Justification of BCM Projects Implementation approach overview

1. Justification of BCM Projects Implementation approach overview - Decision Methodology: The Key  Probability, Cost-Benefit, Intuitive Approaches

4. 1. Estimate Losses by length of outage: Step 2 (Recovery)

5. 2. Determine length of outage by backup/ recovery scenario

6. 3. Perform cost/benefit analysis of each feasible scenario

7. Decision Approaches Probability-based (used in insurance justification) Analysis-based (used in cost-benefit analysis) Intuition-based (used by most executives and expert systems) The analysis-based approach based on fiduciary responsibility will be recommended, since the probability approach and the intuition-based approach can lead to catastrophic loss exposures.

8. Probability-based(used in insurance justification) Mr. probability Cost of Hot Site Backup $500,000/year (2% of IS budget) Direct Losses over ten days $30,000,000 Probability of loss .01/year Net Direct Loss $300,000/event ROI -40% (Bad Investment)

9. Another Probability Approach Assume a 30 year life for the Hot Site Cost of Backup Site over 30 years $15,000,000 Direct Losses over 10 day period $30,000,000 Probability of 1 loss over 30 years 26% Net Direct Loss $7,800,000 ROI -48% (Bad Investment)

10. Analysis-based(used in Life-Cycle cost-benefit analysis) Mr. Application Analyst Cost of Backup Site over 30 years $15,000,000 Direct Impact Loss/Event (10 days) $30,000,000 Delayed Loss of Business/Event $360,000,000 (year to recover � sales) Total $ Loss/Event $390,000,000 (� yearly profit) Probability of Losing our Jobs and Stockholder Suits 100%