Enterprise Risk Management

Corporate real estate and business continuity: An integrated enterprise approach - Journal of Corporate Real Estate

ABSTRACT

This paper explores the strategies and roles for the organization’s corporate real estate function during times of increased uncertainty. Although business continuity planning (BCP) might appear to be a separate and unique effort, there are synergies between continuity planning and standard business planning functions. It is suggested that enterprises should avoid the historically common mistake of stove-piped planning within the context of BCP. Rather, enterprises must fully embrace an integrated approach to business continuity from cross functional to cross-informational. If done correctly, business continuity planning can become a strategic asset that fully leverages an essential factor, the corporate real estate function.

INTRODUCTION

Whether you are planning to ensure the continuity of operations or planning to meet organizational goals and objectives, managing and mitigating enterprise risk is of primary importance. In corporate real estate planning, tools such as scenario planning and real option approaches are increasingly being used to manage uncertainty.1 While these tools have shown effectiveness for specific projects or investments, they do not apply an integrated approach to enterprise planning and uncertainty management. As uncertainty continues to increase and enterprises become more interconnected through process re-engineering and just-in-time management, macro level risks as well as specific business \ risks require vertical and horizontal consideration.

This paper will attempt to explore the and roles for the organization’s corporate real estate function during times of increased uncertainty. Although business continuity planning (BCP) might appear to be a separate and unique effort, there are synergies between continuity planning and standard business planning functions.5 It is suggested that enterprises should avoid the historically common mistake of allowing stove-piped planning, while developing and implementing a meaningful and actionable BCP. Rather, enterprises must fully embrace an integrated approach to business continuity to include three key dimensions: cross functional; cross-locational (headquarters, region, building, etc) and cross-business units (including the supply chain). If done correctly, business continuity planning can become a strategic asset that fully leverages an essential factor, the corporate real estate function.

UNDERSTANDING THE BUSINESS ENVIRONMENT

Corporations have addressed all types of proposals, concerns and initiatives resulting from disaster-related events. One convincing argument for proactive risk management emerges from the need for senior management to minimize its own exposure, in the wake of crises, to the inevitable angry stockholders and customers who question why the company did not plan for the crises while the competition had done so. Another such argument stems from the fact that companies spend money on all types of insurance and then never have to use it. Despite the apparent ‘waste’ of capital expenditure, no executive would say, ‘Let’s cancel the insurance to save money’. While intrinsically convincing, these arguments do not address the underlying reason for business continuity planning or stress the importance of an enterprise approach towards the effort. The most practical description of BCP is the United States National Fire Protection Association’s Charter, which states: The documentation of the strategies, procedures, resources, organizational structure and information database utilized by an organization to respond to, recover from, resume and continue operations in the event of a substantial disruptive incident.

Keywords: enterprise risk management, ERM, #ERM, Continuous Continuity (C2), CRE, #CRE, #Risk, Global Risk