Paul Johnson, Manager Business Risk Consulting Group
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Paul Johnson, Manager
Business Risk Consulting Group
Water UK Asset Management Forum Workshop
London, 12th May 2004
Agenda
• Water Industry Incident Experience
• Business Continuity Management Framework
• The Business Impact Analysis process
Water Industry Incident Experience
Water Industry Loss Experience
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
No
of
Lo
sses
1998 2000 2001 2002 2003 2004
Year
Losses within International Water Companies 1998-2004
Miscellaneous
Pressure equipment failure
Mechanical breakdow n
Electrical breakdow n
Flood
Robbery
Theft
Burgalry
Water damage
Collapse
Earth Movement
Riot & Vandalism
Escaped liquid
Vehicle
Wind or hail
Lightning
Fire
Water Industry Loss Experience
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1998 2000 2001 2002 2003
Year
Loss values within International Water Companies 1998-2003
Misc
T hef t/ Robber y
Mechanical Br eakdown
P r oduction Issues
Natur al disaster
Business Continuity Management Framework
BIA in context – business continuity*
1
5
4
3
2
6
understanding your business continuity
strategies
developing the response
establishing the continuity culture
exercising and plan maintenance
BCM programme
management
*The Business Continuity Institute 2002
BIA in context – business continuity*
1
5
4
3
2
6
understanding your business continuity
strategies
developing the response
establishing the continuity culture
exercising and plan maintenance
BCM programme
management
*The Business Continuity Institute 2002
business continuity management* framework
Stage 1. Understanding Your Business
Organisation StrategyOperational and Business
Objectives
Business Outputs & Deliverables
(Service & Products)
Critical Business Factors(Critical Activities)
Stage 2. Business Continuity Strategies
Organisation (Corporate) BCM Strategy
Resource RecoveryBCM Strategy
Process LevelBCM Strategy
Stage 3. Develop and Implement a BCM response
Business Continuity Plan(s) Crisis Management Plan
Resource Recovery &Solutions Plans
Business
Impact
Analysis
*The Business Continuity Institute 2002
The value chain
Firm Infrastructure - Finance
Human Resources
Information Technology
Procurement
Inbound Logistics
Outbound Logistics
Operations Marketing & Sales
Service
Profit
The Business Impact Analysis process
Business impact analysis – process
What are the key hazards? What is the quality of risk mitigation within the business? What are the credible loss scenarios?
Engineering Risk Analysis
How much profit do these products and services generate? Where are the costs associated with their delivery to customers?
Financial Analysis
Business Impact AnalysisWhat are the key facilities and processes that drive revenues and costs, what could go wrong within these and what would be the cost to the business if it did go wrong?
How can these exposures be mitigated in order to ensure business continuity and protect shareholder value?
Risk Mitigation Opportunities
How do products and services flow through the internal and external supply chain? How could these flows be interrupted?
Business Model Analysis
What does this mean to you?
• Corporate GovernanceImproves your understanding of key property-damage related exposures and how they can be mitigated
• Capital Investment OptimisationProvides you with a tool to optimise risk-focused capital investment decisions – where best to spend your money
• Shareholder Value ProtectionProtects shareholder value through identifying opportunities for you to reduce operating cash flow volatilityRisk reduction => cash flow stability => shareholder value
www.fmglobal.com
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