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Prepared by

Aon Risk Solutions

Walid Khayate, ABCP, M.Eng, M.Sc.A, Eng.

Prepared for

Business Continuity Risks and Recovery

Annual ConferenceNovotel North York, TorontoApril 9, 2013

Tous droits réservés © 2013 Aon Risk Solutions qui est une marque de Aon Reed Stenhouse Inc., Aon Canada Inc. et Aon Parizeau Inc.

Contents

1. The World Today

2. Why Business Continuity Planning is important

3. Risks that can affect your company

4. Recovering from a disaster

5. Messages and Conclusions

1


The World Today

§ “Everybody has moved to a leaner, single-sourcing, fewer-supplier approach. Hey presto, what’s going to happen? You are going to increase risk.” - Tim Lawrence, managing consultant at PA Consulting

§ The potential threat from natural disaster in Canada rose from 55% in 2010 to 81% in 2011 in a recent survey of 100 technology firms

§ We live in an interconnected world where geographical disasters and political unrest can impact businesses anytime, anywhere and any place

2


Manufacturing of API

Transit

Storage of API

In-house

Packaging & Labeling

Storage of finished goods & Distribution

Customer

Supply Chain

Fill & Finish

The World

3


Supply Chain

The Real World

4


Business Continuity Planning Is Important

§ 60% of companies face annually an unforeseen breakdown of 1h to 24h duration (Veritas, 2003)§ 40% of companies that do not have any business

continuity mechanism and facing an incident, close down (KPMG, 2008)

§ Objectives of a continuity management program:─ To minimize business interruptions and to optimize

service recovery─ To protect your customers, your suppliers and your

reputation─ To protect your key personnel, your critical resources,

your critical processes and credits5


Business Continuity and Emergency Planning

§ Do not confuse business continuity with emergency planning

Time

Emergency plan activation

BCP* activation

Crisis management

Actions to protect human beings and ensure their health and their safety

Plan to minimize outage = resume services & activities as soon as possible at an acceptable level

*BCP: Business continuity plan

6


Natural

Earthquakes, floods, storms (i.e., thunder, hail, lightning, electrical, snow, winter ice), tornadoes, hurricanes, volcanic eruptions, natural fires

System/technical

Hardware/software outages, programming/system errors

Supply Systems

Communication outages, power distribution (i.e., blackouts), burst pipes

Man-made

Bombings, explosions, disgruntled employees, fires, purposeful destruction, aircraft crashes, hazardous/toxic spills, chemical contamination, malicious code

Political Events

Terrorist attacks, espionage, riots or civil disturbances, strikes

Business Continuity Risks

7


What Really Causes Businesses To Fail

§ 68% Human error─Fire, power failure (lack of maintenance)

§ 25% Technology failure─System crash, loss of key data

§ 5% Natural disaster§ 2% Intentional causes

§ Many companies fall into a trap of planning only for“failures on a grand scale” when it is the smallerinterruptions that cause most losses

8


Tepco Natural disaster

NetflixChange in

business model

Dow Chemical

Olympic sponsorship

ECBEurozone crisis

News CorpPhone hacking

scandal

Penn StateMisconduct allegations

BlackberryMajor outage

SonyData breach

HPChange in

board members

QantasLabor dispute

http://www.holmesreport.com

Top 10 Crises in 2011

9


Recovering From a Disaster – Case study

§ Canadian media company (newspaper)─Objective: Avoiding the loss of a daily edition of their main

newspaper in case of disaster (mainly flood and fire)

─From a facility point of view, 5 strategies have been put in place:• Relocate to an Alternate Location• Work from Home• Shift Work to Unaffected Location• Reciprocal agreement• Stop Work

10



11



§ BCP project costs($k):• Consulting : $100• Human recovery site (rental cost): $90 per year• Human recovery site (office equipment): $150• Human recovery site (IT equipment): $320• Forwarding phone service (50 numbers): $6 per year• Mirror site: $750

─ Most expenses after a disaster are covered by a Business Interruption insurance policy

12



13


Disaster Recovery Standards and Policies

14

Country Standards and Policies

CanadaCAN/CSA Z731 03CAN/CSA Z796 98CAN/CSA Z1600

UK BS 25999 - 1(2006) -2 (2007), BSI

USA NFPA 1600 (2009)Asis SPC.1-2009

AustraliaHB221 (2004)HB291 (2006)AS/NZS 5050 (2010)

Japan Business continuity Guideline (2005), Ministry Economy Trade and IndustryBusiness continuity Guideline (2005), Cabinet office

Singapore SS 540 (2008)Israel SI 24001 (2007)S.Africa SABS 0264-1,-2,-3Austria ONR 49002-3 2008)Denmark DS 3001 (2009)Netherland NEN 7131 (2010)


Messages

15


Business Continuity Starts With Preparing

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”

Abraham Lincoln

16

“By failing to prepare, you are preparing to fail.”

Benjamin Franklin


Conclusion

§ Faster recovery§ Higher chance of success§ Speed of execution§ Retain clients§ Protect company’s market share and equity

§ Protect and enhance your reputation in the market§ Reduce potential losses, lawsuits and damages

Continuity Management Benefits

Overall Advantages


Natural Disasters and Canada – Looking Forward

§ Natural disaster coming to Canada…

Global warming

Climate change

4000 40%Earthquakes recorded in Canada

each yearOf canadians live and work in zones of high or moderate risk of loss from an

earthquake

Earthquake


Source: World Economic Forum, Global Risks 2011, Sixth Edition

Natural Disasters and Canada – Looking ForwardSurvey conducted during the 2010 World economic forum


Global warming


storm

Forest Fire

Dryness and heatwave

Ice stormGround stability

DistributionHurricanes

Flood

Natural Disasters and Canada – Looking Forward


Questions

§ For further information:

Walid Khayate, ABCP, M.Eng, M.Sc.A, Eng.( +1 514.840.7863*[email protected]

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