TL;DR
Business Impact Analysis (BIA) figures out what happens if key parts of your business stop working. Risk Assessment looks at how likely those things are to happen and how bad they could be. They’re different, but work best together.
1. What is a Business Impact Analysis (BIA)?
A BIA focuses on the consequences of disruption. It asks ‘what if?’ questions about critical business functions.
- Identify Critical Functions: What does your business absolutely need to do? Examples include order processing, payroll, customer support.
- Map Dependencies: What relies on each function? (e.g., Order processing needs the website, database, warehouse).
- Determine Downtime Tolerance: How long can each function be down before it causes serious problems? This is often expressed as Recovery Time Objective (RTO) and Recovery Point Objective (RPO).
- RTO – The maximum acceptable time to restore a function.
- RPO – The maximum acceptable data loss in the event of an outage.
- Quantify Impacts: What are the financial, legal, and reputational consequences of downtime?
The output is a report detailing these impacts, helping prioritise recovery efforts.
2. What is a Risk Assessment?
A risk assessment identifies potential threats to your business and evaluates their likelihood and impact.
- Identify Assets: What needs protecting? (e.g., Data, servers, buildings, people).
- Identify Threats: What could harm those assets? (e.g., Cyber attacks, natural disasters, human error).
- Analyse Vulnerabilities: How easy is it for a threat to exploit weaknesses in your systems?
- Assess Likelihood & Impact: Rate each risk based on how likely it is to happen and the damage it would cause. A simple scale (Low, Medium, High) works well.
- Develop Mitigation Strategies: What can you do to reduce the risks? (e.g., Firewalls, backups, training).
The output is a risk register – a list of identified risks with their ratings and planned responses.
3. BIA vs Risk Assessment: Key Differences
| Feature | Business Impact Analysis (BIA) | Risk Assessment |
|---|---|---|
| Focus | Consequences of disruption | Potential threats and vulnerabilities |
| Question | What if…? | What could happen? |
| Output | Impact report, RTO/RPO values | Risk register, mitigation plans |
4. How They Work Together
- BIA First: Start with a BIA to understand what’s most important to protect and recover.
- Inform Risk Assessment: Use the BIA results to focus your risk assessment on critical functions and assets. For example, if order processing has a low RTO, prioritise risks that could disrupt it.
- Prioritise Mitigation: The risk assessment helps you decide which threats to address first based on their likelihood and impact (informed by the BIA).
- Regular Updates: Both BIAs and risk assessments should be reviewed and updated regularly, especially after significant changes to your business.
For example, a BIA might reveal that losing customer data for more than 24 hours is unacceptable (RTO = 24h). The Risk Assessment then focuses on threats to the customer database – like cyber attacks or hardware failure – and plans mitigation strategies accordingly.
5. Simple Example: Cyber security
- BIA: Identify that loss of customer data would cause significant financial and reputational damage. RTO = 8 hours, RPO = 1 hour.
- Risk Assessment: Assess the risk of a ransomware attack on your servers (High Likelihood, High Impact).
- Mitigation: Implement multi-factor authentication, regular backups, and an incident response plan to reduce the likelihood and impact of a ransomware attack.
# Example backup command (Linux)tar -czvf /backup/customer_data.tar.gz /var/www/customer_data