What Is a Business Continuity Plan?

Key takeaways

A business continuity plan (BCP) offers a detailed roadmap for how a company will resume standard business operations following a disaster:

• Each year, organizations worldwide experience an average of 86 outages, putting profits and public image at risk while underscoring the need for robust business continuity plans [1].

• Testing the business continuity plan periodically ensures it remains effective and up to date.

• You can increase your readiness to respond to crises by becoming a certified incident responder.

Read on to learn how to plan ahead for potential disruptions with a business continuity plan. If you’re ready to get started right away, consider pursuing Dartmouth College’s Strategic Leadership: Impact, Change, and Decision-Making Specialization. Intended for beginners, the four-course series in this program offers insights into the neuroscience behind effective decision-making.

What does a business continuity plan do?

A business continuity plan helps organizations anticipate and plan for high-impact threat scenarios, ranging from natural calamities to increasingly sophisticated cyberattacks. Business continuity planning also helps organizations address disruptions caused by rival firms, changing customer expectations, rapidly evolving technologies, and other factors. Heavily supervised industries, such as energy and financial services, mandate business continuity planning to meet regulatory requirements. 

Who uses a business continuity plan?

From solo entrepreneurs to multinational corporations, most organizations utilize business continuity plans. With an average of 86 outages affecting businesses each year, the risk to financial stability and public image is steadily increasing, making business continuity planning a top priority [1].

Enterprise-wide business continuity plans are typically crafted with input from chief information officers, crisis management experts, and security response teams. Popular tools for business continuity management include Riskonnect, Fusion Framework System, and Archer.

What are the 4 pillars of a business continuity plan?

Assessment, preparedness, response, and recovery—the core pillars of a business continuity plan—offer a systematic approach to handling operational challenges. Business continuity, in its simplest form, includes assembling a team, identifying at-risk functions, planning for minimal operational capacity during disruptions, and conducting regular drills.

Types of business continuity plans

You can tailor a business continuity plan to address the distinct threats your organization may face. Below are some common types to consider: 

IT business continuity plan

Ideal for technology-focused businesses, this plan enables you to keep critical data and information technology (IT) systems secure and accessible during downtime or system failure. As part of this plan, you may implement mechanisms for offline document storage or automatic backups. You can also strengthen existing cybersecurity defenses. 

Financial continuity plan

Financial continuity planning helps you ensure your organization has the financial resources to continue operating during a crisis. This includes developing strategies for maintaining healthy cash flow, utilizing emergency reserves, and safeguarding credit standing through periods of operational instability.

Emergency response plan

This plan outlines clear procedures to follow in the event of emergencies, including fires, natural disasters, or workplace accidents. The focus remains on protecting lives and ensuring a swift and organized response to critical situations.

Workforce continuity plan

A workforce continuity plan involves setting up reliable remote work systems to ensure employees can perform their duties from anywhere, reassigning roles and responsibilities to meet shifting priorities, and establishing clear communication protocols to keep everyone connected and informed even in uncertain times.

Read more: Workplace Communication: What Is It & Why Is It Important?

What are the five key components of a business continuity plan?

While business continuity plans may vary by industry and organization size, they are generally built around five main components:

- Risk assessment: Highlights potential risks, evaluates their effects, and determines which require the most attention

- Recovery strategies: Define how to restore operations, recover data, and allocate resources

- Roles and responsibilities: Clarify who leads and supports recovery efforts during disruptions

- Communication plans: Outline messaging protocols for both internal and external stakeholders

- Testing and training: Verify the plan’s effectiveness and prepare teams to respond effectively

Pros and cons of business continuity planning

Business continuity management falls under the broader scope of risk management. Consider some notable advantages and disadvantages of business continuity planning:

Advantages

When executed effectively, a business continuity plan can minimize downtime, mitigate financial losses, and enhance organizational resilience.

• Identifies gaps in insurance coverage: Enables your organization to assess the scope and limits of insurance policies, highlighting areas where coverage may be insufficient or missing altogether

• Builds resilience over time: Business continuity planning allows your organization to stay operational during crises, reinforcing stakeholder trust and supporting long-term growth

• Ensures faster recovery from unforeseen events: Proactive planning enables you to restart operations quickly after a disruption, minimizing delays and limiting the financial impact on your business

Disadvanatages 

Despite its numerous benefits, business continuity planning also has its limitations. If not properly integrated across departments, a business continuity plan may fall short when it's needed most.

• Can inadvertently lead to losses: If a plan is not well-crafted or lacks leadership backing, it may cause safety risks or significant financial setbacks in times of crisis.

• May cause confusion: Without regular testing and updates, business continuity plans can become outdated or incomplete, leading to misunderstandings and slow responses during emergencies.

• Requires constant training: Threat preparedness can suffer if plan updates and staff training become inconsistent.

How to create a business continuity plan

Operational threats, whether natural, accidental, or human-made, can strike at any time. Next, review some steps you can take to create a robust business continuity plan: 

1. Perform risk assessment. 

Assessment entails recognizing potential threats and conducting a business impact analysis (BIA) to determine which operational functions are essential and what consequences may arise if those functions are disrupted.

The assessment phase also includes evaluating two key metrics: recovery time objective (RTO), which defines the maximum acceptable downtime for a process, and recovery point objective (RPO), which indicates the maximum acceptable data loss in the event of an incident.

2. Determine recovery strategies. 

With the business impact defined, the next phase involves choosing strategies to resume essential business functions. This involves answering questions like: 

• How will you protect sensitive data during a breach?

• What actions will you take if the primary manufacturing site faces a power outage?

At this stage, you may also want to establish immediate steps to take in the early stages of a disruption. 

3. Assign roles within continuity teams.

It’s now time to assemble a team to help design your business continuity plan and establish its framework. This team typically consists of professionals responsible for executing the plan during a disaster. You may also consider enlisting certified incident handlers to address various cybersecurity incidents, such as network attacks, malware, and insider threats.

4. Test the effectiveness of your plan.

Stress-test your business continuity plan by simulating different types of disruptions. Make updates where needed and ensure your staff is continuously trained on the latest response strategies.

How often should you test a business continuity plan?

It’s ideal to have your business continuity plan independently reviewed at least once a year through an external audit to uncover any blind spots. It’s also wise to update the plan following any significant shifts in your company’s operations, systems, or procedures.

Explore our free resources on business intelligence 

Revisit essential cybersecurity concepts, learn more about risk management, and discover the latest trends in strategic business management by subscribing to Coursera’s Career Chat newsletter and exploring these free digital resources: 

• Bookmark for quick access: Cybersecurity Glossary: Key Terms & Definitions

• Watch on YouTube: Risk Management - Security & Safety Challenges in a Globalized World 

• Hear from an insider: Future-Proofing Your Business Strategy with GenAI

Continue exploring key concepts in business continuity planning with a Coursera Plus subscription. When you enroll in either the monthly or annual option, you’ll get access to over 10,000 courses.

Build job-ready skills with Coursera Plus

Start 7-day free trial

• 
• 
• 
• 

Start 7-day free trial