1 / 14

Business Continuity Management

Business Continuity Management. Do you know the impact of business interruptions on your companies' financial performance?. How to enhance your risk management function by implementing BCM. Aon Global Risk Consulting – Alex van den Doel / Rubert Nieuwenhuis

marli
Download Presentation

Business Continuity Management

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Business Continuity Management Do you know the impact of business interruptions on your companies' financial performance? How to enhance your risk management function by implementing BCM Aon Global Risk Consulting – Alex van den Doel / Rubert Nieuwenhuis VimpelCom – Ramon Tolk DACT8 November 2013

  2. Why Business Continuity Management matters Ship route Suez Canal essential for international trade

  3. Stress Testing your continuity risks – approach What (extreme) scenarios can jeopardize your financial objectives? Approach • Define risk bearing capacity • Develop scenarios • Industry specific • Organization specific • Out-of-the-box • Quantify impact of scenarios • Evaluate against risk bearing capacity

  4. Stress Test – Risk Bearing Capacity • Information from financial statements • Balance sheet total: 880M • Equity: 330M • Solvency ratio = 38% 39 % 38 % 37 % 36 % 35 % 34 % 33 % 32 % 31 % • Covenant in financing arrangement specifies a threshold of 34% • Claim of 50M will lower ratio to 32% • Breach of Covenant! • An impact of 28M will lower the ratio to 34% → RBC = 28M

  5. Perception of business continuityrisks Source: AonGlobal Risk Management Survey 2013 - 1.415 respondentsrepresenting a broad range of industry sectors in 70 countries (64% > 1B turnover)

  6. Impact onfinancial performance • An average impact of 25% on shareholder value and an impact whichcommonly lasts for two years! • Historically, supply chain disruptions canlead to an average of 9 percent lower sales and 11 percent higher costs! • Both physical and non-physical events drive supply chain disruptions, and 85%of companies reported disruptions in2011 (study of BCI in 2011) • Other recent examples: Source: VinodSinghal, Professor at Georgia Institute of Technology, and Professor Kevin Hendricks, Richard Ivey School of Business, The University of Western Ontario, London, Ontario N6A-3K7, Canada

  7. Objectives • Protecting your financial performance from the impact of business interruption risks • Understanding methods and techniques to map supply chain interruption risks and quantify the financial impact on revenue generating activities • Enhancing Enterprise Risk Management by implementing Business Continuity Management and focus on high impact exposures • Evolving the Risk & Insurance function towards a more mature operational risk management function

  8. Agenda • Analyzing the impact of business interruptionexposuresonfinancial performance • Business Continuity Management - Execution • Link BCM – ERM • Buiness Continuity Management Process • Quantifyingfinancial impact • Business Continuity Management – In Practice • Case studyVimpelCom – Peter den Dekker • Questions

  9. What is BCM "BCM is the ongoing process of identifying continuity threatening risks and defines a program for mitigating those risks and recovering as soon as possible within predefined time objectives". Structured programme and process

  10. How does BCM link ERM? BCM is the key mitigation for continuity risks BCM is becoming more and more a strategic topic!!

  11. BCM Process

  12. Quantifying financial impact - Business Impact Analysis (BIA) • BIA provides a very structured and efficient approach to: • Identify and quantify business interruption risks • Map complex and global supply chains • Measure the value of current mitigation measures • BIA enables organizations to consolidate the BIexposure from unit level to every consolidated level (country, regional, global, etc.) • The BIA provides a solid basis for risk management improvement: • Clear picture of the biggest interruption risks, accumulation effects and critical issues • Focused development of risk management strategies (loss prevention and response) • Optimization insurance cover and limits • Enhancing business interruption risk awareness and understanding

  13. Step 2: Example of results of quantification unit level Supply chain analysis Site analysis Dataroom analysis

  14. Step 2: Quantifying consolidated level Delivering two key elements: • Dependencies network • Based on unit level outcome defining and modeling material dependencies between suppliers, own units and customers • Making use of a "engine" to simulate impact • Consolidated risk profile on selected level • Calculating the impact of unit level events though dependency network • Creating consolidated loss exposure profile on selected level

More Related