The (In)Famous 80% Rule for Business Continuity

Is there any statistic that was ever so widely used and abused? It’s the one that says “80% of businesses affected by a major incident close within 18 months”, or any similar version. While it’s true that unplanned business disruption can cause financial losses and other prejudice (including bankruptcy), critics of the 80% statistic suggest there is little real data to support it.

And they may be right, given the number of articles that quote this figure and in doing so reference another article as the source, which then references another article, and so on. However, perhaps we’ve simply been applying the 80% figure to business continuity the wrong way…

“80%” may call to mind something else – the 80:20 rule, derived from the one established by Italian economist Vilfredo Pareto about a century ago. When Pareto came up his version over a century ago, he had solid data.

He looked at fiscal profiles and noted that distribution of wealth followed a certain pattern. He didn’t insist on the figures 80 and 20, as his model allowed for more flexibility. But to use them as a specific case, the idea was that 20% of the population in a country possessed 80% of the wealth (and vice versa).

Now, fast forward to the 21st century and the 80% rule for business continuity. In general, the 80:20 rule suggests that 80% of effects are produced by 20% of causes. This of course is a rule of thumb, so it won’t apply – or not apply exactly – in all cases.

However, in the case of enterprises going belly-up, it suggests that if this happens, then in 80% of the cases, you’ll find the same 20% of causes. On a more positive note, as you prepare your business continuity plans, you can also reasonably hope to get 80% of the work done in the first 20% of the total time.

Yes, that does leave the remaining 20% to be done (for which you’ll use the remaining 80% of the time), but at least you now have an “80% rule” working for you, rather than against you.

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