3.2 - Operational Risk Reduction - and the Residual Risk

Each 'owner' of a BC planning project must take responsibility for completing a list of primary threats and reducing the associated operational risk to the minimum possible. Guidance notes and external consultants can only assist in this important activity. At the end of the risk reduction procedure, some of the remaining risk can be laid off through insurance. What remains is the 'residual' risk, which the company itself must be willing to carry.

Contingency plans are then can be prepared and implemented to address the residual risk.

MSTA rule 1

It is imperative that none of the residual risk is carried 'unknowingly.' (For clarity, this statement is repeated here):

All of the residual risk must be carried 'knowingly'.

An example of an unknown risk which disrupted an otherwise sound recovery strategy is that of the internationally active financial services company whose recovery site was sensibly located fifteen kilometres distant from its main premises - but, unfortunately, still within the borders of its home country.

When its home territory was invaded by a hostile neighbour, the company was denied access to both its main offices and its recovery site.

This company now maintains an additional recovery site at a location thousands of kilometres from its home base.