Transnational Corporations and Business Continuity Programs

Transnational corporations or Multinational Companies as they are also called need to have robust and well thought out business continuity programs if they are to manage the myriad risks arising out of their business operations.

MNC’s typically operate in several countries and hence the risks faced by their businesses depend on the location in which they are located and hence varies from place to place. So, there is a need for the MNC’s to mitigate all kinds of risks ranging from natural and terrorist attacks in developed countries like the US and in Europe to managing riots, floods and regional disturbances in countries like China and India.

For instance, it should not surprise many that Citibank and Fidelity have well developed business continuity programs that take into account disruptions to business in countries like India where their local operations can be disturbed due to political and social factors.

The key point to note for MNC’s is that when they operate in countries like India and China, they need to “Glocalize” their responses to risks. Glocalization is a term coined by the famous author, Thomas Friedman to denote the intersection of global and local in business.

Since we are living in a global economy and operate in local conditions, MNC’s need to plan for contingencies that are entirely local in nature but affect their global operations. For instance, the call centers operated by Infosys run on a 24/7 schedule but can be affected due to local disturbances. So, to mitigate the risks companies like Citibank, Fidelity and Infosys have devised a risk mitigation strategy that operates at several levels.

Each level of the risk mitigation strategy consists of managing the risks at that level giving precedence to the global first and the local next. So, disruptions to satellite links and global events are managed along with disruptions to the cab services and logistical services because of local conditions.

As mentioned earlier, the risk manager has to ensure that he or she can communicate effectively with the global audience and at the same time be sufficiently well versed in the local way of doing business to ensure that the business operations do not suffer because of disruptions.

Further, the risk mitigation strategy ought to take into account the fact that the ways of doing business differs from country to country. So an effective risk mitigation strategy for China might not work very well in India.

Hence, the emphases in this article on “Glocalization” or the need to plan for business continuity of global operations taking into account the local conditions. It is for this reason that many risk managers or the business continuity managers in these MNC’s are those who have travelled extensively but are also familiar with the local way of doing business.

Indeed, there is a great demand for risk managers for country operations of the MNC’s who are aware of the global business practices and at the same time are thoroughly conversant with the local business culture.

Finally, risk management in an emergency is all about how to respond to the situation at hand and hence, presence of mind is critical and crucial. One can prepare for many months or even years for contingencies but fail to act appropriately at the time the disaster strikes.

So, what is needed is a person or a team that knows how to respond in an agile and competent manner to the emergency. This is possible if the business continuity team is conversant with the global operations but have their feet firmly on the ground as far as local conditions are concerned.