This document discusses business impact analysis (BIA), cost/benefit analysis (CBA), and risk assessment methods. It defines BIA as identifying key business areas, critical functions, acceptable downtime, and dependencies to understand potential impacts of a disaster. CBA is described as a systematic approach to compare benefits and costs of alternatives to determine the best allocation of resources. Risk assessment methods involve understanding cost estimating risk, schedule risk, and requirement risk as well as quantifying uncertainties. Monte Carlo simulation is presented as a tool to analyze how uncertainties affect cost estimates.

1. Business Impact Analysis
Cost/Benefit Analysis
Risk Assessment Methods
Prepared by:
Erfan Omid
Advisor:
Dr. AmirAli Saifoddin Asl

2. Business Continuity Planning
Business continuity planning (BCP) is the cre
ation of a strategy through the recognition of
threats and risks facing a company, with an e
ye to ensure that personnel and assets are pr
otected and able to function in the event of a
disaster.

3. Business Impact Analysis
Identify
Key Business Areas
Critical Functions
Acceptable Downtime
Dependences: Business areas and
Functions
The scope of the plan

4. Human Resources
Finance
Facilities and Security
Marketing and Sales
Manufacturing
Information Technology
Identifying Business Functions

5. UNDERSTANDING IMPACT CRITICALITY
Critical Function: Mission-Control
Essential Function: Vital
Necessary Function: Important
Desirable Function: Minor
Understanding Impact Critically

6. Terminology
MTD
• Maximum Tolerable Downtime
RTO
• Recovery Time Objective
WRT
• Work Recovery Time
RPO
• Recovery Point Objective
Terminology

7. TerminologyTerminology
Critical Recovery Timeframes

8. TerminologyTerminology
Purchasing BIA Accounts payable BIA

9. Gathering Data
•Questionnaires
•BIA Workshops
•Interview Process
Determining Impact
•Qualitative Criteria
•Quantifiable Criteria
Reporting To Senior Manager
Creating BIA Process

10. Gathering Data
Questionnaires
BIA Workshops
Interview Process

11. Qualitative Criteria Quantifiable Criteria
Service Quality Lost sales
Product Quality Lost Revenue
Customer Relationships Lost Investments
Public Image Fines
Determining Impact

12. Determining Impact
Scoring Key Scoring Table

13. Determining Impact
Definitions

14. BIA Report
Analyze
Determine
Document
Document
The data collected against of the approved criteria
The order of Recovery
minimum resource requirements
Dependencies of each business Process

15. BIA Report
BIA Sample Summary Report

17. • Comparing alternatives
• Evaluating cash flows over time
• Repair your car, purchase a new car
• Buy a house, buy a condo, rent an apartment
Cost-Benefit Analysis
“A systematic approach to the problem of choosing the best method of allocating
scarce resources to a given objective”

18. Cash Flow
Interest Rate
Discount Rate
Future Value
Present Value
Essential Definitions

19. 𝐹𝑉 = 𝑃 ∗ (1 + 𝑟) 𝑛
r= interest rate
P𝑉 = 𝑃/(1 + 𝑟′) 𝑛
r’= discount rate
PV and FV Equations

20. 𝑁𝑃𝑉 =
𝑗=1
𝑛
𝑐𝑗 /(1 + 𝑟) 𝑗
Net Present Value
• If NPV is > 0, accept the project
• If NPV is < 0, reject the project
For Expenses or Cost: NPV Min is desirable
For Profitability or revenues: NPV Max is desirable

21. NPV Example

22.  Risk
1. Cost Estimating Risk
2. Schedule/Technical Risk
3. Requirement Risk
 Uncertainties
1. What is the probability that cost will be within certain bounds?
2. How much could our cost overrun?
Risk and Uncertainty

23. Risk and Uncertainty
Flow diagram for cost estimating
• X months to complete (
where X is less than Y)
• An 85% learning curve
• 80% commonality with
a previous system
• A very strong business
base with contractors
• An inflation rate of only
1.0%
• Y months to complete
• A 90% learning curve
• 70% commonality wit
h a previous system
• A solid business base
with contractors
• An inflation rate of 2.5
%
• Z months to complete
(where Z is greater than Y)
• A 95% learning curve
• 55% commonality with a
previous system
• A weak business base wit
h contractors
• An inflation rate of 4.0%

24. How do the Uncertainties Affect Our Estimate?
𝑪𝒐𝒔𝒕 = 𝟑. 𝟎𝟔 ∗ (𝑾𝒆𝒊𝒈𝒉𝒕 𝒊𝒏 𝒍𝒃𝒔) 𝟎.𝟓𝟓𝟏
Risk and Uncertainty

25. Risk and Uncertainty
Monte Carlo Simulation Result using Crystal Ball

26. Conclusion
• CBA
• BIA
Cost–benefit analysis (CBA), sometimes called benefit costs analysis (BCA), is a systematic approach to calculating an
d comparing the benefits and costs of a course of action in a given situation. The goal of CBA is to determine which
option returns the optimal ratio of benefits to costs, thereby solving the issue regarding opportunity cost. It may be
used to compare potential courses of action or simply to evaluate the desirability of a single decision, project, or pol
icy. Common areas of application include commercial transactions, functional business decisions, policy decisions (es
pecially government policy), or project investments.
A business impact analysis (BIA) is a process that identifies and evaluates the potential effects (fina
ncial, life/safety, regulatory, legal/contractual, reputation and so forth) of natural and man-made ev
ents on business operations.

27. • “Cost Benefit Analysis and Risk and Uncertainty”, book.
• “Cost Risk and Uncertainty Methodologies”, NASA Cost Estimating
• “The realities of risk-cost-benefit analysis, Review, Baruch Fischhoff”.
• “How to Complete a Risk Assessment in 5 Days or Less”, THOMAS R. PELTIER
• “Business Impact Analysis”, syngress.
• “BIA quantifies business interruption”, Review Paper.
• “Risk and uncertainty in CBA in theory”, Paper, 2015
References