Transcript Marsh Risk Services Risk Solution Services

Maintaining Operations in the Face of Unexpected Loss
New Realities in Business Continuity Management
William Pollock
Snr VP & National Manager
MRC-Risk Services
Melbourne
General Overview - MRC
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Management Consulting Division of Marsh
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Global Representation
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Principal focus - To provide risk solutions to clients
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Multiple portfolios / services / operating synergies
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BCM - A Viewpoint
BEING PROPERLY PREPARED IS A COMPLEX SCIENCE
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AN OPINION
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MURPHY’S LAW STILL EXISTS - BUT WE DON’T HAVE TO MAKE
IT EASY FOR HIM
WE CAN NEVER COVER ALL THE BASES ALL OF THE TIME - BUT
GOOD BCM CAN KEEP YOU IN THE GAME
“WINGING IT”
- IS FOR THE BIRDS - AND SHOULD BE AVOIDED OR
BECOME AN ACTION OF LAST RESORT
- IT USUALLY ONLY WORKS WELL:
¯ IN THE MOVIES OR
¯ IF YOU ARE ALL GOING IN THE SAME DIRECTION
AND READING THE SAME SCRIPT - (ie GOOD BCM)
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BCM - What Does It Mean?
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DEFINITION:
The development, maintenance and implementation of
strategies; plans and actions to ensure the continued
availability of critical business processes and services
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It includes:
–pre-empting the impact of an incident / crisis
–responding to the incident / crisis
–implementing contingency / continuity plans
–stabilising / recovering critical functions
–resuming / restoring normal operations
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BCM – What are the Drivers?
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Legislation / Regulations / Statutes / Standards / Government Reports
– ASX Corporate Governance guidelines,
– CLERP 9
– APRA - Australia (GPS 222)
– Sarbanes Oxley in the USA,
– Australian Standards Handbook HB 221 - Business Continuity
Management
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Precedents / Royal Commissions / Senate Inquiries / Parliamentary
Inquiries
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Increasing Litigation / Speed of Communication / Investigation /
Observations
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Customer, employee, stakeholder and supplier expectations
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BCM - WHAT IS REALLY DIFFERENT
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COMMUNITY IS BECOMING INCREASINGLY MORE AWARE
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EXPECTATIONS ARE HIGHER
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LEVELS OF TOLERANCE ARE DECREASING
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ENVIRONMENT IS BECOMING INCREASINGLY MORE COMPLEX**
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PERCEPTIONS CAN “CAUSE DAMAGE”
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RULE OF PRECEDENT
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BCM - why do it?
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General Findings:
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43% of businesses experiencing major disasters never re-open
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29% close within three years
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< 50% of organisations have business recovery plans and at
least 90% never test the plans
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75% of businesses are UNABLE TO FUNCTION without IT
support within 14 days
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“recovery time” is invariably underestimated
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“costs” of recovery not always recovered by BI
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Business Continuity Plan
Why is the Plan itself – so important?
– regulated requirement
– specific response capability vs risk profile vs time
– optimisation of response & recovery strategy
– pre-determined allocation of resources / equipment
– focussed preparation / implementation / training
– enables assessment of specific capabilities and preparedness
against known risk / incident type
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Business Continuity Management
How do we go about it?
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BCM definitions:
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Emergency Response
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Crisis Management
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Crisis Communication Management
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Business Continuity Plan
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Disaster Recovery Plan (DRP)
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Business Continuity Management
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What are YOU trying to do?
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Prevent the problem
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Fix the problem
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Manage Issues & Implications
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Recover and Continue from the event
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Protect the Enterprise
Act diligently
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Business Continuity Management (BCM)
Marsh Integrated Approach
Policy
Training/
Awareness
BIA / Risk
Assessment
Enterprise
Value
Recovery
Strategies
Emergency
Response
Crisis Management
&
Communication
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Plan development - Step by Step
Process
Recovery Priorities
BUSINESS
OPERATIONS
Critical Business
Processes
Recovery Time
Objectives
Recovery
Procedures
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Recovery Options
ALTERNATIVE
OPTIONS
(RECOVERY RESOURCES)
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BCM – A Development Perspective
Some questions:
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What is the actual composition of the impacted activities?
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What are the critical elements / processes / areas of dependency associated
with the impacted activities?
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Where are the bottlenecks and / or key points of failure associated with the
impacted activities?
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Where does your office / function / organisation sit within the “greater” network
Are there any factors or 3rd party disturbances - outside your control - which
could directly / indirectly affect the recovery efficiency of the impacted activity?
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What are the precedents? How can you minimise impact on recovery?
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How do you retain control?
What level of pain are you prepared to carry before it detrimentally affects the
objectives of the business function and its subsequent recovery?
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What happens when a key process is overloaded /
disrupted?
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BCM Development
Some Practical Considerations – Think PROCESS !!!!
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Mission critical activity:
– Financial and non-financial impacts
– Recovery Time Objective (RTO) & Recovery Point Objective (RPO)
– Critical processes / inter- dependencies identified & prioritised
– Minimum level of resources identified - phased over time
– Key people / teams identified; trained; notified; activated; tasked
– Business recovery – linked to – IT system recovery / Hot Site !!!!!
– Key documents backed up & stored off site
– Expectations of Key stakeholders
– Constraints under which the mission critical activities need to operate
– Recovery priorities & acceptable levels of redundancy identified &
confirmed
– Audit; review, train and test
not an exhaustive or prescriptive list
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Coffee Break
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The World Trade Center had two 110story buildings, known as the "Twin
Towers" and five smaller buildings.
• Tower One was 414 meters tall.
•Tower Two was 412 meters.
• Built of aluminum and steel.
• The foundation of each tower extended
more than 70 feet below ground, resting
on solid bedrock.
• Each tower consisted of 104 passenger
elevators and 21,800 windows.
• About 50,000 people worked in the
complex, which housed the offices of
more than 430 businesses
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Indicative
Incident Response
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Evacuation
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Setting up an information centre, to register employees and make an
inventory of missing or wounded people
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Care for employees; families and victims; community
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Setting up communication and IT networks
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Creating alternative office space
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Managing / Recovering day to day business
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Security
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not an exhaustive list
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Merely Identifying Risks is Not Enough
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At Corporate level:
- many companies completed a risk assessment report to
Turnbull or other Corporate Governance requirements went no further or “believed” controls “in place” were
adequate
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Insurance was obviously vital for the businesses affected but it was
evident that insurance was not enough to ensure continued
operation.
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Risk Control is only the starting point - a waste of time unless
meaningful follow-up action is taken
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Some BCM Findings-General Market
– Processes
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Inability to locate key personnel - after evacuation
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poor security at secondary site
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ill-defined secondary / alternate site transition
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Inability to move to alternative locations with minimal disruptions
to ongoing business
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Inability to execute critical business functions in a timely manner
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undefined alternatives in “supply chain”
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Some BCM Lessons - General market
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Contingency Planning
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detailed plans - less effective
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logistical errors - common
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inadequate data recovery
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optimistic scenario planning
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People
– plans assumed impact on premises / functions
– BUT people skills / intellectual knowledge / resources still
available.
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People / intellectual property can and were lost
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Trauma needed to be managed
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Ability to handle stress and trauma is not always directly
associated with seniority
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Some BCM Lessons-General Market
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Logistics
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inadequate security for affected offices / companies
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relocation of large numbers of traumatised people and / or
support teams involved in recovery
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impact of loss of personnel; services and logistics
associated with relocation
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Crisis Management
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Confusion
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Secondary EOC - “outside” exclusion zone
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logistics - impaired efficiency / speed of EOC set-up /
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wide area issues need to be considered
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Some BCM Lessons-General Market
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Telecoms
– businesses may not be able to rely on telecom networks in the event of a
major emergency
– Examples:
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need to check for “choke points’
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internet reliant firms saw websites down for days
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other firms experienced massive surge on internet utilisation
causing servers / routers to overload
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Some BCM Lessons-General Market
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Reputation Management
– all actions in the gun-sight of the media - during and post
incident
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stakeholder management issues not always clearly defined;
differentiated or managed appropriately
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public expectations need to be taken into account
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corporate reputation; brand management
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moral issues are paramount eg:
- compensation / medical / general insurance benefits /
severance
- trauma counselling / NOK
– Comparisons are inevitable - No Rules - unless international
precedents considered
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Some BCM Lessons-General Market
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Risk Identification - outside “Comfort Zone”
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if “likely” look for “global precedents & parallels
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do not be blinkered by “corporate / personal history”
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do not avoid the “apparently insolvable” - there is usually a
precedent
always debate the acceptance of risk and the associated
recovery strategy - they do change with time
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What Is Different
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Strategic Re-Assessment of BCM fundamentals
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multiple and concurrent points of failure in critical systems
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increased awareness of integration of “knowledge” and
systems
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human element + logistics vs technology
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geographical impacts (local-regional-global)
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supply chains / fish-bones
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redundancies vs interdependencies
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cross - industry impacts
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increased regulatory scrutiny
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References – post 9/11
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Text sourced from “global continuity.com”
– incorporating findings from McKinsey; Gartner; Dataquest;
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PWC
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Financial Review
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