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What is a Business Impact Analysis (BIA)?

A business impact analysis (BIA) is a systematic procedure for assessing the possible implications of a disruption to essential business operations due to a catastrophe, accident, or emergency.

What is a Business Impact Analysis (BIA)?

Published on:

12 Jan 2023

The business continuity plan of an organisation must include a BIA. It has an investigative component to find any threats and vulnerabilities and a planning component to create risk-reduction plans. The result is a business impact analysis report that details the potential risks unique to the enterprise under study.

Before the internet, social media, and artificial intelligence, a company could prepare a five-year business plan, develop a strategy, and then put the plan into practice.

Similarly, a Business Impact Analysis might be developed to find future business continuity threats. The study might then be evaluated, risk mitigation measures developed, and then put on hold until the day a significant occurrence might necessitate their implementation.

Today, controlling business disruption is business as usual, and having a disaster radar on round-the-clock is a tool every organisation needs. A firm will be thrown off track by all minor disturbances, not just one major one.

By assessing possible business weaknesses, business gets a much more complete picture of their business risks and opportunities for improved business performance and how best to allocate resources today and in the event of an unforeseen and potentially catastrophic event.

Awareness of the internal and external factors impacting business growth today and tomorrow improve business decision-making.

Business disruption comes in many forms, whether due to competition, technology, the economy or regulation, amongst many other possibilities. Businesses seldom die from a single disruption but more commonly from mini troubles that may go unseen or unknown. When a larger, more obvious disorder occurs, this can bring the end, but it was probably not the real underlying cause of the failure.

According to systemic leadership, a disruption in one area of the organisation will impact all other areas. These disruptions exist quantitatively and qualitatively and may impact the environment, employees, the larger community, and society.

What Is Business Analysis?

The business analysis uses IT systems, staff development, procedures, and business systems to pinpoint business problems, create solutions, and address them. Software development, process enhancements, organisational change, company transformation, and policy revisions may all be involved.

The business analysis aims to reduce risk and increase the value of any change program for its constituents. They will consider all stakeholders as part of a stakeholder capitalism program when doing a business analysis that covers Environmental, Social, and Governance (ESG) factors and their effects on growth and profitability. This may include the rules and regulations about ESG compliance. ESG factors are becoming more and more significant to investors, employees, and customers. 

To maintain or boost individual and corporate productivity, they will work to maximise flow for the organisation, teams, departments, and personnel.

Business analysis is determining and outlining the demands of an organisation’s operations and suggesting solutions to meet those needs. A business analyst’s job is to serve as a liaison between the technical team and the business stakeholders, ensuring that the created resolution satisfies their needs.

A business analyst can offer insights that can guide decision-making and assist an organisation in achieving its objectives. They also considers the impact on stakeholders by collecting and analysing data and comments from stakeholders.

Furthermore, business analysis can assist in locating new opportunities, places for improvement, and prospective growth areas and generate solutions that may result in business success, cost savings, increased revenue, and, therefore, benefits for shareholders.

Overall, business analysis is essential to guarantee the long-term success of the company by bringing stakeholders’ interests and the company’s goals into alignment.

Business Continuity Planning (BCP)

The IT department of a corporation frequently develops a business continuity plan to reduce the risks of an unforeseen incident, like a flood or fire. It’s a proactive procedure that finds the company’s flaws and crisis-related vulnerabilities. Its purpose is to help avoid unplanned downtime and recover from it. It will go over the processes and systems that must be kept up in a crisis, like a server failure, a pandemic, or a natural disaster.

The BCP must be maintained and regularly updated as it contains key information essential to the organisation’s successful operational performance. It should be tested to find any flaws so that they can be fixed and procedures updated.

Its purpose:

· To hasten a company’s ability to recover from an unplanned, major business incident.

· Understanding potential threats to ongoing business performance and determining the necessary responses in the case of an unforeseen and unscheduled business event are made easier for a company, its directors, and senior personnel using this tool. This helps minimise any negative effects on the business’s finances and retain consumers.

· Any unplanned business event will be lessened by a BCP, which will also help to maintain the company’s financial viability.

· It will contain important policy details, contact information for key employees and other stakeholders, and crucial procedures to help implement any business recovery quickly and successfully.

· Any single points of failure, current risk mitigation techniques, and the expertise required to recover from an incident will all be identified.

BS 25999 and ISO 22301

BS 25999 and ISO 22301 are international standards for business continuity management (BCM). BCM is organising, creating, and upholding policies and procedures that businesses can utilise to lessen the effects of disruptions and go on during an emergency or catastrophe.

A British standard for BCM called BS 25999 was initially released in 2007. It offers recommendations for businesses on how to set up and maintain a BCM system, including how to do risk analyses, create business continuity plans, and run tests to see how well they work. ISO 22301 eventually took the place of BS 25999.

A global standard for BCM called ISO 22301 was originally released in 2012. Although it is based on BS 25999, additional international BCM standards are also included. Similar to BS 25999, ISO 22301 offers instructions for businesses on how to set up and manage a BCM system. This includes how to carry out risk analyses, create business continuity plans, and carry out exercises to evaluate the viability of those plans. It offers a more thorough approach, though, and is used everywhere.

The BCM systems of organisations can be developed and implemented using the frameworks provided by BS 25999 and ISO 22301. They can also be used to verify the efficacy of a BCM system. Organisations that have earned certification following one of these standards have proven that they have implemented the best BCM practices. That shows they are better equipped to manage interruptions and carry on with business in the case of an incident or crisis.

Why Complete a BIA?

It might not seem vital to spend the time and use up important resources on a BIA right now. Maybe you believe you already have one, but when was it finished? If your company hasn’t changed significantly, you might believe it isn’t necessary, not business-critical, or not a top priority. You might think that an audit is the only use for it.

So, these are a few justifications for finishing a business impact report:

· It provides a chance to examine business processes, their interrelationships, and the IT systems utilised in those processes.

· You’ll be able to identify any flaws, such as the lack of data backup or the need for a few key employees who are the only ones with the necessary system knowledge.

· You may see how various departments and groups interact and how that might be enhanced. You can learn how things are done. Work frequently follows the path of least resistance, but is this always the optimal course of action or is it simply how people perceive things to be done?

· Plans for important IT and catastrophe recovery are examined to see if they can improve. Compliance with regulations is verified and validated.

· It may be possible to eliminate fees for things that are no longer used, such as applications, insurance, and licenses.

· The organisation’s pulse is measured to see whether there is a potential danger to the resilience of the business, and critical processes, functions, roles, and departments are identified.

· You leave with a much better comprehension of the business risks and prospects for increased business success.

Everyone has the chance to learn more about the company they work for. Additionally, individuals appreciate when management is interested in them, their role, and the dangers involved.

Negative Results Of Business Disruptions

Brand and Reputational Damage

It can harm an organisation’s reputation, which can cause customers, partners, and other stakeholders to lose faith in and credibility with it. This may result in a decline in sales and difficult-to-repair brand damage.

Reduced or Delayed Cashflow

It can result in a decrease in revenue and an increase in expenses, which can hurt an organisation’s cash flow. This may make it challenging for a firm to fulfil its financial commitments, such as paying its employees and expenses, and may result in financial trouble.

Lost Sales and Income

Because clients would not be able to acquire goods or services or could decide to work with a rival, business disruptions can result in a loss of sales and income. This can majorly affect an organisation’s financial performance, which can be catastrophic for small enterprises. 

Increased Expenses and Overheads

Costs associated with repairs and recovery activities are only two examples of how business disruptions can raise expenses. This may hurt an organisation’s cash flow and profitability and make it more challenging to bounce back from the trouble.

Fines and Contractual Breaches

If a company cannot fulfil its commitments under contracts or laws, business disruptions may result in fines and penalties. This has the potential to be expensive and harm an organisation’s reputation.

Bad feelings and impact on the business culture and operating environment can also affect relationships with suppliers and other stakeholders, staff morale, and productivity. An organisation may find it difficult to bounce back from the interruption, which may negatively affect the operating environment and corporate culture.

Structural Business Impact Disruptions Include

1. Natural catastrophes can cause damage to structures, rendering them unusable.

2. Failure of IT systems, manufacturing machinery, or transportation vehicles can cause operations to be disrupted.

3. Issues with the supplier: Delivery, quality, or availability issues for goods or services might cause operations to be disrupted.

4. Power outages can cause activities to be disrupted by making it difficult or impossible to use equipment and systems that depend on energy.

5. Data loss: Operations can be hampered by the loss of crucial data, including financial, customer, or inventory information.

6. Absenteeism among employees: Excessive absenteeism can cause operations to suffer, making it challenging to finish tasks and projects.

Impacts That May Affect The Business Strategy

Competitor action

By altering the competitive environment and influencing consumer demand for a company’s goods or services, competitor activity, such as new product launches or pricing changes, can impact a company’s strategy.

Failure in marketing

A business’s strategy may be impacted by a marketing failure, such as an unsuccessful advertising campaign, which lowers the demand for the company’s goods or services.

Product or service failure

A product or service failure, such as a recall or a technical problem, can impact a company’s strategy by decreasing consumer satisfaction and faith in the company.

Declining working culture

A company’s strategy may be impacted by a deterioration in the working culture within the firm since it may lower staff morale and productivity, which may result in a drop in the calibre of goods and services. 

Declining working environment

Employee dissatisfaction and productivity can be negatively impacted by a reduced working environment, such as inadequate facilities or equipment, which can affect a company’s strategy.

Increased workload and stress levels

Increasing staff productivity, motivation, and contentment can hurt a company’s strategy.

New directors or managers with different values

Changes in organisational direction brought about by hiring new directors or managers with different values can impact a company’s strategy, which can lower productivity by confusing and unsettling staff.

Typical Phases Of A Business Impact Analysis

Define And Agree To The Objectives And Scope Of The BIA

This stage is essential for making sure the BIA is concentrated on the business areas that are most important to the organisation and that the analysis’s findings will be beneficial to it. Senior management agrees on the objectives and scope of the BIA

Preparation Of Team

This step entails selecting the people and organisations in charge of carrying out the study and ensuring they have the abilities, information, and resources required to do so successfully.

Additionally, it’s crucial to make sure the team members are properly trained and equipped, including with the tools and information they need to conduct the BIA.

Collect Relevant Data And Information

The BIA lead or team gathers the needed data from the necessary staff members, systems, and outside sources. To ensure accountability, make sure senior leaders are participating.

Consider listing the following information for each process under review: process name, process purpose, process inputs and outputs, process timings, participants, pertinent data, IT systems, and effects or contributions to the business on the legal, financial, reputational, and operational levels.

Information Review And Analysis

To determine the potential effects of disruptions on the business, this stage entails gathering, analysing, and evaluating data on the organisation and its crucial operations.

The information is then examined to ascertain how various disruptions might impact the firm and its operations.

In addition to evaluating potential threats to the organisation’s reputation, brand, and long-term viability, this can also include determining the possible effects of interruptions on revenue, costs, and other financial measurements. The team will also assess how various organisational components are interconnected and dependent on one another and how disturbances in one business area may impact other areas.

Business Report Creation

Create the BIA report with the team, evaluate it with the contributors, and distribute it to the appropriate senior leaders. This step entails writing information that includes suggestions for addressing identified risks and vulnerabilities and summarising the BIA’s findings. An executive summary, an explanation of the BIA methodology, a list of essential business operations and possible effects, a risk assessment, and a recovery plan might all be included in the report.

Recommendations Review

The team will consider various potential remedies throughout the recommendations assessment to address the noted risks and consequences. Examples of these solutions include implementing new practices, guidelines, or processes, acquiring new tools etc. The team will assess each solution’s viability, cost, and advantages while considering the organisation’s resources.

Ongoing Review And BIA Maintenance

The BIA should be periodically reviewed and updated to ensure that the data and suggestions are still valid and pertinent. This can be done regularly, such as once a year, or in reaction to adjustments made to the organisation’s activities, including the introduction of new goods or services, modifications made to the regulatory landscape, or adjustments made to the organisation’s risk profile.

Critical Success Factors For A BIA

· Senior management support: For a BIA to be successful, senior management must be committed and supportive. They must recognise its significance and be prepared to offer the resources and assistance required.

· Clear objectives and scope: To ensure that the BIA is focused and pertinent to the organisation’s BCM program, it is crucial to identify its goals and scope explicitly.

· Skilled and experienced team: A BIA needs a group of knowledgeable, experienced persons with the skills and information required to carry out the analysis successfully.

· Accurate and relevant data: For the BIA process, accurate and pertinent data is crucial. Without it, the analysis will probably be flawed, and the suggestions might not work.

· Communication and stakeholder engagement: To get information and input from key stakeholders, including employees, clients, and suppliers, effective communication and stakeholder engagement are crucial.

· Maintenance and Regular review: A BIA should be reviewed and updated regularly to ensure the data and suggestions it provides are still accurate and useful.

· Implementation and testing: This is essential to ensuring that the organisation is ready to respond to and recover from disruptions.

Disaster Recovery Planning

Once the BIA is finished, an emergency response plan can be developed. Time must be spent on disaster recovery planning once the processes, procedures, systems, and data are essential for the business’s continued operation after an otherwise terrible occurrence has been identified.

For instance, it is important first to comprehend how a flood or fire would likely affect clients, employees, revenue, partners, and suppliers. A disaster recovery plan can be made to restore or safeguard crucial infrastructure, applications, and data after a significant outage to save downtime.

Determining recovery time goals and recovery point objectives(RPO) is a crucial component of the disaster recovery plan. Recovery time targets describe how long it should take to resume regular business operations and the associated costs and effects on the company. Furthermore, recovery point objectives discuss the potential loss of data and its impact on the company.

BIA and Risk assessment

Both the Business Impact Analysis (BIA) and the Risk Assessment processes are crucial in identifying and assessing potential effects on a business. They do, however, have some glaring parallels and divergences.


· Identification and evaluation of potential effects on an organisation are made using BIA and risk assessment.

· It is necessary to identify crucial business functions and their connections for BIA and risk assessments.

· Evaluating potential effects and likelihood of occurrence is a component of both BIA and risk assessment.

· Plans for mitigation and recovery are created using both BIA and risk assessment.

Differences between the BIA and Risk assessment

· Risk Assessment focuses on determining the likelihood and potential severity of a disruption, while BIA focuses on assessing the impact of an upset on the company.

· While Risk Assessment focuses on locating potential sources of disruptions and the possibility that they will occur, BIA concentrates on finding essential business operations and their interdependence.

· BIA determines the impact of disorders on the company, while Risk Assessment assesses the likelihood and potential severity of disruptions.

· While Risk Assessment is used to discover and assess potential risks and vulnerabilities in the company, BIA is used to create mitigation and recovery plans to deal with the effects of disruptions.

Common Challenges With Business Analysis Impact

The process of doing a business impact analysis (BIA) can be difficult and complex, and there are many problems that firms frequently run into.

These difficulties include:

Difficulty identifying critical functions

Finding the tasks that are essential to the ongoing running of the business is one of the major problems of a BIA. This can be challenging since different departments or functions within an organisation may have different viewpoints on what constitutes a critical function. Assessing a function’s criticality might be an arbitrary procedure.

Lack of data

Lack of data and knowledge is another frequent issue. It can be challenging to analyse the possible effects of disruptions on the business effectively and to make well-informed decisions about mitigating those consequences without precise and pertinent data.

Limited alignment with organisational goals

Activities related to business analysis could not necessarily align with the organisation’s broader aims and objectives, which would have an unreasonable impact.

Difficulty in communicating the impact

Business analysts could have trouble explaining to stakeholders how their actions would affect them, which could result in a lack of understanding and support.

Limited collaboration and communication

Business analysts could not have the requisite stakeholder collaboration and communication skills, which would restrict their impact.

Limited knowledge and abilities

Business analysts may lack the information and skills needed to conduct business analysis operations efficiently, which will have little impact.

Limited time

Business analysts might only have a short amount of time to accomplish business analysis tasks, which could affect the deliverables’ accuracy and thoroughness.


BIA can assist firms in creating efficient mitigation and recovery plans that lessen the effects of disruptions and help preserve operational continuity by recognising potential risks and vulnerabilities. As a result, businesses can lower their environmental impact and increase the sustainability of their operations. This enhances people’s lives by maintaining access to basic services, and secure the world’s future by minimising disruptions’ effects on the global economy and society.

The entire health of the earth and society can be improved by organisations becoming more resilient, sustainable, and proactive in managing risks with the aid of BIA.

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