Business Preservation Series: Internal Controls

Welcome to the 5th edition of the series on Business Preservation! This series is designed for business owners and people with positions of influence and trust in organizations to strategically enhance the continuity of their businesses during periods of disruption.

It is recommended to read the first article in the series, which explains business continuity. Click the link here: https://www.dhirubhai.net/posts/ellen-amo-tachie-409166b3_one-day-corporate-giants-and-the-next-inexistent-activity-7082832662838583297-043i?utm_source=share&utm_medium=member_desktop

One often-underestimated pillar of business continuity is internal controls. In this article, we will explore how robust internal controls contribute significantly to a company's resilience and longevity.

But let’s first understand what internal controls (IC’s) are. IC’S are the actions taken by an organization’s management, its Board, and other parties to manage risk and increase the likelihood that their established objectives and goals will be achieved.

IC’s are no doubt a critical component of business continuity planning because they help organizations mitigate risks, maintain operations, and ensure that essential functions continue in the face of disruptions. Here are practical steps and ways in which internal controls can contribute to business continuity:

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1. Risk Assessment and Identification

One of the key features of internal controls is that they help identify weaknesses in processes and systems, allowing you to assess and address risks effectively. Therefore, as a first step, conduct a comprehensive risk assessment to identify potential threats to your business and ensure that risk mitigation strategies are in place.

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2. Business Impact Analysis

The next step is to evaluate the potential impact of the identified risks on your business operations. Knowing the possible impact of identified risks help prioritize critical functions that need protection. This also ensures efficient resource allocation during disruptions.

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3. Contingency Planning

Using information gathered from risk assessment and impact analysis, develop contingency plans to address the identified risks and critical operations maintenance. Ensure that contingency plans are well documented, and implemented ahead of an actual crisis.

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4. Data Protection and Backups

Verify that your backup systems are functioning correctly, preventing data loss during disruptions. Imagine not only losing valuable assets during a natural disaster but also important company records. Establish robust data protection measures and backup systems to protect your organizational and customer data.

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5. Access Control

Step: Implement access controls to safeguard sensitive information.

Similar to data protection are access controls. Enforcing data restrictions, preventing unauthorized individuals from tampering with or accessing critical systems and data would safeguard your sensitive information from getting into the hands of your competitors or to the public. Access controls should be so strong that even in the event of a disruption, they cannot be breached.

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6. Communication Protocols

Establish communication protocols to keep stakeholders informed during disruptions. Stakeholders need to know what is happening and how the company is going to deal with it in the event of disruptions. Facilitate effective communication by ensuring that communication channels and contact lists are up-to-date and accessible. However, care must be taken that each stakeholder is presented with the appropriate information. Example top-level management information may not be shareable with employees.

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7. Monitoring and Testing

Regularly monitor internal controls and test business continuity plans. Regular testing and simulations would help identify other weaknesses and areas for improvement. Once identified, these should be incorporated into the business continuity plan.

Internal controls provide a structured framework for risk management and recovery efforts, ultimately contributing to business continuity and long-term success. By following these steps and integrating internal controls into your business continuity planning, you can enhance your organization's resilience and its ability to maintain critical operations during disruptions.