NRI Papers
No. 183 April 1, 2013
  Improving Business Continuity Capability through Business Reforms in Normal Times
— Importance of creating incentives under the assumption of large-scale disasters predicted to occur in the future —
 
Kazuchika ASANO and Takao YAMAGUCHI

Major earthquakes are predicted to strike Japan in the near future. A predicted massive earthquake in the Nankai Trough would cause damage inflicted by shaking, liquefaction and tsunami over very wide areas. In addition to the Tokai region, the entire Pacific Ocean belt zone is expected to suffer catastrophic damage.

A major earthquake occurring in the Nankai Trough would affect Japan's economic centers--Tokyo, Osaka and Nagoya, none of which has experienced a major disaster in recent years. In particular, because the Tokai region is home to many production facilities in the manufacturing industry, any major earthquake would have a significant impact on production and distribution functions.

In preparation for these massive earthquakes, more and more companies are either establishing or reviewing their business continuity plans (BCPs), reflecting the lessons learned from the Great East Japan Earthquake. Nevertheless, if a company only applies a paradigm of formulating and improving a BCP in a pedantic manner, it is difficult to ensure its practicability. Inevitably, the practicability of a BCP deteriorates due to factors such as revised damage assumptions, changes in the business environment and reduced motivation.

To stem the degradation of the practicability of a BCP and instead maintain and improve it, it is necessary for a company to continually pursue the enhancement of its business continuity capability, while working to overcome problems and inconsistencies that are inherent in a BCP.

The authors believe that the creation of incentives that are tied to a BCP is particularly important for the improvement of an organization's business continuity capability. In particular, it is vital for a company to continue to plan and implement measures to enhance its business continuity capability and improve its strength by taking the opportunity presented in the process of formulating a BCP to facilitate business and structural reforms.

Contents
I Assumptions regarding the Next Large-scale Disaster
II Common Problems Seen in a Business Continuity Plan (BCP) under the Traditional Paradigm
III A New Paradigm for the Formulation of a BCP

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