Marsh’s ‘Business Continuity Management’ Survey Finds Firms ‘Over-optimistic’

April 1, 2008

A new survey from Marsh has determined that “many European firms are failing to overcome a ‘perception gap’ in their approach to business continuity management (BCM).

Marsh’s latest research, The Upside to Business Continuity, examines the views and perceptions of Business Continuity and Risk Managers from organizations across Europe on issues relating to BCM. The survey consulted professionals from delegates attending the Business Continuity Expo, which is being held on the 2, 3 April at the ExCel Centre, clients of the British Standards Institute and members of London First.

The study found that, “while over three-quarters of respondents believed that their BCM is: aligned to their strategic business objectives, integrated into their risk management program and is understood/supported by senior management, only half believe BCM is used as a strategic tool within their organizations.”

Martin Caddick, Leader of Marsh’s Business Continuity Management team, commented: “Our research suggests that organizations which believe their approach to BCM is mature or very mature are generally being optimistic. It seems that many businesses overrate their own level of BCM and their perceptions do not match the reality.

“However, it is encouraging to note that more organizations are aspiring to a view of BCM as part of an integrated approach to risk, even if their implementation has yet to catch up.”

Marsh set out the following areas examined and conclusions reached in the survey:
Supply chain risk
The research examined whether firms are using BCM strategies to offset their supply chain risk, one of the biggest challenges facing businesses this year: 54 percent of respondents agreed that their BCM plan covers their supply chain risks, with 22 percent saying that it definitely did not; 24 percent of respondents were unsure.

Caddick noted: “As supply chains have extended, especially into the Far East, the nature of disruption and vulnerability in the risk landscape has changed significantly. Embracing BCM to help manage supply chain risk can deliver real business benefits. Given that nearly half of the respondents stated that their BCM plans did not cover supply chain risks or they were unsure only reinforces our view that firms are overrating the maturity of their BCM.”

Barriers to BCM
The research also highlighted how many firms still view BCM as an additional service, rather than intrinsic to their culture and strategy. When asked to identify the barriers to BCM within their organizations, the most common stumbling blocks cited were lack of time and resources, and lack of budget. In the study, Marsh concludes that the barriers are more related to a lack of understanding of the level of resource and commitment required to do the job properly, which again is in contrast to firm’s perception of how mature they believe their BCM program is.

BS 25999
Marsh also questioned the respondents about the new British Standard, BS 25999, which regulates BCM program implementation and management. Although a British Standard, it has relevance outside of the UK and is recognized as a useful tool for any firm that is trying to implement a BCM program.

Only 39 percent of respondents said they intended to align their organization with BS 25999 in the next two years, while 19 percent said that they did not intend to align their organization with BS 25999 and 42 percent were undecided.

Looking more closely into the country of origin shows that BS 25999 alignment is a more serious issue for UK firms, with 60 percent agreeing with the proposition. Outside the UK, half the respondents remain undecided, but 28 percent of foreign businesses do intend to comply with the standard, a surprisingly high level of acceptance.

Benefits of BCM
Marsh also explored the perceived benefits of BCM among the respondents: 32 percent of respondents were able to point to faster recovery after real incidents as a benefit, while 96 percent of firms found at least one other benefit to implementing a BCM program, with 52 percent of firms finding two or more. In addition, over the last 12 months 50 percent of respondents found that they had a better understanding of their business, and 37 percent found they have improved their risk-intelligent decision making.

Caddick commented “This finding shows that although BCM’s primary role may be to help organizations recover from an incident, it has many other ancillary benefits. These benefits can yield huge benefits to business; the fact that 37 percent of respondents believe that their strategic decision-making has improved because they had a BCM program is very encouraging.

“A more incisive understanding of your business and risk-intelligent decision making will improve the effectiveness of the overall risk management and resilience strategies, which can potentially lead to a better return from the investment in these areas. More mature firms are utilizing BCM as a strategic tool to gain these extra benefits and thus improve the bottom line of their business. BCM is not just a risk mitigation and control tool – but also to add value and create an upside for firms.”

Source: Marsh – www.mmc.com or www.marsh.com.

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