by Mark Kirsch, Treasury Practitioner Executive, Global Business Solutions, Bank of America Merrill Lynch
From major disasters, such as hurricanes and tsunamis, to everyday disruptions, such as extended illness and theft, corporate treasuries need to be ready for any interruption affecting their day-to-day operations. Business Continuity Planning (BCP) is the process used by companies to prepare for a wide range of disruptions before they happen, enabling the enterprise to resume normal operations as quickly as possible. This article explains the importance of BCP for treasury organisations and outlines the four stages involved in developing a new, or refreshing an existing, continuity plan.
In recent years, companies around the world have learned to expect the unexpected. Many have developed sophisticated contingency plans to cover a wide range of possible disruptions. For corporate treasurers, this process is particularly important; any disruption to normal cash management activities – for example, the failure to make payroll on time – could have significant consequences for the company.
As such, undergoing a robust BCP process is particularly important for the treasury organisation. The objective of BCP is to develop a plan that enables companies to resume normal operations, within a specified timeframe, in the event of unforeseen changes in the company’s operating environment. The scope and content of the plan should be determined by the perceived threats and risks the company faces, as well as by the size of the business.
The time and effort that a treasury team invests in the BCP process will be reflected in the quality and effectiveness of the plan. In order to keep the plan relevant, it needs to be reviewed regularly by the treasury team and amended to reflect any changes to the treasury’s workflow and resources.