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What Happens When a Critical Third Party Vendor Doesn’t Have a Good Business Continuity Plan?

3 min read
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Business Continuity Planning (BCP) and Disaster Recovery Planning (DR) are the processes of developing, testing and maintaining plans to sustain business resiliency as well as normalize operations should a business be disrupted by either a man-made or natural disaster.

Disruptions are always unexpected. It can be a natural disaster such as a flood, earthquake or fire. However, disruptions also come in the form of pandemics, meaning the building doesn’t have to be destroyed and lives lost for a business to be completely disrupted. For example, a flu epidemic has caused 50% to 75% of a workforce to be at home. In fact, pandemics are just as likely to disrupt a business today as any natural disaster.

Make it a priority to validate your third parties’ BC and DR plans. Especially your critical third party vendors! What should you be doing to insure your third parties are taking BCP/DR seriously and have well-developed, fully tested BCPs in place?

6 BCP/DR Elements Your Third Party Vendor Should Have

Here’s a simple checklist of 6 elements your third party vendor should be able to provide you if they’re taking BCP/DR seriously:

  1. Risk Assessments
  2. The Business Impact Analysis
  3. Recovery Strategies
  4. Business Continuity Plans
  5. Disaster Recovery Plans
  6. Testing & Exercises

What Happens If a Critical Third Party’s Plan Is Insufficient?

Consider this scenario. You ask your critical third party vendor for their business continuity plan and they don’t have one or they send you a one-page BCP/DR summary. If it’s truly a critical third party vendor, both scenarios will not suffice. Just like financial and SOC analyses, documented evidence of BCP/DR is a must-have for every critical vendor.

Faulty BCPs could result in the following ripple effect:

  • The critical third party experiences a business disrupting event that they are not prepared for; therefore, they have no back up plans in place to resume operations. They’re scrambling to resume uptime.
  • Since operational resumption is delayed, this could mean your organization’s operations are interfered with for longer than anticipated or longer than the downtime allotted for in your own BCP/DR plans.
  • Also, your critical vendor may lose, and not be able to recover, some of your data.
  • Ultimately, due to your critical vendor’s failure to implement strong BCPs, your reputation with your customers could be at risk. They’ll think it’s your organization who isn’t prepared!

6 Steps to Take to Resolve BCP/DR Issues

The following are steps you can take to resolve any BCP/DR issues, before they happen, if a critical vendor can’t or won’t produce an adequate business continuity plan:

  1. Make sure BCP/DR are part of your contract. Do this with every critical third party vendor.

  2. Remind the vendor of their responsibility. If providing evidence of an adequate BCP/DR program is part of your contract, and they still can’t provide it, remind the vendor of their responsibility. Most vendors will honor their contractual obligations.

  3. Use your lines of defense. Your first line has direct contact with the vendor on a daily basis. Have them ask for resolution of any BCP problems.

  4. Request a copy of the vendor’s BCP policy. If you left BCP/DR out of the contract, then request a copy of the vendor’s BCP policy to suffice in the meantime. You’re seeking a board approved policy.

  5. Ask for a copy of the business continuity plan itself. Vendors may be reticent to share the details. That’s fine if you can see evidence of the six checklist items mentioned earlier.

  6. Check and see if the third party isn’t providing a BCP because it’s their vendor’s responsibility - a fourth party vendor to you. The critical third party vendor may have outsourced to a vendor who provides the service as this is very common today. If that’s the case, it’s time to take it a step further and ask the fourth party to provide the documentation you need.

You’ll find that some vendors just don’t take BCP seriously. You need to be prepared for the fact that there are going to be vendors who will not have what you feel is an adequate BCP. If that’s the case, and you’ve exhausted all options, then you should be prepared to begin the process of seeking a new third party to provide the product/service.

Dive deeper into what to know about your vendor's business continuity plan. Download the infographic. 
Vendor Business Continuity for Third Parties

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