Descriptions and Definitions of Quality Terms, Tools and Techniques

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Business Impact Analysis (BIA)

Business Impact Analysis (BIA) is the process of assessing the impact on the organization should a particular event occur, for example the failure of a process or the occurrence of any other risk.

Impact can be experienced in a number of ways and its dimensions include:

• Coverage: The processes and people affected.
• Spread: The dynamics of how it spreads over time.
• Duration: How long it lasts, both if nothing is done or if a recovery effort is undertaken.
• Mop-up cost: The short-term cost of handling the impact.
• Long-term cost: The cost in terms of lost business and other longer-term financial issues.
• Dissatisfaction: The effect on customers and others in terms of satisfaction.

An impact analysis may include:

• Mapping of the processes and resources in the business area being analyzed.
• Identifying those who are dependent on the outputs of these processes.
• Assessment of the criticality of continuity for this overall area.
• Identification of weaknesses and single points of failure.
• Selecting a set of points for deeper analysis.
• Full assessment of the impact of the selected points.

The result is then carried forward into action planning where plans are made for:

• Immediate action to reduce the probability / impact of risks identified.
• Monitoring of the risks to determine changing probability.
• Preparation for contingency action should the risk occur and the impact felt.

Business impact analysis is often done as a part of Business Continuity Planning (BCP) and may categorize risks depending on the overall impact and satisfaction/cost effects. BIA and BCP are also effectively part of business risk management (which is closely related to quality management).

See also:

Risk management

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