I recently had a conversation about managing the risks associated with business process outsourcing (BPO) with a client who is a senior operations executive from a leading global insurer.  One risk stood out as paramount -- this executive had a dramatically heightened concern regarding the ability to mitigate any operational down time. Why?  Because if any such incident were negatively experienced by customers, or worse, publicized, it would reflect poorly on the insurer’s ability to fulfill its core customer value proposition:  risk management.   Thus, addressing business continuity concerns were imperative for bringing individual business line stakeholders on board the BPO program.

While every company sourcing operational processes is concerned about business continuity, insurers make a strong and legitimate case for the highest level of scrutiny and thus provide useful examples for others.  

Not surprisingly, the BPO sourcing requirements for this client had a distinctive focus on Business Continuity Planning (BCP).  RFP requirements and subsequent provider evaluations were developed that addressed four key areas of BCP:  

• Geography:  What breadth of geographic diversity does the provider offer (within the building or campus, across a city or region, within other regions of the same country)?  And, what about an international option?  While same-country solutions may deal with many disaster scenarios, today’s geopolitical risks (and weapons proliferation) demand that one ask, “What if the entire country becomes unusable?”
• Priority:  What approach and criteria does the provider employ during migration to determine which client business processes receive back up, with what resource allocation?  How quickly will service be restored and at what service level?  Who from the client helps make the decisions?
• Practicality:  Different BCP solutions may “move the work” while others will “move the people.”  How well-trained are the back-up provider employees for “move the work?”  How practical, under disaster scenarios, will “move the people” really be given that the employees targeted to move will likely have their own personal concerns.  
• Cost:  What additional seat/workstation capacity is “built in” to the provider’s base case pricing?  What incremental BCP capacity is required and at what level (cold/warm) and what unit price?  What are the costs of maintaining visas, etc?