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Business Impact Analysis (BIA): Phases, Effects, Importance

29th Sep, 2023
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    Business Impact Analysis (BIA): Phases, Effects, Importance

    When it comes to business, impact analysis is key. Every business, regardless of size, can be affected due to a disaster, accident or emergency. While some businesses may be able to weather the storm with little or no damage, others may not be so fortunate. Thus, performing a business impact analysis (BIA) is important to ensure your business can survive any unforeseen event. The goal of BIA is always to protect the essential operations of the business.  

    Importantly, BIA should not be viewed as a one-time event but rather an ongoing activity that is updated regularly to reflect changes in the business landscape and increased resilience needs. In this post, let us explore the different phases of BIA, its effects on businesses, and some of the reasons why conducting a BIA is so important. Also, understand that BIA is a key component of many best Business Analyst Courses . 

    What is Business Analysis Impact (BIA)? 

    Business Impact Analysis (BIA) is the process of identifying and assessing the potential impacts a disruption or incident could have on an organization. BIA helps organizations identify their most critical operations and business functions and place plans and procedures to ensure these are maintained during and after a disruption.

    Business analysts use various techniques to understand the business operation being interrupted and the potential impacts of that interruption. They then work with stakeholders to develop strategies to address the risks. Common strategies to mitigate risk include developing alternative sources of supplies or services, increasing capacity, or developing contingency plans.   

    For example, a manufacturing company can create a business impact analysis template to analyze how losing a key supplier would affect operations and revenue. By understanding the risks and developing mitigation strategies, business analysts can help organizations minimize the impact of an interruption and ensure the continuity of operations. 

    What is the Purpose of Business Analysis Impact?

    The key purpose of business impact analysis is to help an organization determine the potential effects of an interruption to critical business operations due to any negative event. The purpose is to understand the potential impacts on the organization and develop contingency plans to minimize those impacts.  

    Furthermore, BIA business impact analysis aims to predict exactly how a disruptive event will play out and identify the possible consequences of different types of disruptions. This information can then be used to develop plans for how the organization will respond if one of those disruptions occurs.   

    Importance of Business Impact Analysis 

    Businesses rely on various systems and processes to function properly. When one of these components is disrupted, it can have a ripple effect throughout the organization. That is why business impact analysis (BIA) is so important. Let us understand the importance of business impact analysis in detail by considering some crucial business disruption scenarios and their possible impact. 

    Business Disruption Scenarios

    Here are some of the most common business disruption scenarios:  

    1. Data Loss/Breach  
    2. Data Recovery  
    3. Power Outage 
    4. Network Outage  
    5. Natural Disruption  
    6. Pandemics  
    7. Physical Disruptions  


    1. Data Loss/Breach  

    Losing data can happen in several ways, from accidental deletion to cyberattacks.  Businesses rely on data to make informed decisions, and a data loss or breach can significantly impact operations. Not only does it involve the cost of recovering the data, but it can also lead to a loss of trust from customers and partners.  

    2. Data Recovery Issue 

    Even with a backup, recovering lost data may be difficult or impossible. This can be due to file corruption, physical damage to storage devices, or other factors. You may need to hire a professional if you can't recover the data yourself.  

    3. Power Outage 

    A power outage can bring your business to a halt. It can also be disruptive, especially if it lasts extended. Not only will businesses be without power, but they will also lose access to network systems and possibly critical equipment.  

    4. Network Outage 

    An outage of your primary internet connection can disrupt business operations. To avoid this, have a backup internet connection such as a secondary ISP or LTE.  

    5. Natural Disruption 

    A physical disruption such as a fire, flood, or earthquake can damage or destroy your business premises. In addition to the direct damage to property, businesses may face challenges with communication and access to essential services.  

    6. Pandemics 

    A pandemic can cause widespread sickness, death, and economic disruption. It can significantly impact businesses regarding health and safety concerns and the potential for lost productivity. To minimize the impact of this scenario on your business, have a plan in place for how you will maintain operations during a pandemic.  

    7. Physical Disruptions 

    Physical disruptions such as riots, protests, and strikes can disrupt business operations.   

    How to Conduct Business Analysis Impact In 10 Steps? 

    The steps to conducting business analysis impact can differ from company to company depending on their requirements and team. However, the general steps of how to conduct a business impact analysis are as follows:  

    1. Getting approval from senior management.  
    2. Selecting experienced staff to perform a BIA. 
    3. Preparing a detailed business impact assessment template and the plan. 
    4. Gathering information from interviews, documentation, and questionnaires. 
    5. Evaluating the gathered data. 
    6. Performing an analysis so that the technologies needed could be discussed.   
    7. Preparing a report or a detailed BIA template. 
    8. Showing the results to senior management. 
    9. Define strategies for recovery after examining the results.   
    10. Using these results to develop a sample business impact analysis plan and then working with the team and seniors to make it a final plan.   

    To learn more about conducting effective business analysis, one can choose KnowledgeHut which offers some of the best business analyst courses. The courses cover everything from the basics of impact analysis to advanced aspects for assessing the potential ramifications of proposed changes under the guidance of project management professionals. KnowledgeHut’s best Business Analyst courses are interactive and engaging, offering students the opportunity to learn through real-world examples. 

    Phases of Business Analysis Impact

    The business impact analysis process involves 4 phases. They are: 

    1. Define the Objectives and Scope

    The first phase is to define the goals, major objectives, and scope of the business impact analysis. The business's goals should be clear. Once approval has been obtained, businesses should gather trained people to perform a BIA together. These individuals should understand the organization's business processes well and be familiar with risk assessment methods.  

    2. Collect Data and Information

    After initiating the business analysis phase, the analyst will gather information. This is done through a variety of means, including a BIA questionnaire template, interviews, and documentation review. The goal is to collect data that is relevant to the analysis and that can help to answer questions about the problem or opportunity at hand. Once this information has been gathered, it can be used to generate insights and recommendations.   

    The collected information should include: 

    • The process name 
    • What the process entails in detail 
    • Inputs and outputs  
    • All business impact analysis tools and resources to be used in the process 
    • Users involved in the process 
    • Timing 
    • Financial and operational affect  
    • Regulatory and legal impacts 
    • Historical data 

    3. Review the Information

    The third phase of business impact analysis is information review. This is the process of documenting and reviewing the collected data to prioritize a list of business functions or processes, identify human and technology resources needed, and establish a recovery timeframe. This phase can be automated or done manually, depending on what is easiest, reliable, and, most importantly, practical.  

    This phase is important in crisis management and contingency planning because it helps company leaders make decisions about allocating resources and managing operations during and after a disruptive event. Information review might seem a basic part of the business impact analysis process, but it is an essential step in making sure that your company is prepared for any eventuality. 

    4. Making a Detailed Report

    One of the most important business impact analysis steps is making a detailed report. This report comprehensively documents the findings of the previous phases and offers recommendations for recovery in the event of a disruptive incident.  

    Here is a business impact analysis report example explained in detail: 

    The report begins with an executive summary, which provides an overview of the objectives, the scope of the analysis, and a summary of the findings. This is followed by a section on methodology, which outlines the data-gathering and evaluation methods used.  

    The next section presents a detailed finding on the most crucial processes, the disruption impact, acceptable duration, acceptable loss level, recovery cost, etc. The report concludes with a section on supporting documents and recovery suggestions. 

    The final phase of business analysis impact is showing the Business Impact Analysis (BIA) report to seniors. The report should be shown to seniors to get their input on the findings and recommendations. The analysts can choose from any business impact analysis template excel available online to present the report.  

    After the BIA report has been reviewed and approved by seniors, it can be used to develop a plan of action in the event of a disruption. The goal of this phase is to ensure that seniors are aware of the risks and impacts associated with disruptions and that they understand the role they play in mitigating those risks.   

    Effects of Not Performing a Business Analysis Impact

    Not conducting a business impact analysis can result in significant negative impacts on an organization. These include the following: 

    1. Lack of clarity on which business processes are critical and need to be safeguarded. 

    2. Inadequate protection of key assets and resources. 

    3. Poorly designed continuity plans that do not take into account all risks. 

    4. Increased exposure to financial, reputational, and legal risks in the event of a disruption. 

    5. Difficulty obtaining insurance coverage or adequate compensation from insurers in the event of a loss. 

    6. Poor decision-making during a crisis is due to a lack of information about the potential impacts of various actions. 

    Conducting a business impact analysis risk assessment is essential for any organization that wishes to protect itself from the potentially devastating effects of disruptions. By identifying critical business processes and assets, organizations can ensure that their continuity plans are comprehensive and effective and that they are taking all necessary steps to mitigate risks. 

    Common Challenges with Business Analysis Impact

    In business analysis, the impact of a change should be measured to ensure that it is worth implementing. However, this can be difficult to do accurately. There are several common challenges that analysts face when trying to assess the impact of a change: 

    1. First, predicting how users will react to a change can be difficult. They may not use the new features as intended or find workarounds that negate the impact of the change.  

    2. Second, it can be hard to identify all the stakeholders affected by a change. Some stakeholders may have hidden agendas that make them resistant to change, while others may be unaware of the potential impacts.  

    3. Third, analysts must deal with uncertainty when assessing impact. Changes often have complex ripple effects that are difficult to predict.  

    4. Fourth, analysts must balance conflicting demands when assessing impact. For example, a change that benefits one group of users may have negative consequences for another group.  

    5. Fifth, analysts need to take into account both tangible and intangible factors when assessing impact. For example, a change may improve efficiency but make users feel less engaged with their work.  

    Gain valuable insights and skills to excel in the competitive world of data analysis. Enroll now for online business intelligence course.


    Business impact analysis is a key part of risk management and should be done regularly to assess the potential effects of disruptions on an organization. The three phases of a BIA are identification, assessment, and response. To see what this looks like in practice, we have included the above as well.  

    The BIA is extremely important because it allows organizations to plan for possible outcomes and take steps to mitigate any negative effects. By completing a BIA, businesses can make informed decisions about whether or not a change is worth undertaking. 

    Despite the challenges, business analysts must still try to assess the impact of changes to make informed decisions about whether or not to implement them. Check out CBAP Certification Training online to upscale yourself.

    Frequently Asked Questions (FAQs)

    1What is Business Impact Analysis example?

    The primary types of Business Impact Analysis are - quantitative and qualitative. Quantitative BIA uses numerical data to assess the impacts of disruptions, while qualitative BIA relies on expert opinion and subjective judgments. Let's understand it with a business impact analysis example - A quantitative BIA might be used to calculate the cost of lost productivity due to a power outage, while a qualitative BIA might be used to identify the risks posed by an extended power outage (e.g., loss of perishable inventory).   

    2What are the 5 areas a business impact analysis details?

    The 5 areas a business impact analysis details are: 

    • Preparation  
    • Information Gathering  
    • Information Review And Analysis 
    • BIA Report Creation  
    • Business Impact Analysis Recommendation Implementation 
    3Why is a business impact analysis important?

    The business impact analysis process helps identify which business functions are critical to the organization and analyzes the potential consequences of disruptions to those functions. BIA results can be used to develop strategies for continuity planning and disaster recovery. Additionally, the BIA can help identify gaps in current capabilities and provide insights into areas where additional investment may be needed. 

    4What business impact means?

    Business impact is the effect of a company. A company's business impact can be both positive and negative. It may have a positive business impact if it creates jobs, produces goods or services that are essential to society, or contributes to charitable causes. A company may have a negative business impact if it pollutes the environment, engages in illegal or unethical practices, or mistreats its employees. 

    5How do you Analyse impact?

    The business impact analysis includes looking at financial, operational, and compliance impacts. The financial impact considers how the change will affect the organization's bottom line. The operational impact looks at how the change will affect day-to-day operations. The compliance impact considers how the change will affect the organization's compliance with laws and regulations. 

    6How do you write business impact?

    Clearly identify the problem or opportunity that your business is addressing. Next, you need to quantify the potential impact of your solution in terms of benefits like revenue, cost savings, or efficiency gains. Finally, you need to articulate how your business will achieve those goals. This will require a detailed understanding of your business model and value proposition.  


    Mansoor Mohammed

    Business Agility Expert

    Mansoor Mohammed is a dynamic and energetic Enterprise Agile Coach, P3M & PMO Consultant, Trainer, Mentor, and Practitioner with over 20 years of experience in Strategy Execution and Business Agility. With a background in Avionics, Financial Services, Banking, Telecommunications, Retail, and Digital, Mansoor has led global infrastructure and software development teams, launched innovative products, and enabled Organizational Change Management. As a results-driven leader, he excels in collaborating, adapting, and driving partnerships with stakeholders at all levels. With expertise in Change Management, Transformation, Lean, Agile, and Organizational Design, Mansoor is passionate about aligning strategic goals and delivering creative solutions for successful business outcomes. Connect with him to explore change, Agile Governance, implementation delivery, and the future of work.

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