Changing Business Environment of Coca-Cola

Changing Business Environment of Coca-Cola Summary The objective of this research is to study and evaluate the changing business environment of Coca-Cola over the past 5 years. To understand what business environment is one should have a clear idea initially about business. Business can be referred to as an economic act performed by an organization to attain its goals regarding profit, production etc. Any company would be affected by the environment surrounding it. PankajMehra (2008) defined Business Environment as The set of external factors such as the economic factors, socio-cultural factors, government and legal factors, demographic factors, geophysical factors, which are uncontrollable in nature and effects the business decisions of a firm or company. The research thus conducts a PEST analysis of Coca-Cola as well as identifies the environmental and ethical factor affecting the company. After the analysis, suggestions were given that would help the company to cope up with the challenges and changes that is being faced in the cur rent business scenario. PankajMehra, Aspects of Business Environment, 2008, Omega Publications INTRODUCTION During the recent years, there has been a tremendous increase in the number of people who are interested in Business. This was triggered by the flourishing of Far Eastern economies and especially the progress of China. So it is quite important for students to have an idea about business environment so that they can easily understand how business decisions are made and what the impact of each decision is. Generally business environment is divided into two- Micro environment and Macro environment. Another way is to categorize business environment into General and Specific environments. However there exists only minimal difference between these categorizations. There is another approach which views an organization as open system. This is referred to as Systems Model of organization and its environment. Thus business of an organization is thus influenced by a number of external factors which include political, social, and technological and many more. Hence every organization is keenly observing these dynamic forces in order to equip themselves against contingencies. There are a number of methods that help an organization to analyze its surrounding environment. This includes SWOT, PEST, SLEPT etc. PEST analysis has been used in this study and also the ethical and environmental factors are identified. This report looks at the Multi-national beverage company Coca-Cola, the worlds most recognized brand. Coca-Cola is a multinational company operating in almost 200 countries or territories. It is a beverage company and is into the production and distribution of non-alcoholic drinks. The main brand of the company is the aerated drink Coca-Cola or Coke. The company at present owns more than 400 brands across seven continents. Due to this fact, the company is likely to be affected by the fluctuations in the business environment, globally as well as on each country. The company hence introduces innovative strategies and takes business decisions in order to cope up with the turbulent environment. http://en.wikipedia.org/wiki/The_Coca-Cola_Company John Kew, John Stredwick, (2005), Business environment: managing in a strategic context, CIPD Publishing ORGANIZATION DESCRIPTION AND BACKGROUND SOME FACTS Founded: 1886 Headquarters: Atlanta, Georgia, USA Chairman and CEO: Muhtar Kent Revenue: USD 31.0 Billion (FY 2009) Employees: 92,400 (Oct 2009) Operations: 200 Countries http://en.wikipedia.org/wiki/The_Coca-Cola_Company CORPORATE VISION MISSION Vision People: Be a great place to work where people are inspired to be the best they can be. Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy peoples desires and needs. Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value. Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities. Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities. Productivity: Be a highly effective, lean and fast-moving organization Mission To refresh the world To inspire moments of optimism and happiness To create value and make a difference. http://www.thecoca-colacompany.com/ourcompany/mission_vision_values.html DESCRIPTION The journey of Coca-Cola started when the syrup of Coca-Cola was mixed with soda. It was done in a pharmacy in Atlanta, USA. Even today, the company I headquartered in Atlanta. Thus the company began as a soda fountain beverage selling firm. It sold a glass of drink for five cents. The initial progress of the company was quite remarkable, but only when a solid and strong bottling system developed could it emerge as one of the largest corporations as of today. Coca-Cola functions as a franchised distribution system. Thus the company only produces the syrup and it is then sold off to thousands of bottlers around the world. As per the annual report of 2005, the company operates in more than 200 countries. The beverages which bear the trademarks or licenses of Coca-Cola account to almost 1.5 billion. It was declared that Coca-Cola became the first brand in United Kingdom to cross  £1 billion in yearly grocery sales in the year 2010. Coca-Cola today is the worlds most popular brand. The annual company report of 2006 stated that the second most recognized expression in the world after OK is Coca-Cola. The strength of the company lies in it branding. Coca-Colas branding strategy lies on three As- availability, acceptability and affordability. The company competes not only to every carbonated or soft drink available in the world but even considers water as its competitor. For it, every product that has a share in human liquid consumption is its rival. At present Coca-Cola serves almost one billion servings per day. That means every second 12500 bottles are being consumed. The company was able to achieve this only because they made use of the most finest and innovative technologies available. During these 125 years of existence, the company has gone through different strategic paradigm shifts that involve financial re-engineering to debts on offload bottling and from product expansion to progress through distribution. http://en.wikipedia.org/wiki/The_Coca-Cola_Company Brand Spotlight: Coca-Cola http://www.thecoca-colacompany.com/ourcompany/historybottling.html http://www.scribd.com/doc/14306067/Coca-Cola Business Environment The business environment of an organization is situational. That means every organization have a unique environment of its own. Due to this fact, the external factors influencing the company would also be different. The systems model of an organization and its environment views the organization as an open system. This model advocates that there are two ways in which an organization communicates with its environment. It acquires inputs/ resources from the environment, transforms it into finished product/services and distributes the outputs back. These outputs are meant to meet the needs of customers (Figure 1.1). Environment Organization Environment Money Machinery People Technology Materials Conversion Goods Services Information Waste Figure 1.1: Systems Model John Kew, John Stredwick, (2005), Business environment: managing in a strategic context, CIPD Publishing Analyzing the environment It is not a difficult task for the organization to analyze the task environment as they will have good knowledge about their customers, suppliers etc. But analyzing the general environment is more complex. The different factors in the general environment will have to be first identified. One of the most popular tools for analysis is PEST. This method segregates the environment into four components: Political/legal Economic Socio-cultural Technological PEST analysis was later modified into PESTLE analysis. This was done by splitting the political and legal factors as well as by adding a new factor i.e. environment. The major reason behind this addition was the increasing concern over global warming and other ecological issues. By the year 2000, another method was introduced which was named STEEPLE. This method have a new factor i.e. ethics. This factor was added due to the growing awareness about corporate social responsibility and business ethics. John Kew, John Stredwick, (2005), Business environment: managing in a strategic context, CIPD Publishing Analysis of the environment of Coca-Cola Social Factors: Over the past 5 years the numbers of people who are conscious about their health have increased exponentially. This is especially true in USA where more and more people are practicing healthier lifestyles. Researches indicate that soda and other sweetened drinks are the chief calorie sources in the diet of an American. Due to this fact, doctors and nutritionists advice people to reduce the daily consumption of drinks like Coca-Cola since they can be harmful to their health. In USA, drinks like Coca-Cola and Pepsi were found to be the main reason for obesity among young children and women. Studies have also revealed that regular intake of Coke and the like products reduce the absorption of minerals like Calcium, Magnesium, Ascorbic acid, Riboflavin and Vitamin A. Thus the company is facing a setback from the home country itself. In 2005, many lawyers and environmentalists charged a lawsuit against Coca-Cola and other soft drinks industry for excessive selling of their brands in school s. Coca-Cola also faced much resistance from the Eastern countries where there was a high consumption of tea and other milk fermented drinks. So the company in 2010 introduced a new drink named Sprite Tea which was a mix of sprite and tea. Before that in 2008, it launched a tea brand named Yuang Ye and Jackie Chan was the brand ambassador of the product. This was launched in China and other eastern countries. In 2004, the company also launched a wellness drink in Japan for women. Apart from that there are number of social ventures into which the company is into. It is providing resources like books and scholarships to needy children. Apart from that it has introduced a program in Pakistan that is into providing basic education to children. In 2004, the company donated à ¢Ã¢â‚¬Å¡Ã‚ ¬50,000 to SOS Kinderdorf, a childrens charity organization in Austria. A sum of 1 million USD was also donated for awareness against HIV/AIDS in 2007. www.thecoca-colacompany.com//10/Coca-Cola_10-K_Item_01ab.pdf http://www.virtualvender.coca-cola.com/ft/index.jsp www.thecoca-colacompany.com//eu_business_social_review2005.pdf www.thecoca-colacompany.com//2007-2008_sustainability_review.pdf http://blog.7xpub.com/2010/02/heaven-earth.html http://www.docshare.com/doc/8487/An-Analysis-of-The-Coca-Cola-Companys-Markets Technological Factors Coca-Cola is always a pioneer institution in bringing out innovative technologies. In 2007, it came up with a new technology that would help customers to have ice-chilled coke wherever they want. This technology will work in such a way that when the cap of the bottle is opened, the mechanism inside will make ice out of the drink inside. The company also introduced this technology in 2008 with a new product called Sprite Super Chilled. In the same year, the company announced to use coolers and vending machines free of HFC in the venues of 2008 Olympic Games to show its commitment towards environment protection. The company developed this technology together with Green Peace. In the year 2009, the company introduced another technology into their vending machines. These Freestyle machines will be having touch screens and the customer can mix up to a variety of 100 drinks at a single time. Popsci.com has named this as the Most Advanced Soda Fountain Ever. In 2009 itself the company introduced bottles which are partially made from plants and hence can be recycled completely. This bottle also has a reduced carbon emission when compared with ordinary plastic bottles. The company has also introduced innovative technologies in the entertainment field. In 2006, the company installed Dhoom 2-Juke boxes in and around Delhi (India). A limited series of Coke bottles were then brought into the market whose labels contained specific codes. When these labels are swiped into the Juke boxes, the customers could see the exclusive visuals of Dhoom 2 movie. http://www.techdigest.tv/2007/09/new_technology_1.html http://www.associatedcontent.com/article/1973430/cocacola_meets_technology_touch_screen.html www.greenpeace.org//en/news//coca-cola-to-champion-our-cool/ http://www.greentechnolog.com/2009/09/cocacolas_new_plant_bottle.html http://www.coca-colaindia.com/media/media_news_releases_detail.aspx?id=189 Economic Factors: The company went through a major economic phase in the past five years. The income tax payment has increased from 1.5 billion USD in 2006 to 1.9 billion USD in 2007. But the capital expenditures have also increased from 1.4 billion USD in 2006 to 2 billion USD in 2008. Still the company managed to have revenue of 31.9 billion USD in 2008. The above graph shows the fluctuations in the stock prices of Coke from September 2009 to February 2010. In 2008, the world faced the global economic crunch and this naturally had an impact on the company. The main reason for this was that 75% of companys sales is derived outside of North America. But, reports revealed that the company was not much affected by the economic downturn. The first quarterly results of 2009 showed that the sales have increased by 2 percent in USA and by 3 percent around the world. This was because the company positioned it well in the international markets. The company also had a remarkable increase in business in India. In 2009, the companys business increased by 31 percent in this country despite the various environmental protests against it. But the final quarter results of 2009 showed a decrease of 18 percent in the companys profit worldwide. In 2010, the company registered revenue of 7.53 billion US dollars in the first quarter. This shows that the company expects to have a bright year ahead. http://www.theepochtimes.com/n2/content/view/16128/ http://www.msnbc.msn.com/id/29161172/ http://www.wikinvest.com/stock/Coca-Cola_Company_(KO) http://equityclock.com/pictures/CocaColaEnterprisesInc.TechnicalAnalysis_3A38/image_thumb_3.png Environmental Factors: The company has been accused of a number of environmental issues around the world. In India, Coca-Cola has been nicknamed even as Killer Coke in certain areas. It was feared that Coke contains hazardous levels of pesticides that could cause numerous health issues. A study conducted by Centre for Science and Environment (CSE), New Delhi, revealed that Coke and Pepsi contains toxins like lindane, DDT, malathion etc. These pesticides if consumed could even result in Cancer or irreparable damage to immune system. CSE also found that the Coke that is sold in India contained 30 times the permitted level of pesticide residues as per European Union regulations. 1n 2005, the Kerala State government banned the production and selling of Coke but it was overturned by the state high court in the same year itself. The company was also blamed for over use of water resources and thus depleting the ground water table. The 16$ bottling plant in Kerala was shut down in 2004 due to severe decay in both quantity and quality of water in the surrounding areas. The plant there uses almost 900,000 litres of water every year for its purposes. According to the renowned environmentalist Vandana Shiva, it takes almost 9 litres of water to produce one litre of Coca-Cola. In the holy city of Varanasi, India, the Coca-Cola plant near the Ganges has been accused for emitting waste water which contained toxins into the river. The packaging of the bottles has also been a cause of concern to the public and alleges to have serious environment impact. The company still claims to be environmental friendly in all its ventures. The Coca-Cola environmental foundation is said to be actively participating in environment issues like waste management, recycling etc. http://en.wikipedia.org/wiki/Criticism_of_Coca-Cola http://www.thecoca-colacompany.com/citizenship/foundation_local.html http://en.wikipedia.org/wiki/File:CocaColaIndia.gif Political Factors: As far as the political factors are concerned, they affect the company in meager way. It is because the governmental activity which is the major part of political environment has a little impact over the company. Over the recent years the company met with a lot of protests in India and Middle East. Still it was able to outrival PepsiCo by a small percent. In the last century there have been issues in Israel regarding the construction of a plant over there. The company was accused of boycotting Israel in order to appease the Arab League. These still had an impact over the market of Middle East. The environmental laws have some impact over Coke and other companies operating in the same industry. Over the past two years, the government of India has introduced some modifications to the existing laws that are likely to affect Coke. But the company is introducing changes in the plants as well as implementing proper wastage handling system and this would reduce the impact of these laws. Tax system in India is a little complicated because it involves a variety of regulations. The license needs to be updated every time the production capacity is increased. This can pose certain problems to the company. http://en.wikipedia.org/wiki/The_Coca-Cola_Company Ethical factors: The Coca-Cola Company has been involved into a number of ethical issues over the past. The major controversies include those like violation of human rights and following unethical business practices. The company has been charged of monopolistic and other discriminatory practices which affected its goodwill. In 2005, the European Union found that the companys business methods suppressed competition and hence the company had to end its dealings with bars and shops for stocking its drinks. In the same year itself, Coca-Cola Export Corporation was charged a fine of 68 million dollars for unfair commercial practices. In the early 2000s the company was also criticized for racial discrimination in its US offices and had to pay a hefty fine of 192.5 million dollars. The company is also involved in a number of cases related to environmental degradation, ground water depletion, overuse of pesticides etc. in India. This had affected the reputation of Coca-Cola in India in a major way. http://www.thecoca-colacompany.com/citizenship/foundation_local.html http://en.wikipedia.org/wiki/Criticism_of_Coca-Cola Conclusion To summarize it can be said that Coca-Cola Company has gone through a number of challenging situations in the past five years. The major challenge was the protests from the environmentalists for exploiting the resources. The company has tackled this issue to an extend by agreeing to the demands of the protesters and the governments. But it should put in more effort to get back the reputation it had in third world countries. Innovative technologies that are eco-friendly must be introduced. The company is now into more and more green initiatives which are a very positive sign. If such efforts continue, it would undoubtedly be the most reputed and recognized brand in the world. Recommendations In this current dynamic world scenario, its always best if the organization is well informed about the changes that are being taken place in its business environment. By this way the company can foresee the trends and come up with new strategies to cope up with them. It is recommended that Coca-Cola Company gives importance to some factors. These include: Introduce new programs aimed at public welfare and thus show their true concern for the society. Through this way try to be a model for other companies in following CSR activities. Follow the environmental regulations and norms properly. Make the public aware that the company has and is following strict environmental ethics. New technologies that produce superior quality products and that do not affect the environment must be invented. Understanding the exact needs of customers and try to find solutions to them in a harmless way. References Bibliography PankajMehra, Aspects of Business Environment, 2008, Omega Publications John Kew, John Stredwick, (2005), Business environment: managing in a strategic context, CIPD Publishing

Fidel Castro, the Cuban people’s Leader Essay -- History Castro Histor

Fidel Castro, the Cuban people’s Leader Fidel Castro and the United States of America have a very tense relationship. The current president of Cuba has helped the less fortunate people of Cuba in many ways, but in doing created conflict between the wealthier Cubans who in turn have chosen to seek homes on US soil in Florida. Castro is a very powerful leader who speaks for the people, in general, of Cuba. Since the 1960’s when Castro took power US relations with Cuba have decreased and instead of indifference to each other, hostility has arisen main from the US towards Cuba. Fidel Alexander I Castrate Ruz was born August 13, 1926 in Birà ¡n. He attended Catholic schools before attending the University of Havana graduating with a degree in law. He was a member of a social democratic party named the Ortodoxo Party, which strongly critized the government of Cuba under the control of Fulgenclo Batista. He then ran for election to the Cuban House of Representatives. The elections were never carried out; instead dictator Batista halted the elections thereby ending democracy in Cuba. As a result of Batista actions, Castro attacked on July 26th, 1953 against the Moncada army barracks with 120 men. The attack failed and Fidel was arrested and sentenced to fifteen years but was pardoned after two years. During his trial preceding the sentence he gave his famous speech, â€Å"History Will Absolve Me† (Team 1). After being released he fled to Mexico. During his exile in Mexico he trained and assembled the 26t of July Movement. He gained support fr om Che Guevara before leaving aboard the Granma to invade Cuba in 1956. The revolutionaries returned to Cuba and hid in the Sierra Maestra mountains gaining the support of the peasa... ...cept Fidel Castro’s regime and instead of blockading the country embrace the programs such a great leader has created. Works Cited - BBC News. â€Å"Lift Cuba embargo, Carter tells US.† BBC News 30 February 2005. http://news.bbc.co.uk/1/hi/world/americas/1988192.stm>. - Caldara, Jon. â€Å"We Need Cigars; They Need Freedom.† Boulder Daily Camera. 1 June 2003. http://i2i.org/article.aspx?ID=682>. - Castro, Fidel. â€Å"History Will Absolve Me.† Personal Speech. 1953. - Goodman, Josh. â€Å"Help end the embargo; visit Cuba.† The Yale Herald. 17 January 2003. http://www.yaleherald.com/article-p.php?Article=1555>. - Leler, William. â€Å"End the Embargo of Cuba.† Global Exchange. 17 October 2004. http://leler.com/cuba/embargo.html>. - Team 18355. â€Å"Fidel Castro.† Biography. 2 March 2005. http://library.thinkquest.org/18355/fidel_castro.html>.

Business Continuity Plan as a Part of Risk Management

Celem niniejszej pracy jest zaprezentowanie roli i znaczenia Planu Ciaglosci Funkcjonowania Przedsiebiorstwa w calosciowym procesie zarzadzania ryzykiem w firmie oraz przedstawienie przykladowej tresci takiego planu.Rozdzial pierwszy zawiera ogolne wprowadzenie do zagadnienia zarzadzania ryzykiem. Przedstawia on definicje ryzyka w sensie, w jakim jest ono rozumiane w niniejszej pracy. Ponadto, znajduje sie w nim opis wielorakich zagroSen, ktore sa zwiazane z funkcjonowaniem przedsiebiorstwa, a takSe lista metod sluSacych do pomiaru ryzyka oraz opis przykladowych postaw, jakie sa przybierane wobec zagroSen. W rozdziale drugim zaprezentowano pojecie Zarzadzania Ciagloscia Funkcjonowania Przedsiebiorstwa. Znajduje sie tu charakterystyka ewolucji tego zagadnienia oraz wyjasnienie, dlaczego Plan Ciaglosci FunkcjonowaniaPrzedsiebiorstwa jest dokumentem o ogromnym znaczeniu dla firmy i jej interesariuszy. Ponadto, w rozdziale tym poddano dyskusji pewne szeroko rozpowszechnione mity dotyczac e Zarzadzania Ciagloscia Fukncjonowania Przedsiebiorstwa. Ta czesc pracy konczy sie opisem Analizy Wplywu na Przedsiebiorstwo jako glownego narzedzia, ktorym posluguje sie opisywany typ zarzadzania. W rozdziale trzecim przedstawiono rezultaty dokonanej przez autorke analizy roSnych Planow Ciaglosci Funkcjonowania Przedsiebiorstwa i ich szablonow.To studium bylo podstawa do zaprezentowania przykladowej struktury Planu oraz opisu najczesciej spotykanych w nim bledow. Ostatni rozdzial zawiera takSe charakterystyke faz wprowadzania i testowania Planu, ktore sa rownie waSne jak etap jego przygotowania. Wspolczesne przedsiebiorstwa nie moga sobie pozwolic na postawe reaktywna wobec realnych zagroSen, gdyS wydarzenia bedace w stanie zaklocic ich funkcjonowanie sa liczne i moga zaistniec zarowno w wewnetrznym, jak i zawnetrznym srodowisku firmy. Profesjonalnie przygotowany i skrupulatnie 5 aktualniany Plan Ciaglosci Funkcjonowania Przedsiebiorstwa cechuje postawe proaktywna. Jest nie tylko ogromnie pomocny w przezwycieSaniu trudnosci, ale dla interesariuszy firmy stanowi takSe dowod jej wiarygodnosci. MoSna wiec oczekiwac, Se coraz wiecej przedsiebiorstw bedzie sie staralo zdobyc ten nieoceniony atut. 6 ABSTRACT The aim of this thesis is to present the role and significance of a Business Continuity Plan (BCP) in the holistic process of a company’s Risk Management, and to provide a characteristic of exemplary BCP contents. The first chapter contains a general introduction into Risk Management.It delivers the definition of risk as it is understood in the context of the present thesis. Moreover, there is a description of multiple risks which are relevant to a company’s activity, as well as a list of the risk measurement methods and an account of exemplary attitudes towards threats. The second chapter presents the question of Business Continuity Management (BCM). It characterizes the evolution of this concept and explains the reasons why the BCP is a documen t of utmost importance to the company and its stakeholders. What is more, certain wide-spread myths concerning BCM are also disputed there.This part of the thesis ends with a description of Business Impact Analysis as the main tool of Business Continuity Management. The third chapter provides the results of the author’s analysis of various Business Continuity Plans and their templates. That study has been the basis for the presentation of an exemplary structure of a Business Continuity Plan, as well as for the description of the most frequent mistakes which occur in BCPs. The last chapter also contains a characterization of implementation and testing phases which are as significant as the preparation of a Business Continuity Plan.Modern companies cannot afford a reactive stance towards possible threats as the dangers which may disrupt their functioning are multiple and come both from the inner and outer environment. A professionally prepared and carefully updated Business Con tinuity Plan characterizes a proactive attitude. Not only does it significantly help to overcome difficulties, but it is also a convincing proof of the firm’s reliability to all its stakeholders. Therefore, it may be expected that more and more companies will attempt to acquire this invaluable asset. 7 INTRODUCTIONThe present thesis is the result of the author’s interest in various aspects of Risk Management, especially in the procedures which are applied by companies in case their functioning is faced with a serious threat. The most effective method used by business units is called Business Continuity Management (BCM) and focuses on the preparation and implementation of a Business Continuity Plan (BCP). The aim of this thesis is to present the role and significance of a Business Continuity Plan in the holistic process of a company’s Risk Management, and to characterize the contents of an exemplary Plan.The first chapter contains a general introduction into Risk Management and includes, inter alia, a description of multiple threats which are relevant to the company’s activity and a list of risk measurement methods. The second chapter discusses the concept of Business Continuity Management, explains the importance of Business Continuity Plan and characterizes the steps which lead to the development and implementation of this document. In the third chapter, there is a description of the contents which should be included in a Business Continuity Plan.That presentation is based on the author’s analysis of various BCPs and their templates. The exemplary materials enclosed in appendices have been provided by Punk, Ziegel & Company, Business Link, London Borough and Wallsal Council. All the translations which are enclosed in the present thesis have been made by the author. The references have been edited in accordance with the traditional Footnote/Endnote System. 8 CHAPTER 1 RISK MANAGEMENT This chapter contains an introduction into the nature and types of risk, as well as a description of the methods by which risk is assessed and managed.All these issues are inseparably connected with the concept of Business Continuity Plan, which aims at making provisions for the whole spectrum of present and future threats that may put a company's proper activity into danger. When a company decides to prepare and implement such a plan, it has to carry out a complex and accurate analysis of all the factors which may influence its operation, so that even the least expected dangers are taken into consideration. The first phase of drafting a BCP requires the recognition of existing and prospective risks, evaluation of their possible impacts and assumption of particular attitudes towards them.These vital steps are covered by Risk Management, which helps to organize the findings and solutions in a logical way. The proactive nature and principles of this comprehensive process will be presented and explained in the following chapte r. 1. 1. The Definition of Risk Risk and uncertainty are inseparable parts of every aspect of life. As Jan Mikolaj writes, â€Å"risk is connected with human activity, while uncertainty applies to the environment. †1 When these terms are used in the scientific context, they must be precisely defined.Some of the authors of economic and financial literature do not stress the difference between them. For example, Allan Willet states that â€Å"risk is objective uncertainty of the occurrence of an undesirable event. †2 In his opinion, â€Å"risk changes in accordance with uncertainty, not with probability level. †3 Similarly, Joseph Sinkey defines risk as â€Å"uncertainty connected with some occurrence or profit 1 2 Jan Mikolaj, Risk Management, (RVS FSI ZU, Zilina 2001), p. 17. Allan Willet, The Economic Theory of Risk Insurance, (Philadelphia 1951), p. . 9 in the future. †4 Frank Reilly thinks that â€Å"risk is the uncertainty that the investment may not bring the expected return. †5 However, the prevailing trend in modern professional literature is to differentiate between them. According to the Dictionary of Economic and Financial Terminology by Bernard and Colli, risk is â€Å"the probability of incurring losses by a business unit as a consequence of making a certain economic decision by this unit. The probability results from the uncertainty of the future. 6 The same source states further that â€Å"the concept of uncertainty is used in the situation when calculus of probability cannot be applied, whereas the term risk concerns recurrent events which possibility of occurrence can be calculated using the calculus of possibility. †7 Similar classification is introduced by Frank Knight. In his opinion, risk is a â€Å"measurable uncertainty,†8 while â€Å"immeasurable uncertainty†9 is uncertainty sense stricto. According to Irving Pfeffer, â€Å"risk is the combination of hazard and is measurable by pr obability mathematics, whereas uncertainty is measured by the level of confidence.Risk is a state of the world while uncertainty is a state of mind. †10 To summarize, risk means â€Å"a condition in which there exists a possibility of deviation from an outcome that is expected or hoped for. †11 Risk â€Å"can be expressed as a probability, ranging from 0 to 100 percent. †12 What is important, although not often mentioned in professional literature, there is not only the negative aspect of risk, but also the positive one. Thus, it is a possibility of loss as well as gain. 3 4 ibid. Joseph Sinkey, Commercial Bank Financial Management, (New York: Macmillan Publishing Co. 1992), p. 391. 5 Frank Reilly, Investments, The Dryden Press, (London: Intenational Edition, Collins, 1988), p. 463 6 Bernard and Colli, Slownik ekonomiczny i finansowy, (Wydawnictwo â€Å"KsiaSnica†, 1995), p. 156. 7 ibid. , p. 157. 8 Frank Knight, Risk, Uncertainty and Profit, (Boston: Univ ersity of Boston Press, 1921), p. 233. 9 ibid. 10 Irving Pfeffer, Insurance and Economic Theory, (Illinois: Irvin Inc. Homewood, 1956), p. 42. 11 Reto Gallati, Risk Management and Capital Adequacy, (New York: Mc Graw Hill, 2003), p. 7. 12 ibid. , p. 8. 10 1. 2. Risk in Business ActivityThe volume and diversity of risk obviously depend on a company’s type and branch of economy, but risk as such is a phenomenon which accompanies in its versatile forms any kind and field of business activity. It may come from the external environment of a company as well as from the internal one. For some entrepreneurs, risk is a necessary evil, whereas for others it is an additional motivation, if not the main one. Whatever the point of view is, if a given business activity is to succeed, it is essential to recognize what are the kinds of possible risk, asses their possible impact and acknowledge ways of reacting towards them.Such identification will considerably help in developing a suitable a ttitude, which allows minimizing a potential loss and maximizing a gain. 1. 2. 1. Types of Risk Types of risk which threaten a company’s activity are complex and numerous. Classifications of risk provided by professional literature differ with regard to the assumed criteria. The following comprehensive categorization is based mainly on the division presented in the book Risk Management in Emerging Markets.How to Survive and Prosper by Carl Olsson13: †¢ business risk (also called strategic risk) concerns potential results of inappropriate strategies, inadequate allocation of resources and changes in economic or competitive environment; †¢ market risk is associated with potential results of changes in market prices. It can be divided into: – interest rate risk, –foreign exchange risk, – commodity price risk, Carl Olsson, Risk Management in Emerging Markets. How to Survive and Prosper, (London, Pearson Education United, 2002), pp. 35-36. 13 11 shar es price risk; †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ credit risk means that a debtor may not pay in due time; industry risk regards operating in a particular industry; liquidity risk applies to inability to pay debts because of the lack of available funds; operational risk means potential results of actions by people, processes, and infrastructure; accounting risk concerns a possibility of financial accounts not being in accordance with the reality; reputation risk regards the results of changes in a company’s reputation; country risk is associated with effects which the mother ountry’s and foreign countries’ economic policies may have over the company; sovereign risk applies to lending money to the government or a party guaranteed by the government; political risk means results of changes in political environment; legal/regulatory risk is associated with the consequences of non-compliance with legal or regulatory requirements; environmental/ecological risk applies to the changes in natural environment which affect a company; systemic risk concerns small events which may produce much larges results than expected; technological risk is associated with the consequences of bringing new technology products to the market and introducing new IT systems; natural risk concerns natural and space disasters. All these risks usually appear simultaneously and their effects are synergic. Therefore, none of them should be ignored when considering the company’s situation. After realizing the large number and complex nature of different types of risk involved in all aspects of business activity, a logical step is to try to estimate their potential impact and results. 12 1. 2. 2. Methods of Risk Evaluation An assessment of a particular risk, both internally- and externally-driven, allows taking an appropriate attitude towards it.As Andrzej Stanislaw Barczak writes, such a measu rement involves both subjective and objective elements. 14 The subjective component consists in assuming a priori particular stipulations of a given evaluation tactic, as well as interpreting obtained results in a specific way. The objective constituent derives from the common agreement of the business circle on the methods widely applied to the assessment of risk. Two main types of risk measurement tactics are quantitative risk assessment and qualitative risk assessment. 1. 2. 2. 1. Quantitative Risk Assessment The main conception of quantitative risk assessment is to determine the cost of a given unwelcome occurrence, i. e. o calculate how big the loss would be if an adverse event happened. As it is pointed out in The Security Risk Management Guide, â€Å"it is important to quantify the real possibility of a risk and how much damage, in monetary terms, the threat may cause in order to be able to know how much can be spent to protect against the potential consequence of the threat . †15 This method involves: †¢ evaluation of assets (determining the overall value of a company’s assets, the immediate financial impact of losing the asset and the indirect value of losing the asset); †¢ measurement of the Single Loss Expectancy (SLE), which means â€Å"the total amount of revenue that is lost from a single occurrence of the risk. 16 It is calculated by â€Å"multiplying the asset value by the exposure factor (EF). The 14 Andrzej Stanislaw Barczak, Ryzyko – kategoria obiektywna czy subiektywna? , (Poznan: WSB, 2000), s. 30. 15 Microsoft, The Security Risk Management Guide, (Microsoft Corporation, 2004), p. 19. 16 ibid. , p. 18. 13 exposure factor represents the percentage of loss that a realized threat could have on a certain asset. †17 †¢ assessment of the Annual Rate of Occurrence (ARO), which is â€Å"the number of times that one can reasonably expect the risk to occur during one year. †18 This step is very diffi cult; it bases on historical data and previous experiences, and requires consultation with experts. calculation of the Annual Loss Expectancy (ALE), which stands for â€Å"the total amount of money that an organization will lose in one year if nothing is done to mitigate the risk. †19 This figure is established by multiplying the SLE and the ARO. †¢ valuation of the Cost of Controls (ROSI), i. e. establishing â€Å"accurate estimates on how much acquiring, testing, deploying, operating, and maintaining each control would cost. â€Å"20 It is estimated by using the following equation: (ALE before control) – (ALE after control) – (annual cost of control) = ROSI Although quantitative risk analysis provides clearly defined goals and results, all of the involved calculations are based on subjective estimates, which may prove inaccurate. Moreover, the whole process can be long and costly. 1. 2. 2. 2. Qualitative Risk AssessmentIn opposition to the quantitative method, qualitative risk assessment does not â€Å"assign hard financial values to assets, expected losses, and cost of controls†21 but instead, 17 18 ibid. , p. 19. ibid. , p. 19. 19 ibid. , p. 19. 20 ibid. , p. 19. 21 ibid. , p. 20. 14 â€Å"calculates relative values. †22 It involves distribution of questionnaires among people in the company who have relevant skills and knowledge, and workshops. The questionnaires are designed to discover what assets and controls are already deployed, and the information gathered can be very helpful during the workshops that follow. In the workshops participants identify assets and estimate their relative values.Next they try to figure out what threats each asset may be facing, and then they try to imagine what types of vulnerabilities those threats might exploit in the future. The information security experts and the system administrators typically come up with controls to mitigate the risks for the group to consider and the approx imate cost of each control. Finally, the results are presented to management for consideration during a cost-benefit analysis. 23 This tactic does not require a lot of time and it is not a big burden for the people involved. What is more, the results of the implemented solutions are quickly visible. However, the estimated figures are often perceived as too vague.These two presented approaches are often used together in order to obtain the most comprehensive information about a potential threat. Although scientific methods of risk assessment are helpful in estimating the possible impact which particular occurrences may have on the company’s activity, it is essential to remember that none of the methods can be perceived as 100% trustworthy and absolutely infallible. However, even if it is impossible to predict all threats and provide for all undesirable events, the significance of risk evaluation tactics combined with human knowledge, experience, imagination and intuition canno t be questioned. 1. 3. Risk Management in Business ActivityThe fact that the phenomenon called risk is measurable and its occurrence may be predicted means that it is also possible to take preventive measures and proactive attitude towards it. As Reto Gallati stresses, â€Å"the term Risk Management is a recent creation, but the actual practice of risk management is as old as civilization itself. †24 In everyday life, people face risk in a varying degree all the time and they manage it in a natural way so as to minimize undesired impact and render possible profits. 22 23 ibid. , p. 20. ibid. , p. 20. 15 Certain individuals even enjoy plunging into extraordinarily dangerous situations in order to check how they will cope in difficult moments.However, Andrew Holmes notices that â€Å"at the individual level, if a person takes a risk and fails to manage it properly, the damage is limited to him, and maybe his near relatives,†25 while â€Å"the management of risk for orga nizations is not as simple. †26 As it was presented in the part 1. 2. 1, the company is a subject to various and multiple threats. Holmes stresses that â€Å"ultimately, all risks have a financial impact. †27 The complexity of the required actions aimed at coping with the risk means that â€Å"within the modern corporation, risk management must encapsulate managing strategic, business, operational, and technical risks, rather than those associated with pure finance such as credit, interest rate, and currency risk. †28 Nowadays, Risk Management is not an extra feature added to a company’s basic activity, but â€Å"an essential skill of all modern corporations. †29 All usiness units should realize its great importance, because it is essential not only for their success but simply survival. According to Holmes, a company’s attitude towards the risk depends on its risk sophistication, which can be divided into five stages30: †¢ at the lowest level of sophistication (reactive stance), risks are dealt with only when they turn into live issues or when crisis strikes. There is no effort to recognize and measure possible risks in advance. †¢ At a slightly more sophisticated stage, a company understands the importance of risk management and takes the trouble to identify and manage threats more actively. It tends to seek out the best practice and views adverse events in a wide context. At the next level, there are organizations which acknowledge the need to manage risks throughout the organization and usually develop some form of 24 25 Reto Gallati, Risk Management and Capital Adequacy, (New York: McGraw Hill, 2003), p 11. Andrew Holmes, Risk Management (Oxford: Capstone Publishing, 2002), p. 2. 26 ibid. 27 ibid. 28 ibid. 29 ibid. 30 ibid. , p. 8. 16 risk management framework to ensure consistency of approach. †¢ At the following stage, a company understands the link between risk and reward. It is aware that for eve ry risk there is an associated opportunity which can be exploited. Such a business unit is often a market leader and is willing to take risks to achieve its strategic objectives. At the ultimate level of risk sophistication, there are organizations which integrate risk management with the goal of enhancing shareholder value. Thus, they shift the responsibility for risk management away from the traditional areas of audit and compliance to everyone within the organization. Of course, the active process of Risk Management requires commitment and focus as it means following a deliberate set of actions which are designed to identify, quantify, manage and then monitor the events or actions that could lead to financial loss. Often, there is too little data about a given risk, and therefore, this kind of management may involve a large degree of judgment and assumptions concerning the future. 1 Yet, all the effort is worthwhile as â€Å"successful organizations tend to be excellent risk man agers, not only because they understand the risks they face, but also because of how they manage them. Conversely, those organizations that are poor at risk management spend no time scanning the risk horizon, instead leaving their futures to fate. This invariably means shocks, falling market share, takeovers and missed opportunities. †32 As Holmes reflects, â€Å"risk management is both an art and a science, and being successful depends on how well the two are kept in balance. †33 1. 3. 1. Methods of Risk Management John Holliwell, the managing director of Smith Williamson Consultancy, once said, â€Å"There is nothing wrong with risk.It is the lifeblood of business and the test of entrepreneurs and managers. What matters is how you handle risk and the culture in 31 32 ibid. ibid. 17 which you operate. ’’34 A similar thought is expressed by Clifford Tijok, â€Å"Entrepreneurial behaviour demonstrated in real life entails, i. a. , the ability to enter int o calculated risk, so that return-driven opportunities can be pursued and the ability to identify the relevant risks associated with these opportunities and the decision on appropriate behaviour to address these risks. †35 When a company decides on its risk management techniques, it usually analyses the following features: Table 1. Factors influencing the type of risk management framework required by the organization36ors the type of risk managementframework required by an organizatio FACTORS INFLUENCING RISK MANAGEMENT REQUIREMENT DIMENSIONS TO CONSIDER Strategy risk appetite of owners/risk managers industry geographical coverage aggressive or conservative risk taking or risk averse sunrise or sunset industry; primary, manufacturing, service sector local, national, regional or global is the company critically dependent on critical success factors one or two factors which require close management? volatility is the environment likely to change significantly or unpredictability ? monopoly, few or limited number of osition in industry players, or free market with many players and no barriers to entry is the area of operations highly controlled by regulatory environment legislation and/or regulatory bodies? are regulators intrusive or hands off? 33 34 ibid. ibid. , p. 2. 35 Clifford Tijok, Risk Management in Finance, (Lehrverangstaltung, 2005), p. 8. 36 Carl Olsson, Risk Management in Emerging Markets†¦ pp. 110-111. 18 is deregulation occurring or the level of regulation increasing? management style centralized or decentralized adequate or inadequate people and resources technology resources, financial position – adequate funds available, highly or lowly geared. tatus/ownership Organizational culture Public or privately owned Is the culture strong or weak? are they simple and predictable or nature of risks faced complex/ unpredictable? is the size of risks manageable or is catastrophic risk a cause for concern? Such an analysis leads to adopting one of the main risk management techniques, as presented by Cliff Tijok37: †¢ †¢ †¢ risk limitation – a company establishes its range of tolerance towards a given risk and constantly monitors whether the limits are not breached; risk avoidance – a company chooses the least risky option or none of them; risk transfer – a company reduces or completely transfers specific risks by hedging against a risk (i. e. , obtaining insurance) or diversification.Whatever the approach is, managing risks â€Å"takes a degree of courage and requires the organization to take responsibility for its actions. †38 It is a continuous process, which is â€Å"based on a distinct philosophy and follows a well-defined sequence of steps. †39 After the application of the methods and rules provided by risk management, the obtained data are organized in a clear and logical way. This is the basis which allows the company to go one level up and prepare action schedul es that will be used in case a recognized danger occurs. An essential part of such planning is encompassed by Business Continuity Management and will be discussed in the next chapter. 37 38 Cliff Tijok, Risk Management†¦ pp. 12-13. Andrew Holmes, Risk Management†¦ p. 2. 39 Reto Gallati, Risk Management†¦ p. 11. 19 CHAPTER 2 BUSINESS CONTINUITY MANAGEMENT This chapter provides information on what is Business Continuity Management, when it appeared in the history of management, what purposes it serves and how it should be organized and introduced into a company’s activity. Moreover, it contains a description of the steps which lead to the preparation of a Business Continuity Plan and of the implementation process that follows. Business Continuity Management forms an integral part of Risk Management. It met with particularly deep interest in the 1990s as the result of the frenzy which concerned the year 2000.At that time, there were many anticipated business conti nuity problems, implicated by the date change in computer systems. Business Continuity Management became even a bigger focus of attention in 2001, after the terrorist attack in New York. As Michael Gallagher observes, that huge calamity â€Å"increased awareness of business interruption issues, resulted in a better understanding of critical processes and vulnerabilities and improved co-operation and collaboration between public and private sectors on emergency management questions. †40 Lyndon Bird adds that â€Å"‘business today has far more economic interdependency between regions than ever before. There are often global consequences when risk becomes reality. 41 Yet, at the same time â€Å"there is a growing awareness of what business continuity really is about and why it is so important to both businesses and individuals. †42 8 2. 1. The Concept of Business Continuity Management Business Continuity Management (also called BCM) is defined by the Business Conti nuity Institute as â€Å"a holistic management process which identifies potential Michael Gallagher, Business Continuity Management, (Edinburgh: Pearson Education Limited, 2003), p. 7 41 Lyndon Byrd, â€Å"Business Continuity Management in a shrinking world,† Business Continuity & Risk Management (a supplement distributed in The Times), July 26 2006, p. 2 40 20 mpacts that threaten an organization and provides a framework for building resilience and the capability for an effective response that safeguards the interests of its key stakeholders, reputation, brand and value creating activities. † Its main purpose is to enable the company’s regular functioning, even though everyday operations are disrupted. As Lorraine Lane observes, â€Å"organizations must be capable of withstanding the shocks that can so easily distract management from their primary purpose of meeting and beating their ‘normal’ operational goals. †43 BCM appears as the solutio n that is exactly needed to guarantee such stability to the business. Obviously, BCM looks different in various companies as each organization is a unique system of multiple factors and interdependencies.Dr David Smith explains that â€Å"because of its all-embracing nature, the way BCM is carried out will inevitably be dependent upon, and must reflect, the nature, scale and complexity of an organization’s risk profile, risk appetite and the environment in which it operates. †44 Gallagher supports this view by stating that â€Å"the plan must fit comfortably with the culture and management style of the organization. For example, the type of plan that suits a financial institution would be totally inappropriate in a radio or television broadcasting organization. †45 It is also very important to acknowledge that the company’s BCM must be continuously revised and tested, in order to stay valid and fulfill its tasks. As Dr Smith emphasizes, â€Å"BCM is, by necessity, a dynamic, proactive and ongoing process. It must be kept up-to-date and fit-for-purpose to be effective. 46 Maintaining the validity of proper plans and policies is actually more difficult than establishing them, but this is what constitutes the point of developing BCM by a business. On the following page, there is an approximate structure of steps involved in Business Continuity Management, which is focused on planning. 42 43 ibid. â€Å"Corporate resilience: the new regime,† Business Continuity & Risk Management,†¦, p. 11 44 David Smith, â€Å"Business continuity and crisis management,† Management Quarterly, July 2003, p. 27 45 Michael Gallagher, Business Continuity Management,†¦, p. 43 46 ibid. 21 Scheme 2. 1. Procedures involved in Business Continuity Management47 INPUTS 1. 2. 3. 4. 5. 6. scope definition desired objectives policies and standards inventory – information, technology, people management commitment financeANALYSIS ASSET ASS ESSMENT BUSINESS IMPACT ANALYSIS TECHNICAL REQUIREMENTS 1. analyze BIA and Asset Assessment 2. list technical strategies based on the analysis of each asset and business process in scope 3. document drawbacks and advantages of each listed strategy 1. identify and quantify asset needs 2. document ownership 3. assign weight based on importance 4. assess exposure 5. identify access control and other preventive measures 1. rate processes based on criticality 2. identify dependencies 3. identify custodian 4. identify threats and consequences 5. identify safeguards needed/possible 6. list critical resource requirement 7. quantify acceptable owntime and and losses DEVELOPMENT 1. 2. 3. define continuity goals and chosen strategy in the form of a plan acquire resources needed for preparing and implementing the continuity plan test the plan RESULTS 1. 2. 3. 4. preventive control Business Continuity Plan continuity team training plan for team 47 Padmavathy Ramesh, Business Continuity Planning, (Tata Consultancy services, 2002), p. 28 22 2. 1. 1 The Evolution of BCM As Halls observes, â€Å"Business Continuity Management is a relatively modern idea. Its first mentions can be found in the 1980s, although it was only in the very late 1990s that it became a more widespread as a business discipline. 48 In fact, Business Continuity Management is â€Å"the outcome of a process that started in the early 1970s as computer Disaster Recovery Planning (DRP) and then moved through an era where the emphasis was on business continuity planning rather than on management. †49 In that time, computer managers were responsible for DRP. Soon, they realized that â€Å"the concentration of systems and data in itself created new risks; computer operations management introduced formal procedures governing issues such as backup and recovery, access restrictions, physical security, resilience measures such as alternative power supply, and change control. †50 In 1970s, if a big probl em appeared, the tolerated downtime was not measured in hours, but days. Therefore, â€Å"the cost of back-up computers sitting idle in an alternative location waiting for a disaster to happen was prohibitive. However, for some companies, data safety was a priority; no matter at what cost it would be obtained. As Gallagher points out, â€Å"organizations such as banks were in a more vulnerable position and invested considerable resources in installing and testing computers at alternative sites. Back-up tapes or disks were increasingly stored at protected locations well away from the computer centre. †51 Later, in the 1980s, commercial recovery sites offering services started to appear, often on a shared basis. â€Å"This was the start of the sophisticated recovery centers that operate today,†52 notes Gallagher. However, they all concerned mainly IT: â€Å"The disaster recovery plans documented the actions required to safeguard and restore computer operations.These co vered computer processing, computer applications, telecommunications services and data after a disruptive event. The objectives were to 48 49 Michael Halls, â€Å"What is Business Continuity Management? † †¦ Michael Gallagher, Business Continuity Management,†¦, p. 6 50 ibid. 51 ibid. 52 ibid. 23 prevent or at least minimize the impact that such an event would have on the business. †53 Such plans were far from being perfect as â€Å"they were more concerned with, for example, restoring a company’s financial systems to an operational state than with worrying about whether there would be accommodation available to allow the staff of the finance department actually to use the systems. 54 Not much attention was paid to implementing BCL into every aspect of the company’s activity. In 1990s, a significant change in the IT environment took place and the movement from DRP to Business Continuity Planning became considerably quicker. Gallagher confirms tha t â€Å"throughout this decade, and into the 2000s, there were significant changes in the IT approach to DRP/BCP and in what constituted acceptable downtime. The emphasis moved from being mainly on IT to an approach that considered all aspects of an organization’s business and relationships. †55 It is only then that â€Å"BCP has become BCM with the emphasis on management – not just planning.This encompasses the emphasis on risk management and the measures to be taken to reduce risk. BCM is no longer regarded as a project – it is now a program, emphasizing that it is a continuous process rather than a task with a defined enddate. †56 The next step is to make managers of all companies aware of the importance of BCM as â€Å"the increased recognition of BCM means that a greater budget allocation may be available to it. More significantly, the message preached by business continuity practitioners for years that business continuity principles should b e an integrated part of the business planning process may be heard. † 57 2. 1. 2 The Significance of BCMThanks to proper Business Continuity Management, a company has a professional plan which allows acting as quickly and efficiently as possible in case a dangerous 53 54 ibid. ibid. 55 ibid. 56 ibid. 57 ibid. 24 event happens, because â€Å"BCM not only aims to provide continuity in customer service at a minimum acceptable level, it also aims to limit the impact on the financial position of an organization by ensuring that its critical functions continue to operate during a crisis and that the remainder are recovered in a controlled manner. †58 Therefore, when a BCP is applied, there are no chaotic, haphazard attempts to minimize the losses as clear and logical procedures have been devised earlier and communicated to the staff.As Mel Gosling notices, â€Å"decisions made in the first few hours of an event that causes serious disruption to an organization’s opera tions are critical, and actions undertaken in the first few days will have a significant financial impact†59 and â€Å"a company that has an effective and well-tested Business Continuity Plan is more likely to take the right decisions in the first few hours and to subsequently undertake the best actions to limit the impact on its financial position. It has a better chance of incurring significantly less additional expenditure at the time of a disruption. †60 Moreover, â€Å"one of the benefits that implementing business continuity management brings to a firm, which is not immediately apparent, is an understanding of what the business does and what is important to it. †61 In this way, a company can analyze its allocation of resources and improve it, as well as â€Å"find out what is critical and of value, and what can be outsourced or left undone. †62 Besides, certain companies, e. g. , financial institutions, are legally obliged to develop BCM and maintain an effective business continuity plan.It is also becoming increasingly common that businesses require from their suppliers to be presented with their BCM plans. This facilitates the process of assessing the supplier’s infallibility and constitutes an element of developing a sound business relationship. Mel Gosling, â€Å"Why invest in business continuity,† 1 February 2007, . 59 ibid. 60 ibid. 61 ibid. 62 ibid. 62 ibid. 58 25 The investment into Business Continuity Management is beneficial not only in the matter of a business being prepared for multiple diverse crises. It also adds significantly to the company’s reputation and brand image by â€Å"demonstrating effective and efficient governance to the media, markets and stakeholders. 63 Moreover, it enhances the competitive advantage of the business, because to some investors and customers it may be a vital factor in deciding to which company they should entrust their capital. Osborne explains it as follows, à ¢â‚¬Å"To a firm’s shareholders it’s part of investor relations – you are showing your commitment to keeping their investment safe. To a firm’s staff it is labour relations – you are showing your willingness to protect the livelihood of your staff. †64 Furthermore, he stresses that â€Å"it’s customer relations too – you’re demonstrating your commitment to providing a service for them even in the most extreme of circumstances. †65 Last but not least, devising professional plans and keeping them updated increases the company’s credibility in the eyes of nsurers and auditors because they are becoming increasingly aware of the importance of BCM. As Osborne observes, â€Å"Five years ago, auditors simply would have said to their clients, do you have a plan in place? A couple of years ago, they would have wanted to inspect it, to see if every contingency was covered and how practical it appeared to be. Nowadays, they will ask how it worked in practice. When it was last tested and what were the results? †66 What is more, â€Å"insurers like to see evidence that all reasonable steps have been taken to understand the past accident record and that actions have been put in place to prevent them from happening again. 67 This is confirmed by Gosling, who states that â€Å"insurance companies themselves are now starting to realize the opportunities that business continuity provides for loss reduction, and it is becoming increasingly common for a condition of insurance cover to be the existence of a business 63 64 David Smith, â€Å"Business continuity and crisis management,† †¦ p. 27 Ask the panel of business continuity experts,† †¦ 65 ibid. 66 ibid. 67 â€Å"Pro-active Risk Management: Avoiding catastrophe. † Business Continuity & Risk Management,†¦, p. 14 26 continuity plan. †68 All in all, devising and implementing an effective BCM plans brings ve rsatile advantages to a company, while the failure to do so â€Å"means taking an unnecessary risk with an organization’s future and profitability. †69 2. 1. 4 Continuity Culture in a Company A vital step in forming Business Continuity Management in a company is to instill a proper attitude in the staff.Michael Gallagher believes that â€Å"it is about creating a continuity culture in the organization. This can be at least as important as producing the actual plans. †70 He also states that â€Å"for BCM to work, it must be driven from the top. â€Å"71 Therefore, senior managers must understand that BCM is â€Å"not just another expense but also a significant resource,’ 72 as Mike Osborne assures. However, the amount of data that has to be taken into consideration while developing preventive measures is overwhelming. Lane points out that â€Å"while responsibility for corporate resilience sits firmly with the executive board, the skills and experience required to combat the growing list of disruptive threats exists throughout the organization. 73 Thus, in large companies, it is a wise move to appoint a full-time Business Continuity Manager, whose tasks are to accumulate the relevant knowledge from all departments and co-ordinate proper procedures, as well as devise professional plans and keep them updated. Smaller businesses may use the services offered by consulting companies. The staff’s awareness of specific procedures ready to be applied in case of any foreseeable disaster enhances their efficiency and identification with the company. Instructing them of the specific plans encourages them to pay bigger attention to the safety issues, which significantly contributes to the BCM process. 68 69Mel Gosling, â€Å"Why invest in business continuity,† †¦ ibid. 70 Michael Gallagher, Business Continuity Management,†¦, p. XI 71 ibid. 72 â€Å"Ask the panel of business continuity experts,† Business Continu ity & Risk Management,†¦, p. 12 73 David Smith, â€Å"Business continuity and crisis management† †¦ p. 27 27 Gallagher explains that â€Å"if the business continuity culture is sufficiently developed, the continuity considerations will be a natural part of the development of the plans. †74 2. 2 BCM and the Company’s Size For the definite majority of large corporations, BCM is a regular part of their activity but, as Gallagher states, â€Å"there is a feeling that it is not a matter of concern to the smaller business. 75 This happens because â€Å"a lot of the emphasis in the business continuity press, and in business continuity material generally, relates to large organizations and to the financial services industry. †76 While â€Å"for the largest corporations and those with enormous sums of money at stake, the complexity of planning is breathtaking,†77 â€Å"small and medium-sized enterprises tend to get ignored when talking about bus iness continuity planning. The planning is more prosaic. The challenges are fewer. And most importantly, their budgets are smaller. †78 Another problem is the fact that â€Å"smaller companies are typically less aware of the correct procedures than larger firms where systems have been developed. 79 The managers of small and medium-sized businesses simply tend to think that their company’s size is a kind of safeguard against a disaster, or that potential recovery will be quick and simple, so â€Å"the process of developing a plan is perceived as too complicated, involving excessive costs and management time. †80 However, Mike Osborne emphasizes that â€Å"the issue for small to medium sized businesses is that they often do not have the inherent resilience that say, a UK multinational has. †81 He warns the managers against an illusive safety feeling as â€Å"smaller firms often trade from a single location and do not benefit from vast armies of support sta ff and Michael Gallagher, Business Continuity Management,†¦, p. 88 Michael Gallagher, Business Continuity Management,†¦, p. 28 76 ibid. 7 Michael Halls, â€Å"What is Business Continuity Management? † Business Continuity & Risk Management,†¦, p. 3 78 Michael Halls, â€Å"Small is still beautiful (but riskier too),† Business Continuity & Risk Management,†¦, p. 10 79 ibid. 80 â€Å"It’s never too late to plan for the future,† Business Continuity & Risk Management,†¦, p. 15 75 74 28 specialists who can react to and recover from an incident. If they are hit by a disaster, the impact is greater then it would be the case in a larger organization. †82 This view is supported by Gallagher, who states, â€Å"Small businesses should remember that their biggest threats do not come from high profile incidents such as earthquakes or terrorist bombs.It is the dozens of relatively minor issues such as prolonged power outages or computer ne twork failures that may cause the problems. The vast majority of problems are caused by people or process failures. †83 He points out that â€Å"this is where the effort and investment should be concentrated. Because of size, the process is simpler and the cost will be proportionally less than for larger organizations. The consequences of not having a plan are, however, likely to be disastrous. †84 Therefore, as Michael Halls stresses, â€Å"Business Continuity Management is a must for companies of all sizes. A small firm that loses its data will go out of business just as surely as a larger one. †85 2. 3 BCM in Relation to InsuranceSome managers wonder why they should engage themselves into Business Continuity Management while their company is insured. To them, devising a BCM plan seems to be an unnecessary waste of time and money, because they think that risks are looked after by the insurers and thus, there is no need to worry. But these are absolutely false c onclusions. As Mark Baylis emphasizes, â€Å"insuring the risk is not the answer, because it is better for the business that the problem does not happen at all. † 86 This view is supported by Gallagher, who states that â€Å"insurance is simply a necessary part of the total business protection and recovery plan – but it is only a part. 87 Although it is true that insurance provides financial aid in case a disaster strikes, the money may 81 82 ibid. ibid. 83 Michael Gallagher, Business Continuity Management,†¦, p. 28 84 ibid. 85 Michael Halls, â€Å"Small is still beautiful (but riskier too),† †¦ 86 Mark Baylis, â€Å"Weak links in the supply chain,† Business Continuity & Risk Management,†¦, p. 11 87 Michael Gallagher, Business Continuity Management,†¦, p. 33 29 arrive after quite a long period. Moreover, â€Å"insurance for loss of profits, or for increased cost of working, will cover only a defined period – which in practice may prove to be inadequate. †88 Besides, â€Å"proving loss of profits can be very difficult.The outcome may be based on historical performance and may not take account of recent market developments. †89 It is also very important to notice that insurance will not â€Å"keep customers supplied or guarantee that market share will be recovered,†90 nor will it â€Å"protect the organization’s reputation and image. †91 Last but not least, as it was mentioned in the previous paragraph, there may be a situation when the insurer refuses to provide a cover unless the company devises a BCM, because nowadays businesses are required to act more actively in protecting themselves from various possible risks. Therefore, it is vital for a firm to have efficient Business Continuity Management in order to obtain insurance on favourable terms.To sum up, managers must remember that â€Å"insurance is reactive – while it has its place, the whole protection proce ss must be more proactive and BCM is the key. †92 2. 4 Business Impact Analysis Business Impact Analysis (also known as BIA) is the most important tool of Business Continuity Management. Gallagher defines it as â€Å"a management-level analysis that identifies the impacts of losing company resources. It measures the effect of resource loss and escalating losses over time in order to provide senior management with reliable data upon which to base decisions on risk mitigation and continuity planning. †93 The BIA process â€Å"identifies and ranks the business processes, 88 89 ibid. , p. 34 ibid. 90 ibid. 91 ibid. 92 ibid. 93 ibid. , p. 146 30 criticalities and dependencies. 94 It is closely related to risk analysis, which was discussed in the previous chapter, therefore, it may base on the materials that have already been gathered during the general Risk Management process in the company. The method by which BIA is carried out â€Å"depends on the nature of the organiza tion – size, structure, local or international, etc. †95 Generally, in order to maximize the efficiency of a BIA processes, standardized questionnaires should be used. They should contain questions which are formed in such a way as to provide information that concerns the following issues: †¢ †¢ the nature of given problems; the impact of the problems, which should be presented from different perspectives, e. g. the company’s reputation, costs involved, loss of future business, etc. †¢ †¢ †¢ the influence that may be caused by the problems at different times of the day, week, month and year; the kind of resilience that may be currently provided in a quick and easy way; the recovery from the addressed problems (time needed for recovery, priorities for resumption, duration of backlog, additional costs, insurance cover); †¢ †¢ the available workarounds and the way they operate; the continuity and recovery requirements, e. g. , acco mmodation, computer systems, etc. 96 After the questionnaires have been filled in, the Business Continuity Manager prepares a comprehensive report which presents the company’s Business Impact Analysis. The report is composed of the following parts: 1. Introduction 2. Executive Summary 3. Background to Study 94 95 ibd. , p. 47 ibid. 96 cf. Michael Gallagher, Business Continuity Management,†¦, p. 57 31 4. Current State Assessment 5. Threats and Vulnerabilities 6. Critical Business Functions/Operations 7. Business Impacts – Operational and Financial 8. Potential Strategies 9. Recommendations 10. Conclusion 11.Appendices97 Thanks to the logical and substantial structure, the report fully represents the current standing of the company, clearly indicates its weak points and realistically describes possible procedures. Business Continuity Management is an extremely important process, which not only enables the assumption of proper attitudes towards multiple threats that endanger a firm’s functioning, but it also significantly deepens the understanding of the business and improves the staff’s morale. Proper implementation of BCM in a company leads to the creation of a Business Continuity Plan, which will be discussed in detail in the following chapter. 32 CHAPTER 3BUSINESS CONTINUITY PLAN In the previous chapters, the importance of Business Continuity Management was explained and it was stated that devising a Business Continuity Plan is one of the main tasks of this type of management. This chapter provides information on how to construct, implement and test a Business Continuity Plan. Moreover, it contains a description of the most frequent mistakes that appear while drafting a BCP and advises how to avoid them. The exemplary plans and templates on which the analysis is based are attached as Appendices B, C, D, E and F at the end of the present thesis. 3. 1 The Structure of an Exemplary Business Continuity PlanBusiness Continuity Plan s vary in length and are divided into different parts, which mostly depends on the size and type of a company. However, certain sections are vital and thus common for all the plans. They should be organized in such a way as to enable quick access to the required information. These crucial parts will be successively discussed herein. 3. 1. 1 Front Page and Introduction On the front page of a Business Continuity Plan, there should be written the name of the company, the issue date and a distinct lettering stating BUSINESS CONTINUITY PLAN. Moreover, if the Plan is confidential, it should be indicated on the front page as well. Optional elements inserted here may include contact details for feedback, references, the revision date, etc.These components are followed by an introduction, which consists of a distribution list (copy number, name and location) and a table of contents. 97 cf. Michael Gallagher, Business Continuity Management,†¦, p. 57 33 3. 1. 2 Aim This section should con tain the description of the purpose for which the Plan has been created. It usually gives examples of possible disasters and explains the objectives which the plan is intended to meet in case of a calamity. What is more, a company which wishes to convey an especially powerful message concerning its reliability may include in this part a summary of the extensive works and professional researches which have been involved in the development of the Plan. 3. 1. 3 Critical Functions ChecklistCritical Functions are these activities without which the company would not be able to perform. In order to prepare a Critical Functions Checklist, the following steps should be completed: †¢ †¢ †¢ †¢ †¢ the identification of Critical Functions, e. g. , sales and distribution; the description of the Functions in terms of the impact which may be caused by their interruption in the first 24 h, 48 h, one week and two weeks; the prioritization of the Functions; the ascription of a reasonable timeframe within which the recovery is possible; the determination of resources which will be necessary in the recovery process, such as: a) the staff – the required number of people, their knowledge and skills; b) alternative location – e. g. the staff working at home or provisional premises; together with necessary equipment like computers, cars; c) data – information and documents, e. g. , insurance certificate, service, customers and suppliers details; d) communications – all ways in which customers, suppliers, the staff and media can be contacted in case of disaster. 34 Such a Checklist allows ensuring that â€Å"critical tasks are completed on time and according to a pre-agreed priority schedule. It may also be used to provide a handover document between different shifts in the recovery process. †98 3. 1. 4 Risk Analysis Table This part should contain a table comprising a list of dangers which may interrupt and threaten the activi ty of the company.The matrix presented below may be used to ascribe values to the particular risks with regard to the likelihood of their occurrence and their potential impact. Table 3. 1. 4 Risk Matrix LIKELIHOOD NEGLIGIBLE CATASTROPHIC RARE UNLIKELY POSSIBLE PROBABLE M M M L L H H M L L VH VH H M L VH VH H M L VH VH H M L IMPACT SIGNIFICANT MODERATE MINOR INSIGNIFICANT Legend: L – low, M- medium, H – high, VH – very high Moreover, there may be also attached a list of possible losses, endangered people and equipment, as well as the actions which had to be taken in case a particular risk occurs. 98 Appendix D, p. 77. 35 3. 1. 4 Emergency Response Checklist Such a Checklist greatly facilitates the performance of people involved in fighting a potential adverse event.It also acts a concise register of actions that were taken after the disaster happened. It should be later analyzed, developed and improved. It is preferable that tasks to be completed are organized in the form of a table, together with a column in which the date of termination will be written down. The actions may be listed as follows: †¢ during the first 24 h a) to establish the Actions and Expenses Log, which is a more detailed and comprehensive version of the Emergency Response Checklist; b) to contact emergency services; c) to identify and approximately assess the damage which has been incurred by the staff, equipment, buildings, data, etc. d) to determine the critical functions which have been interrupted; e) to decide on the steps that need to be taken within the recovery process, which is based on the Critical Function Checklist; f) to contact the staff, customers, suppliers, insurers, relevant authorities and other stakeholders in order to assure them that the situation is under control; g) to issue a special PR statement to the media. †¢ daily within the recovery period a) to update the Actions and Expenses Log; b) to provide valid information to the staff, cu stomers, suppliers, insurers, relevant authorities and other stakeholders, as well as the media; †¢ after the recovery period a) to interview the staff with respect to their welfare needs; b) to analyze the Emergency Response Checklist and Actions and Expenses Log in order to introduce possible improvements into the Business Continuity Plan. 36As it can be seen, the response to the crisis should focus on its effects, not on the causes. The reasons of the adverse event should be identified as quickly as possible, but a comprehensive analysis of them must not be performed before the main steps of the recovery process have been taken. 3. 1. 5 Roles and Responsibilities This section should contain information and contact details regarding the people who are responsible for the shape and content of the Business Continuity Plan (e. g. , Business Continuity Manager, the BCM Team). Moreover, there may be included a list of duties which are ascribed to the particular staff members in ca se an adverse event happens.Last but not least, it is necessary to indicate the names and contact details of the co-ordinators of the recovery process, help-line numbers (possibly, with pre-recorded messages) and location of meeting rooms and the Business Recovery Command Centre, together with maps. 3. 1. 6 Contact List In this part, there should be listed the following contact details: †¢ staff members (divided in respect to the departments) and their next of kin a) name, b) address, c) work telephone number, d) home telephone number, e) mobile telephone number, f) e-mail address; †¢ key suppliers a) name, b) provided goods, c) address, d) telephone/fax number, 37 e) e-mail address; †¢ key customers a) name, b) service/good used, c) address, d) telephone/fax number, e) e-mail address; †¢ mergency services (ambulance, fire service, flood line, hospitals, police) a) address, b) telephone number; †¢ utilities (water, telecommunication, gas and electricity comp anies) a) name, b) telephone number, c) e-mail address; †¢ insurers and banks a) name, b) address, c) telephone/fax number, d) e-mail address; †¢ authorities a) name b) address c) telephone/fax number; †¢ media a) name, b

Little Red Riding Hood . The Importance Of Woman’S Right

Little Red Riding Hood The importance of woman’s right and gender equality are emphasized throughout the world, especially during the last decade. Unfortunately in many parts of the world sexual harassment of women is still on the rise and needs to be addressed. The fairy tale â€Å"Little Red Riding Hood† has many versions, while most of them are meant for children and have a happy ending, Charles Perrault, version discuss how women should not trust strangers regardless of how compassionate they may seem. He also goes on to show how men target innocent, pretty and impressionable women. While in todays time we know that it’s not the victim’s fault however Perrault argues that it can be the victims fault if they are as naà ¯ve and gullible as†¦show more content†¦When little red riding first encounters a wolf she is not afraid or startled, but acts like it’s perfectly normal to have a conversation with a wolf. She goes on to give the wolf all the information as to where she is going and why. Furthermore, she goes on to take instructions from the wolf and take the long path to the house. However, none of the actions done by the wolf come as a surprise or make little red riding hood question what’s going on. Perrault uses the word â€Å"poor† in the phrase â€Å"The poor child, who did not know that it was dangerous to stop and listen to wolves, said: I m going to see my grandmother†¦Ã¢â‚¬ (12) to emphasize the vulnerability of the girl. The word â€Å"poor† in this context is not applied financially by rather to make us the reader feel bad for the lack of common sense and knowledge she has. This shows that it is women who are extremely gullible and trustworthy are targeted the most. Perrault goes on to describe Little Red Riding Hoods actions after this conversation, he says â€Å"he little girl continued on her way along the long path. She had a good time gathering nuts, chasing butterflies, and picking bunches of flowers that she found†(12). The words â€Å"chasing butterflies† and â€Å"picking bunches of flowers† go on to describe Little Red Riding Hood as such an innocent and gullible girl that even though she just found out that a wolf would also visit her sick grandmother she doesn’t have a care in the worldShow MoreRelated Fairytales and Folktales2815 Words   |  12 Pagesâ€Å"Cinderella† as instructional tales for his children. However, perhaps his most famous tale, â€Å"Little Red Riding Hood,† was written especially for the bourgeoisie that resided in the Palace of Versailles, as means of entertainment and folly (Orenstein 1). With parables of sex, rape, murder, and torture; Perrault managed to entertain and horrify adults and teach children. The first published version of â€Å"Little Red Riding Hood† or â€Å"Le petit chaperon rouge† was by Charles Perrault, in 1697. 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