3.5 Source of Budget

For most business contingency planning projects, the source of finance will be the budget of the ultimate owner of the implemented BC plans. However, the following example shows how this might not always be the case. There could be benefit from considering alternative sources of funding for the bc project. The example relates to two hypothetical banking groups. Both have trading floors, each with its support 'back office' units. Who should fund the back office bc planning project?

In the first bank, there is no doubt at all that the front office trading division should pay the whole cost for implementation and maintenance of the back office bc plans.

The reasoning is that a) the front office can not function without the back office and wishes to have some degree of control over the provision of back office emergency services following invocation of the bc plans. b) the back office will, in any case, pass the cost of bc plan development and maintenance to the trading department at the end of the year, in their annual charges for back office services. After all, the trading department earns the money and, ultimately, has to fund all of the 'cost centres' or support functions throughout the bank. So the trading department might just as well pay for the project directly.

In the second bank, there is no doubt at all that each department, throughout the bank, should take full responsibility for funding the implementation and maintenance of its own bc plans.

The reasoning is that a) Ownership of the bc plans and of the invocation and recovery procedures must rest with the department concerned. This is the classical bcp approach. Each department is solely responsible for ensuring that its bc plans are adequate to enable it to deliver the pre-agreed service levels in an emergency. b) The pre-agreed service levels should be written into a 'service level agreement', drawn up with each of the department's 'customer' departments. c) The bc planning and maintenance costs will, quite properly, form part of the annual back office service charges invoiced to the trading department.

There could be similar opportunities to consider alternative funding for other bcp projects.