Business continuity: Overview, definition, and example
What is business continuity?
Business continuity refers to the processes, plans, and systems an organization implements to ensure that critical operations can continue during and after a disruption, such as a natural disaster, cyberattack, or other crisis. A business continuity plan (BCP) outlines strategies for minimizing downtime, protecting assets, and maintaining essential services, enabling the organization to recover quickly and effectively.
For example, a company might establish backup data centers and remote work protocols to ensure continuity during an IT outage or natural disaster.
Why is business continuity important?
Business continuity is important because it helps organizations minimize financial losses, maintain customer trust, and ensure compliance with legal or regulatory requirements during disruptive events. It also protects employees, customers, and other stakeholders by ensuring that essential services and operations are not significantly disrupted.
For businesses, a robust business continuity plan is essential for resilience and risk management. It ensures preparedness and reduces recovery time, helping the organization maintain its reputation and competitive edge.
Understanding business continuity through an example
Imagine a financial services firm experiences a cyberattack that compromises its primary IT systems. The firm activates its business continuity plan, switching operations to a backup data center and informing clients about the issue. Employees continue working remotely using secure systems, and the firm maintains essential services with minimal disruption.
In another example, a manufacturing company faces a supply chain disruption due to a natural disaster. Its business continuity plan includes agreements with secondary suppliers and inventory reserves, allowing production to continue without significant delays.
An example of a business continuity clause
Here’s how a business continuity clause might appear in an agreement:
“The Company shall maintain a business continuity plan designed to ensure the continued operation of critical business functions in the event of a disruption. The Company agrees to periodically review and update the plan to address evolving risks and provide a summary of the plan to the Client upon request. In the event of a disruption, the Company shall notify the Client promptly and take all reasonable steps to minimize impact on services.”
Conclusion
Business continuity is essential for organizations to effectively manage disruptions and maintain critical operations. It protects businesses from financial losses, reputational damage, and compliance risks while ensuring uninterrupted service for customers and stakeholders. For businesses, having a clear and actionable business continuity plan promotes resilience and builds trust with clients and partners. Including business continuity provisions in agreements ensures transparency, preparedness, and accountability.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.