Business Continuity Plan Value Calculator

Just how much is a Business Continuity Program worth to your company?

This tool, which uses the method described in the articles How Much is a Business Continuity Plan Worth (Part 1) and How Much is a Business Continuity Plan Worth (Part 2) is subject to the various simplifying assumptions described below.

Your situation

What is your net income (profit) each year?

What percentage is that profit expected to grow each year?

What is the risk free per cent interest rate at which you can invest?

What is the current annual inflation rate? (%)

What is the percent chance of the company failing in any year WITHOUT a business continuity plan?

What is the percent chance of the company failing in any year WITH a business continuity plan?

Results

Based on the information given above (and the assumptions below):

• The value of your company without a Business Continuity Program in place is $53,531,179.
• The value with a Business Continuity Program in place is $123,884,209.
• The value of the Business Continuity Program is therefore $70,353,030.

The value of a company can be thought of as the amount you would need to invest now in a safe place (e.g. in US Treasury Bills) to receive a future cash flow equal to the company's expected earnings. See How Much is a Business Continuity Plan Worth (Part 1) and How Much is a Business Continuity Plan Worth (Part 2) for a more detailed explanation.

You can get a more accurate assessment of the risks (and costs) associated with a major incident and the likelihood of failure using our Risk Assessment Toolkit.

Assumptions

The estimate uses the following assumptions:

• The value of your company is the net present value of the income stream it is expected to produce. The value is not based on market sentiment or today's share price.
• All earnings are paid out as a dividend: retained earnings aren't lost if the company fails.
• If your company does fail there is no residual value (or liability).
• The interest rate does not change.
• The rate of inflation is constant.
• The rate of growth of earnings is constant.
• The probability of failure is constant. (Not true for the first few years of a company's operations).

Need different Assumptions?

If you need these figures calculated using different assumptions (e.g. residual value of assets, complex or changing income, growth or interest rate scenarios), please contact us.

Comments?

We're always interested in hearing what you think. If you have any comments on the method used, please drop us a line using the contact form on this website.