Firms fail to weather the storm

Organisations in the engineering sector are failing to prepare for disruption, despite recording an increase in the level of upheaval caused by extreme weather conditions and high levels of people and skills loss.

According to research, published today by the Chartered Management Institute, organisations in the engineering sector are ‘blowing hot and cold’ when it comes to business continuity – they pay lip service to the importance of planning for disaster, but fail to make business resilience a reality.

The 2007 Business Continuity Management Survey, supported by the Cabinet Office and Continuity Forum, reveals that 19 per cent of organisations in the engineering sector were affected by extreme weather conditions in the 12 months to January 2007, an increase from less than 1 in 10, the previous year. In regional terms, the worst affected areas were Wales, where 21 per cent reported significant disruption, closely followed by Scotland and the South East.

Forty five per cent of managers in the engineering sector also said their organisation’s productivity had suffered due to a ‘loss of people’ over the past year, the highest proportion since the question was first asked in 2003. Forty per cent blamed ‘loss of skills’ for business disruption and 21 per cent focused on health and safety incidents.

Managers in the engineering sector identified traditional areas as most likely to impact on future costs and revenue. IT was cited by 77 per cent, followed by loss of telecommunications (72 per cent) and loss of access to sites (64 per cent). However, reflecting concerns expressed in the recent Leitch Review of Skills, managers also highlighted fears over ‘loss of people’ (55 per cent) and skills (63 per cent).

Jo Causon, director, marketing and corporate affairs, at the Chartered Management Institute, said: ‘Protecting an organisation’s infrastructure is, of course, vital to its sustainability. However, technology is nothing without the people who can use it and unless organisations balance the need to safeguard buildings with the need to secure their workforce, any attempt at business continuity management will remain unfinished and inadequate.’

The research also uncovered an alarming level of complacency amongst employers in the engineering sector. Although 59 per cent believe business continuity is viewed as important by their senior management team, the number whose organisations have a business continuity plan (BCP) covering critical areas is much lower at 40 per cent. Amongst medium- and small-sized organisations levels of preparation are lower still at 42 and 34 per cent, respectively.

Even where BCPs exist, many organisations fail to balance levels of protection with what they perceive are key threats to business. For example, only 35 per cent of BCPs focus on reputation, even though 45 per cent perceive ‘damage to brand’ as a major threat.

Encouragingly, half of those respondents with a BCP report that they rehearse plans at least once a year. More than 1 in 3 do nothing with the plans that have been developed and 15 per cent fail to act on the shortcomings they identify.

Bruce Mann, director of Civil Contingencies at the Cabinet Office, said: ‘The report reveals a situation where there is still much work to be done. Events from the Carlisle floods to the London bombings and Buncefield explosion have clearly shown the vast range of impacts that emergencies can have. Yet despite these, there are still too many organisations with insufficient business continuity plans in place.’

In the context of these fears and the continued threat of a ‘flu pandemic, managers were asked if their employer had plans in place to cater for excessive staff loss, due to illness. Encouragingly, 36 per cent of organisations in the sector have plans in place for a ‘flu pandemic, but organisations are still failing to fully consider the impact of additional parent-worker absences - a factor demonstrated recently when almost 1,000 schools were forced to close because of snow. The research found that 65 per cent of respondents in the engineering sector suggest that increased levels of absences would result from school/ childcare closures during a pandemic, but only eight per cent suggest their organisation’s plan is sufficient to cope.

The research also makes it clear that organisations are failing to make adequate provision for immediate business continuity. Despite many fearing the impact of loss of access to their site, less than half said their organisation is ready for remote working ‘to a great extent’ even though 54 per cent have access to alternative work sites.

Sixty five per cent also report that their organisations outsource facilities or services, but only 18 per cent demand business continuity management (BCM) from all business critical suppliers. Where BCPs are sought, 48 per cent admit they are satisfied with a statement from the supplier, one-third will examine the BCP, but only 17 per cent are involved in the development of supplier BCPs.

John Sharp, policy and development director at the Continuity Forum, said: ‘Successful business continuity planning is a two-way process. Organisations need to demonstrate their commitment to BCM to key stakeholders internally and externally, but at the same time should encourage suppliers to do the same. Failure to do so will lead to major business disruption as inadequate plans are exposed at the time they are needed most.’