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Lost power, lost business: How to avoid this overlooked tech risk Logo cgma

  Neil Amato |   Free |   AICPA |   24 Aug 2016 |   CGMA Magazine

This article discusses technology risk and provides three tips for companies seeking to strengthen their technology infrastructure: 

Topics covered:
  • Management accounting: Technical: Risk management & internal control: Risk identification & assessment, Intermediate
  • Management accounting: Technical: Accounting information systems: Information systems environment, Intermediate

2 Comments/Reflections

Timothy Hardy

Timothy Hardy Apr 2018

As the Financial Director for a medical device company I also am responsible for the ICT infrastructure and service. Power outage is a real and unfortunately experienced issue having occurred once already due to a sub station catching fire.
This resulted in a days lost work and in the end a full week to transpose customer orders onto our ERP system and to initiate a second overtime shift to clawback production.
So whether or not the data side is protected through successful 'fail over', of which we leverage a cloud terminal server from our service provider, the operational impact remains.
This led to a review of our business continuity plans with mitigations and change of SOPs in the event of future outages. An outcome of this was to ensure we had a specific SLA with our ICT provider for a prompt response to an outage with increased frequency on data backups.
It is not just electricity but telecommunications lines that can have a similar effect. Again, an outcome of our business continuity review has resulted in 2 separate broadband lines in the Netherlands due to fragility with KPN's network over a 3 month period.
In summary I have felt the direct consequence of this risk category and have found the most effective way to improving risk management is to raise levels of engagement with energy and ICT providers, where necessary formalise in agreements such as response times and identify the ciritical operational processes that need to run in the event of an outage and design substitute off line processes for the intervening period to allow core business to continue.
Tendai Nyakurimwa

Tendai Nyakurimwa Oct 2016

It was interesting to read this article. Power outages are common in Zimbabwe. It is pleasing to note that many companies now have back-ups in case of a black out. However, some companies have back-ups that cater for administration buildings only. This has a cost to the business as other operations will be affected like what happened to the airliners mentioned in the article.As an organisation we also came up with a back-up in case of power outages.