Why are critical business functions important for companies?
Critical Business Functions (CBFs) are activities or processes your company can’t operate without, or whose downtime would cause major financial, legal, operational, or reputational damage.
Examples of common critical functions in small and mid-sized businesses
- invoicing, billing, and accounting (to maintain cash flow),
- customer support and account management,
- core production, fulfillment, or supply chain operations,
- IT systems and infrastructure that keep operations running,
- processes required for regulatory and compliance obligations.
Why is it worth identifying critical functions?
- Maintaining operations during a disruption – when you know what matters most, you can prioritize recovery on those functions first.
- Business continuity planning – critical functions are the foundation of a Business Continuity Plan (BCP).
- Risk management – helps you understand which threats could disrupt the business and target prevention where the impact is highest.
- Customer, auditor, and insurer expectations – many clients, insurers, and partners ask whether you’ve identified critical processes and how long you can operate during an outage.
How to determine your company’s critical functions
- Create an inventory of all (or at least key) business processes in your company.
- Assess the impact if each process stops (financial, customer, operational, regulatory/compliance).
- Define the maximum tolerable downtime (RTO – Recovery Time Objective).
- Assign an accountable owner for each process and name a backup.
Summary
Critical business functions are the backbone of any business continuity plan. For small and midsize businesses, this isn’t theory—it’s a practical tool: when you know what’s truly essential, you can handle disruptions faster, meet partner and compliance expectations, and keep operations running.