London, 1 April 2008 - A new survey by Marsh, the world’s leading insurance broker and risk adviser, has revealed many European firms are failing to overcome a ‘perception gap’ in their approach to business continuity management (BCM).
Marsh’s latest research, The Upside to Business Continuity, examines the views and perceptions of Business Continuity and Risk Managers from organisations across Europe on issues relating to BCM. These professionals were drawn from delegates attending the Business Continuity Expo, which is being held on the 2, 3 April at the ExCel centre, clients of the British Standards Institute and members of London First.
The study highlights that while over three-quarters of respondents believed that their BCM is: aligned to their strategic business objectives, integrated into their risk management programme and is understood/supported by senior management, only half believe BCM is used as a strategic tool within their organisations.
Martin Caddick, Leader of Marsh’s Business Continuity Management team, commented: “Our research suggests that organisations which believe their approach to BCM is mature or very mature are generally being optimistic. It seems that many businesses overrate their own level of BCM and their perceptions do not match the reality.
“However, it is encouraging to note that more organisations are aspiring to a view of BCM as part of an integrated approach to risk, even if their implementation has yet to catch up.”
Supply chain risk
The research examined whether firms are using BCM strategies to offset their supply chain risk, one of the biggest challenges facing businesses this year: 54% of respondents agreed that their BCM plan covers their supply chain risks, with 22% saying that it definitely did not; 24% of respondents were unsure.
Mr Caddick continued: “As supply chains have extended, especially into the Far East, the nature of disruption and vulnerability in the risk landscape has changed significantly. Embracing BCM to help manage supply chain risk can deliver real business benefits. Given that nearly half of the respondents stated that their BCM plans did not cover supply chain risks or they were unsure only reinforces our view that firms are overrating the maturity of their BCM.”
Barriers to BCM
The research also highlighted how many firms still view BCM as an additional service, rather than intrinsic to their culture and strategy. When asked to identify the barriers to BCM within their organisations, the most common stumbling blocks cited were lack of time and resources, and lack of budget. In the study, Marsh concludes that the barriers are more related to a lack of understanding of the level of resource and commitment required to do the job properly, which again is in contrast to firm’s perception of how mature they believe their BCM programme is.
BS 25999
Marsh also questioned the respondents about the new British Standard, BS 25999, which regulates BCM programme implementation and management. Although a British Standard, it has relevance outside of the UK and is recognised as a useful tool for any firm that is trying to implement a BCM programme.
Only 39% of respondents said they intended to align their organisation with BS 25999 in the next two years, while 19% said that they did not intend to align their organisation with BS 25999 and 42% were undecided.
Looking more closely into the country of origin shows that BS 25999 alignment is a more serious issue for UK firms, with 60% agreeing with the proposition. Outside the UK, half the respondents remain undecided, but 28% of foreign businesses do intend to comply with the standard, a surprisingly high level of acceptance.
Benefits of BCM
Marsh also explored the perceived benefits of BCM among the respondents: 32% of respondents were able to point to faster recovery after real incidents as a benefit, while 96% of firms found at least one other benefit to implementing a BCM programme, with 52% of firms finding two or more. In addition, over the last 12 months 50% of respondents found that they had a better understanding of their business, and 37% found they have improved their risk-intelligent decision making.
Mr Caddick said: “This finding shows that although BCM’s primary role may be to help organisations recover from an incident, it has many other ancillary benefits. These benefits can yield huge benefits to business; the fact that 37% of respondents believe that their strategic decision-making has improved because they had a BCM programme is very encouraging.
“A more incisive understanding of your business and risk-intelligent decision making will improve the effectiveness of the overall risk management and resilience strategies, which can potentially lead to a better return from the investment in these areas. More mature firms are utilising BCM as a strategic tool to gain these extra benefits and thus improve the bottom line of their business. BCM is not just a risk mitigation and control tool – but also to add value and create an upside for firms.”
About Marsh
Marsh, the world's leading insurance broker and risk advisor, has 26,000 employees and provides advice and transactional capabilities to clients in over 100 countries. Marsh is a unit of Marsh & McLennan Companies (MMC), a global professional services firm with more than 55,000 employees and annual revenue exceeding $11 billion. MMC also is the parent company of Guy Carpenter, the risk and reinsurance specialist; Kroll, the risk consulting firm; Mercer, the provider of HR and related financial advice and services; and Oliver Wyman, the management consultancy. MMC’s stock (ticker symbol: MMC) is listed on the New York, Chicago and London stock exchanges. MMC’s Web Site is www.mmc.com. Marsh’s Web site is www.marsh.com.
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