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In undertaking a Business Impact Analysis (BIA), the analyst is required to estimate the impact on the organisation of a disruption to a product, services, process, or activity. If you read the literature about undertaking a BIA, you will often find lists of types of impact that can be considered, such as financial or reputational, and in many instances you will see something such as “Damage to the Environment” listed as an impact. This is incorrect, and in a common misconception.

It is incorrect because something such as “Damage to the Environment” is not an impact on the organisation. It is an impact that a disruptive event can have, but the impact on the organisation is what happens as a result. Including such things as a direct impact on the organisation confuses cause with effect. A well known example will illustrate what I mean.

The Deep Water Horizon oil spill has a major impact on the environment of the Gulf of Mexico, but the impact on BP was not environmental. The impact on BP was the reputational damage, the cost of cleaning up the oil spill, the compensation claims, and the fall in share price. Yes, “Damage to the Environment” is an impact, but only in so much as it is the cause of real impacts on the organisation.

Confusing cause and effect is, in my opinion, one of the common causes of poor BIA’s in the public sector. This is because analysts naturally look at the wider effects on society of a disruption to services, rather than the impact on the public sector organisation itself.

 

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