Business contiunity Management is a luxury in times of recession Essay

Business contiunity Management is a luxury in times of recession - Essay Example Matthys (2009) lists some disruptive or unexpected events which may occur to an organization that may bring harm and other major impacts to the organization and community. Example of events are broken equipments; computer viruses and other IT fraud; phone, internet, power and gas failure; natural calamities; terrorist attacks and all forms of pandemics; and other events that hinder the flow of operations of the business. 2. RECESSION VS. BUSINESS CONTINUITY MANAGEMENT When recession strikes, it is the period when the Gross Domestic Product (GDP) growth is negative. GDP is the total value of the annual output of goods and services produced within a nation's borders. It excludes the foreign output of domestic firms and includes the domestic output of foreign firms (Mankiw, 2008). Because of low GDP, companies' level of output they produce annually has been reduced. One common mistake of some companies during recession is when there is less money to go around, they will cut off their bu dgets. When this happens, it is inevitable to lay off key employees to reduce their expenses. When there's a decrease of employment rate in the economy, people will be earning lower incomes that will result to a decrease of consumer spending. Businesses then will be forced to lower the prices of their goods that will eventually cause a deflation (KCLAU, n.d.). The 9/11 World Trade Center (WTC) terrorist attack is an example in which local and national economies were pushed into recession. The Fiscal Policy Institute (2001) categorized the three types of direct effects of the WTC fall. First were the businesses that comprise the WTC area. Most of them are securities, insurance carrier, real estate operations and data processing services. Thousands of people working at the hotels, restaurants, banks and other establishments near the WTC lost their jobs, hence Lower Manhattan experienced decline of sales. Furthermore, other industries in New York were also greatly affected in the attac k. Example is the air transport industry which comprises 54,000 jobs was shut down for few days not just because of the attack but also most people were already scared to travel by air. This resulted to the decline of tourism. Lastly, the household spending in New York was reportedly made a huge impact during the attack and its aftermath. New York's annual consumption spending is over $200 billion. A 10% one month reduction in consumer spending was assumed by FPI resulting to 9600 job loss. Before the 9/11 attack, it was stated in the Info Security News Magazine of 2000 that 90% of losses will be reduced if an organisation had established beforehand an effective BCP in case of any unwanted event. After the attack, a study conducted that about 81% of CEOs had said that their company plans wouldn't be able to survive with that kind of incident (Naef, 2003). 3. OBJECTIVE CATEGORIES 3.1 STRATEGIC To fully understand the whole coverage of Business Continuity Management, an organization m ust begin first in the development of the business continuity strategies. These are courses of actions used in the development and implementation of business continuity plan which are approved, documented and funded by the management of the organization. The results of the