On the Trail of the Business Continuity Calculator

Business continuity? Sure, but how much will we earn from it – or at least, how much will we save? Business continuity managers often appear to be destined to an eternal quest for hard data on the return on investment for their activity. The situation is complicated by the fact that business continuity is almost by definition a non-event: it’s the absence of business interruption that defines effective continuity. It’s rather like insurance, and getting organisations to fork out for their insurance premiums. Perhaps that’s why the insurance company below offers an online calculator to show companies how much they’ll save with improved risk management, an area of interest for BCM as well.

The cost-savings calculator comes from Aon Insurance. They make it available to give customers an idea of what can be saved by using Aon’s risk management information system (called Aon RiskConsole). Use of the calculator is simple enough. On the webpage, you enter your industry sector, preferred currency and annual revenue (we tried natural resources, the Australian dollar and AUD $500 million – just to see). The calculator then gives you default values for risk transfer costs (what you get them to insure), retained risk costs (what you deal with yourself) and risk management costs (all the resources in your organisation needed to manage risk). It also lets you choose different values.

What result did that give? The calculator suggests that before savings, the total of the three insurance costs above is about 1% of a company’s revenue. For the example $500 million company above, savings using the insurer’s risk management information system would be between about 5% and 10% (of that 1%), or $237,000 to $487,000 (we didn’t change any of the default values). Information to be ‘moused over’ on the calculator page says that savings would come from more efficient risk coverage and loss prevention, and the automation of different processes, among others.