What Business Continuity Management and Zero-based Budgeting have in Common

Every so often (business continuity plan updates, for example), figuratively speaking it’s time to get the crystal ball out and see what the future holds. This is an ambitious undertaking given how difficult it is to know what the weather will be like next week, let alone business in six months’ time. Modern science has also crushed lingering hopes that any certainty might exist anywhere in the universe. This means BC planners have to bite the bullet and accept that figuring out what might be coming down the line means building on uncertainties instead. But then which are the right uncertainties to consider?

Business continuity management includes risk analysis as an essential component, and rightly so. Risk by definition is uncertain. Your plant might be hit by lightning, industrial action, government legislation or supplier breakdowns – or it might not. Scanning the horizon helps to identify obvious threats and opportunities, but is limited to what is known and/or already experienced. This is akin to incremental budgeting, where you use last year’s budget and add or subtract percentages to account for inflation, changes in priorities, and so on.

However, uncertainties exist outside the confines of what happened last year and also beyond what is immediately visible on the horizon. Just like incremental budgeting perpetuates a number of assumptions that may no longer be valid, just scanning the horizon cannot take into account “game changers” that do not yet exist. Zero-based budgeting assumes nothing and builds the budget from scratch. It takes longer, it’s harder but the result is a budget based on reality. Similarly, business continuity management also needs possible futures to be envisioned, and not just “incrementally budgeted” from what is apparent today. By looking at underlying trends and causes to build different credible “futures”, BC planning can avoid the trap of assumptions and forecast the future more realistically.