September 1, 2023 | By Greg Dougherty
Business Continuity Plans for Financial Institutions
Disasters rarely strike with advanced notice. That’s especially true in the business world, where there’s no such thing as a business meteorologist to forecast potential threats that may beset a company’s personnel or assets. That’s where a Business Continuity Plan comes into play.
What is a Business Continuity Plan?
A Business Continuity Plan (BCP) is an operational strategy outlining all significant efforts and actions an organization is expected to take in the event of a disaster, such that they can continue running their business with minimal loss and downtime. All BCPs are centered around protecting both a company’s personnel and its assets from disaster, whether they be physical (e.g. earthquake) or digital (e.g. cyber attack).
How financial institutions should create their Business Continuity Plans
Financial institutions may be especially prone to threats, perhaps in the form of attempted heists or cyber attacks on their monetary funds. Here are essential considerations for any financial institution looking to bolster up their BCPs:
Business impact analysis
Conducting a business impact analysis is the first step in developing an operable BCP. Essentially, a financial institution will want to appraise a realistic downtime cost in the event a disaster besets them. While figures for every organization will vary, consider that the average medium-sized business can lose up to $216,000 per hour due to downtime from a disaster. For an enterprise-level business, that number jumps up to $686,000 lost in that same time span. Next, compare that figure to what it would reasonably cost to implement an operable BCP. Doing so will paint a clearer picture regarding the value that a BCP will bring to your business. Naturally, most financial institutions will not be able to stomach elongated downtimes, which means it’ll be imperative for them to invest in a thorough BCP, leaving as few stones unturned as possible from BCP ideation to completion.
Risk assessment
In this step, a financial company is evaluating likely risks that could potentially befall them, then prioritizing them in order of likelihood and severity of impact (e.g. adverse effect to them, their customers, and/or financial markets). There is no shortage of what a risk or disaster can take the form of, but common threats could include:
- Natural disasters: hurricane, earthquake, tsunami, etc.
- Human-driven threats: theft, cyber attacks, acts of terror, etc.
- Technological interruptions and failures: software/hardware malfunctions, data loss, frozen accounts, etc.
Additionally, it’s important to consider that financial institutions are typically part of a greater ecosystem of interdependency, whether it be in partnership with other financial companies, or with binding agreements with consumers or the general mass market. An effectualized disaster may lead to one or more adverse effects, such as:
- Inability to withdraw funds for consumers
- Inability to pay out pensions, investments, and/or salaries
- Inability to deposit or transfer funds between financial institutions
By mapping out all likely risks and adverse effects, you can help your financial institution better prepare to combat a disaster if/when one takes place. While you may not be able to anticipate every possible threat out there, approach BCP preparation from a mindset that even something is better than nothing. Of course, the more thorough your risk assessment, the better prepared your organization will be.
BCP creation
After conducting a business impact analysis and assessing likely risk, your financial institution can now create its BCP. Ensure the following when crafting your BCP:
- BCP is written and disseminated so that various teams and personnel can access and employ it with minimal latency.
- BCP is specific both its efforts/actions and in its delegation to the appropriate personnel.
- BCP emphasizes how to minimize downtime, and get business operations up and running as efficiently as possible in the event of a disaster.
- BCP focuses not just on responding to specific threats, but specific function or facility failures.
- BCP addresses the best practices/methods to minimize or recoup financial loss.
Disaster Recovery Planning
Disaster Recovery Planning (DRP) is an essential part of a financial institution’s BCP. The DRP should outline specific protocols and requirements for the recovery of its systems, with the foresight and ability to back them up as needed. For more on DRP preparation, read our 10 Key Elements of Disaster Recovery Plans.
Risk monitoring
Risk monitoring involves ensuring the strength and viability of an organization’s BCP through the following:
- Testing the BCP in a simulated disaster environment.
- Auditing the BCP at least annually.
- Updating and optimizing the BCP based on tests and audits, as well as changes to personnel and internal/external infrastructure.
Outsourcing your Business Continuity Plan
Optimizing BCPs—especially for financial institutions—isn’t a one-and-done job. It’s a continuous process of implementing, testing, honing, and then repeating. For many organizations, creating an operable BCP is a bigger commitment than what their bandwidth currently permits them to undertake. opti9 is a potential alternative to doing BCPs in-house. At opti9, we offer entirely customizable Business Continuity Plans and Disaster Recovery Plans, including Off-site Backup, Ransomware Recovery, and IBM Disaster Recovery. Learn how we can help bolster protection of your company’s data and assets here .