Business continuity planning as a strategy for building resilience amongst deposit taking microfinance institutions in Kenya

Abstract

Disruptive events can cause extensive handicaps and serious threats to the ability of a business to continue operating effectively. Whereas managers can do little to influence the occurrence or lack thereof of “acts of God”, error or even sabotage, they should make discrete business continuity plans to assure stakeholders of spontaneous resumption of services and business processes if disruptive events occur. The ability and capacity of an enterprise to withstand these disruptions and adapt to its own risk environment is called enterprise resilience. A Business Continuity Plan (BCP) on the other hand is a roadmap to the achievement of the desired level of enterprise resilience. It is management’s plan for ensuring that the business organisation continues to operate in the face of established adverse scenarios. This study was undertaken to determine the extent of adoption of formal business continuity planning practices amongst Kenya’s Licensed Deposit Taking Microfinance Institutions (DTMs). The study also sought to establish the various methods adopted by the DTMs to assure themselves of continuity of ICT systems, people, facilities and finances. The study was conducted on all the six DTMs licensed by the Central Bank of Kenya as at August 2012. Data was collected using questionnaires and analysed. The questionnaires were specifically addressed to the head of risk department for each of the DTMs. The findings from this study indicate that the licensed deposit taking microfinance institutions in Kenya have adopted formal business continuity planning. Further, the study found that adoption of business continuity planning is positively correlated to the priority given, management attitude, existence of technical capacity, knowledge of the need for business continuity planning as well as the regulatory environment. These findings are important because they give the regulator a view of the level of resilience built into the DTMs which are currently holding very significant financial portfolios in the economy. Further, the findings give the Kenyan citizens a view of the long term security of their funds based on the proactive management of business continuity risks amongst the DTMs.