Crisis and Business Continuity Management - Coursework Example

CRISIS AND BUSINESS CONTINUITY MANAGEMENT By Name Course Instructor Institution City/State Date Crisis and Business Continuity Management Introduction Nowadays, companies across the globe are facing unparalleled number of threats. The severity as well as the occurrence of climate-related events has increased tremendously, and reliance on the multifaceted network of supply chains and technology is growing. Such trends have brought about vulnerability to the businesses due to the increasing number of emerging and existing risks. However, developing business continuity strategy to manage such risks is crucial for the continued existence of the organisation. According to Smith (2012, p.5), no business enterprise can completely control its business environment; hence, it is imperative for organisations to have crisis management as well as business continuity management (BCM) capability to be able to manage disaster or crisis when they occur. Business preparedness that is fit-for-purpose, efficient and robust is crucial, and satisfaction is intolerable, considering that threats and challenges are part of contemporary business climate. Presently, BCM is essential for long-lasting competitive advantage, and is also crucial in identifying possible effects of losses within the organisation (Mwaiwa & Odiyo, 2015, p.148). The aim of this essay is to explain whether Business Continuity Management (BCM) should be an essential responsibility of senior management in the United Kingdom-based international holiday tour operator. Discussion ‘Business Continuity’ according to Hiles (2014, p.6) can be defined as the as the organisation’s ability to continue offering products/services at predefined levels that is considered acceptable subsequent to a disruptive event. According to Business Continuity Institute (BCI), BCM is a holistic process of management, which recognizes possible effects that put the organisation at risk and offers a framework for building-resilience as well as the ability to respond effectively with the purpose of protecting the key stakeholders’ interests, its brand, reputation and activities that create value (Smith, 2003). BCM is very crucial for the tour company senior management considering that the UK tour companies are facing a lot of challenges. One of the challenges is the recession, which have certainly reduced consumer spending (Green, 2011). Consequently, a number of tour operators have been compelled by the market situation to reduce their capacity so as to meet their holiday programmes. Owing to the travel seasonal nature, tour operators require effective financial markets where they can easily access capital at affordable rates. Besides that, tour operator need means of safeguarding their client money, but because of confidence in the banking sector is reducing the tour firms are facing an increasing pressure. The tour operator faces the challenge of economically and politically risky destinations such as Greece and Ukraine. Lack of good intelligence in countries facing political or economic risks can create challenge for the tour operator. More challenges are presented by the new UK regulations, whereby the tour operator is expected to adhere to new regulations meant for consumer protection like the Flight-Plus ATOL. Consumer protection is very crucial across Europe, and the laws introduced to protect consumers have an enormous effect on way tour firms operate in Europe. In view of this, BCM should be considered as a crucial tool for managing such challenges. In UK, 37 million overseas holidays bookings were made between 2005 and 2010, but only 17 million holidays bookings were made through tour operators (EP, 2012). This is attributed mainly by the increasing online bookings companies like Opodo, lastminute.com and Expedia. According to Lantos (2015, p.140), consumers are using the internet to compare prices as well as to shop. Nowadays, most customers are not using tour operators to make bookings, but instead they do it independently through the internet. Recent events such as the Arab Spring, high prices of fuel, and natural catastrophes have significantly affected the tour operators’ margins. Collectively, the recession as well as structural pressures has irreversibly transformed the nature the tour operators, especially those adhering to the conventional industry model. For tour companies to be successful in this uncertain environment, they should focus on BCM and transforming the environment. According to Green (2011), twenty tour operators registered by ABTA/ATOL have since January 2011 gone into administration and are likely to face a flood of failures in the future. The present legislation requires tour operators to publicize annually their cash flow, solvency as well as observance to requirements stipulated by Civil Aviation Authority. All such factors have left scores of tour operators staggering towards failure. Presently, tour operators firms face what Osborne (2011) terms as 'critical distress' is high considering that in 2010 it was 49 per cent. The combination of uncertain future revenue an overstretched balance sheet creates need for espousal of BCM framework. Basically, every tour operator seeking to be successful in UK must have an active BCM programme. Even though, some companies espouse BCM as a result of pressure to meet the demands as well as recommendations of the insurers or auditors, at times BCM is espoused because of senior managers concerns, especially those who understand their responsibilities un. Despite the pressures that the tour operator is facing in the market, BCM must be considered as an essential part of effective management. It is imprudent for senior management to disregard the significance of BCM, and failure to plan of how to reduce the disruption that the business could face can result in business failure. BCM as mentioned by Gallagher (2003, p.17) is concerned with protecting the interests of the shareholders and employment; signifying effective management; managing as well as protecting brand value and reputation. Basically, all companies are striving to manage their business efficiently and effectively through various approaches as well as tools, but mostly depend on a business management system that is well functioning. It is imperative that senior management completely support from the start since the support is needed to instil a sense of ownership as well as value amongst the employees. For this reason, it is imperative for the team or an individual from the senior management to be responsible for coordinating and managing the BCM capability at the tour firm. The tour operator’s senior management: should for this reason nominate or appoint an entity from the management level so as to be responsible for BCM; as well as appoint a number of employees to steer the BCM programme forward. According to Bowers (2014), carrying out Risk Assessment as well as Business Impact Analysis (BIA), can allow senior management to clearly understand the organisation as well as develop a BCM capability. Basically, BIA is important because it finds and documents the company’s main products and services; crucial activities that will facilitate delivery of such; the impact of disruption to such activities on the organisation; as well as the resources needed to facilitate continuity of business activities (Fay, 2010, p.410). The tour company must undertake BIA because it the important foundation for both continuity management as well as risk management. Through BIA, the company can successfully identify important function and resources as well as the timeframes through which normal business activities can be restored after a disruption. This can also help the company successfully develop strategies for business recovery (Venclova et al., 2013, p.136). According to Svata (2013, p.24), an impact analysis can help a company distinguish between critical as well as non-critical organisational processes or functions. In BCM context, Graham and Kaye (2012, p.63) posits that risk assessment investigates the probability and impact of various risks, which may result in business disruption. Through risk assessment, the company can effectively prioritize it risk reduction undertakings. Therefore, it is the responsibility of the senior management to ensure that risk assessment focuses on the supporting resources as well as critical activities identified during the stage of Business Impact Analysis. Imperatively, risk assessment may be performed only after completing. The enterprise risk main components as identified by Hoffmann et al. (2008, p.89) are: environmental risk, market risk, credit risk, strategic risk, compliance risk as well as operational risk. Business managers as argued by Watters (2013, p.153) must be prepared for the worst and focus their efforts in developing responsible strategic plan capable of reducing harmful events impact. Planning for business continuity can help the company discover possible improvements not just on business systems, but also means of reducing business-related costs. Therefore, planning for unexpected future can help the tour company in improving its operational efficiency. Latest natural disasters and events that have led to business disruptions across the globe demonstrate the significance of having a mature and robust. Crotty (2015) posit that every business has continuity needs, but particular considerations must be followed when modifying or starting a BCM programme. When business is hit by a disaster, its continuity rely on the company ability to replicate its data as well as IT systems. Having a disaster recovery plan in position can help a company prepare itself for disaster, understand how to respond to a disaster, and steps it can follow to make sure operations are restored. As part of BCM, disaster recovery can help the senior management understand the steps involved in adapting to and planning for possible disaster and also offer a road map for restoring business operations (Department of Homeland Security, 2012). Business continuity planning offers the company an all-inclusive approach that makes sure business operations is normal, both after a disaster as well as events that bring about interruptions. Business continuity is different from disaster recovery since it maintains every aspect of business functioning instead of only keeping the technology systems. Scores of companies have realised that have realised that implementing a generic Business Continuity Plan is not adequate. To respond effectively, with regard to sustaining operational continuity, the Business Continuity Plan must be tailored to particular disastrous scenarios and risks such as collapse of a building or failure of the local system. If the tour firm espouse BCM programme, the senior management will be able to plan how to recover its main business functions through timescales and priorities achieved through risks assessed as well as associated data. Presently, it is no more adequate for companies to recover their communications as well as technology infrastructure; they company must have skilled personnel and offer them accommodations so as to work effectively. The present economic climate and increasing threats consisting of both natural and unnatural catastrophes, cyber-terrorists and hackers have created need for BCM programme. Currently, it is imperative for tour companies to maintain operational flexibility and effectiveness since natural calamities are part of the threats facing their business operations. For instance, hackers can seriously destabilize the company’s whole operation. Overcoming such threats is imperative, and can be achieved by using results achieved from risk analysis as well as management activities and BIA. If the tour company has operational BCM programme security, it can successfully undertake security testing, which includes network infrastructure penetration testing as well as vulnerability assessment. Elliott et al. (2010, p.10) asserts that BCM system is a tool that has repeatedly confirmed its ability to help companies overcome possible crises in the business environment. Considering that BCM programme is closely associated with other subsystems such as the organisation’s Management System, it is without doubt a connecting unit in collaborative management. The traditional model used by tour companies that focuses on pre-booking accommodation as well as flight capacity is at a high risk. As many of the customers are opting for niche and online solutions to their travel, Evans (2011) thinks that the traditional model is declining fast. However, this challenge can be overcome if the tour company can espouse BCM programme that can help it compile travel packages with reduced booking lead times as well as reduce operation cost. Conclusion In conclusion, the essay has explained whether Business Continuity Management (BCM) should be an essential responsibility of senior management in the United Kingdom-based international holiday tour operator. As argued in the essay, BCM should be senior management responsibility in unifying a broad spectrum of as well as redesign how the organisation offers its products/services while at the same time reducing loss or interruption caused by disasters and events. For this reason, the tour operator’s senior management should act decisively and swiftly when a disaster strikes so as to ensure the situation is managed and operations are restored. Tour operators are facing a number of risks associated with market, operations, environment, and many others. 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