication800-34r1.pdf
Educational disclaimer
This explainer is for general educational purposes only. It is not individualized legal, regulatory, or investment advice. Organizations should consult qualified professionals when developing or implementing a business continuity plan.