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Human Error in CRE: Business Continuity

Picture of William Tygart
Human Error in CRE: Business Continuity
19:22

Introduction

In the ever-evolving commercial real estate (CRE) landscape, ensuring uninterrupted business operations is crucial for success. While events like natural disasters, cyberattacks, and pandemics pose significant threats to business continuity, human error remains a persistent and often underestimated risk factor. Mistakes made by employees, such as data entry errors, failure to follow procedures, or miscommunication, can disrupt operations, lead to financial losses, and damage a company's reputation. This report delves into the impact of human error on business continuity in the CRE industry, exploring its causes, consequences, and effective mitigation strategies.

In addition to human error, several other factors can disrupt business continuity in CRE. These include:

  • Cyberattacks: Cybersecurity threats, such as data breaches and ransomware attacks, can compromise sensitive information, disrupt operations, and cause financial and reputational damage1.
  • Pandemics: Global health crises, like the COVID-19 pandemic, can significantly impact workforce availability, disrupt supply chains, and force businesses to adapt to new ways of working1.
  • Natural Disasters: Events like hurricanes, earthquakes, and floods can damage property, disrupt transportation, and force businesses to suspend operations1.
  • Supply Chain Disruptions: Disruptions in the supply chain, caused by factors like material shortages, transportation strikes, or economic downturns, can delay projects, increase costs, and impact business operations1.

These diverse threats underscore the importance of a comprehensive business continuity plan that addresses a wide range of potential disruptions.

Resources and Tools for Implementing Business Continuity Plans in CRE

Before delving into specific mitigation strategies, it's essential to understand the resources and tools available to CRE companies for implementing effective business continuity plans. These resources provide a framework for developing, implementing, and managing plans tailored to specific organizational needs:

  • Business Continuity Management (BCM) Teams: Business continuity management teams play a critical role in the design and implementation of business continuity plans. These cross-functional teams provide the insight, focus, and leadership needed to keep a business running smoothly during disruptions. They are responsible for risk assessment, business impact analysis, plan development, and testing2.
  • Business Continuity Planning Software: Specialized software can help organizations develop, implement, and manage their business continuity plans. These tools provide features for risk assessment, business impact analysis, recovery planning, and communication3.
  • Professional Consultation Services: Business continuity consultants offer expert guidance and support in developing and implementing comprehensive plans. They can help organizations assess their risks, identify critical functions, and develop customized strategies for maintaining operations during disruptions4.
  • Guidelines and Templates: Online resources, such as guidelines and templates, provide valuable frameworks and best practices for business continuity planning. These resources can help organizations structure their plans and ensure they address all essential components4.
  • Business Impact Analysis (BIA) Tools: BIA tools help organizations assess the potential impact of disruptions on critical business functions. This analysis enables companies to prioritize recovery efforts and allocate resources effectively4.
  • Risk Assessment Tools: Risk assessment tools assist in identifying and evaluating potential threats to business continuity. By understanding their risks, organizations can develop proactive mitigation strategies4.

These resources and tools provide a foundation for building a robust business continuity program in the CRE industry.

The Impact of Human Error on Business Continuity in CRE

Human error can manifest in various forms within the CRE industry, with wide-ranging consequences. Some common examples include:

  • Data Loss: Accidental deletion of files, overwriting critical data, or inadvertently exposing sensitive information to unauthorized individuals can result in significant data loss, hindering decision-making and disrupting daily operations5.
  • Financial Losses: Errors in accounting, billing, or payment processing can lead to substantial financial losses, impacting profitability and potentially jeopardizing the viability of projects5.
  • Reputational Damage: A single mistake, whether it involves a service failure, a missed deadline, or a mismanaged property, can tarnish a company's reputation and erode customer trust6.
  • Legal and Compliance Issues: Human error can result in non-compliance with regulations, leading to legal liabilities, fines, and reputational damage6.
  • Safety Incidents: Mistakes in operating equipment, managing building systems, or overseeing construction projects can lead to safety incidents, potentially causing injuries or property damage5.

While specific statistics on the frequency and cost of human errors in CRE are limited, the potential for disruption and financial losses is undeniable. In the United States alone, the potential cost of bad data caused by human error is estimated at roughly $3.1 trillion per year7. This highlights the significant financial implications of human error across various sectors, including CRE.

Studies indicate that human error is a major contributor to data loss incidents. Specifically, 32% of data loss incidents are caused by human error, emphasizing the need for robust data management practices and employee training8.

Case Studies of Human Errors in CRE

While specific case studies focusing solely on human error in the CRE industry are limited, several examples highlight the potential for significant disruption across various industries:

  • Public Health England (PHE) Covid-19 Case Tracking: In 2020, PHE used an outdated Excel spreadsheet format to track Covid-19 cases, resulting in nearly 16,000 cases going unreported due to the spreadsheet's limited capacity. This incident underscores the importance of using appropriate technology and data management practices to avoid data loss and ensure accurate reporting5.
  • Pegasus Airlines Data Breach: A misconfigured cloud environment by a system administrator at Pegasus Airlines exposed sensitive passenger data, highlighting the importance of proper employee training and access control measures to prevent data breaches9.

These examples demonstrate the potential for human error to cause significant disruptions and financial losses across various sectors, emphasizing the need for proactive mitigation strategies in CRE operations.

Best Practices for Preventing and Mitigating Human Error in CRE

Preventing and mitigating human error requires a multi-faceted approach that addresses both individual and organizational factors. Here are some best practices:

Foster a Culture of Security Awareness

Regularly communicate cybersecurity best practices, encourage employees to report suspicious activities, and recognize security-conscious behavior10. This creates an environment where employees are actively engaged in maintaining security and preventing errors.

Develop and Enforce Clear Policies and Procedures

Ensure policies cover all aspects of data handling, device usage, and incident reporting. Regularly review and update policies to address new threats and technologies10. Clear policies provide employees with guidelines for proper conduct and data management, minimizing the risk of errors due to ambiguity or lack of information.

Provide Comprehensive Employee Training

Train employees on their specific job duties, relevant procedures, and the potential risks of human error. Incorporate cybersecurity awareness, data management best practices, and compliance training5. Comprehensive training equips employees with the knowledge and skills to perform their tasks accurately and safely.

Use Checklists and Cognitive Aids

Implement checklists to ensure all necessary steps are taken in critical processes. Provide cognitive aids, such as automated alerts and compliance readiness tools, to reduce reliance on memory and minimize errors5. Checklists and cognitive aids provide structure and support, reducing the likelihood of mistakes, especially in complex tasks.

Design User-Friendly Systems

Ensure systems and software are easy to use and understand to minimize errors caused by confusion or misunderstanding5. User-friendly systems reduce cognitive load and make it easier for employees to complete tasks accurately.

Implement Error-Proofing Mechanisms

Incorporate error-proofing techniques, such as automation and poka-yoke (mistake-proofing), to prevent errors from occurring in the first place5. Error-proofing mechanisms design systems and processes to minimize the possibility of human error.

Encourage Error Reporting and Learning

Create a culture where employees feel comfortable reporting errors without fear of punishment. Use errors as learning opportunities to improve processes and prevent recurrence5. A culture of open communication and learning encourages employees to identify and report errors, facilitating continuous improvement.

Empower Employees to Stop Processes

Encourage employees to stop processes if they identify potential errors or safety hazards. This proactive approach can prevent minor mistakes from escalating into major disruptions5. Empowering employees to take action promotes a safety-conscious environment and prevents errors from propagating through the system.

Ensure Fitness for Duty

Ensure that employees are physically and mentally prepared to perform their tasks by managing factors like fatigue, stress, and distractions13. Addressing these factors can significantly reduce the chances of mistakes.

The Role of Technology in Preventing and Mitigating Human Error in CRE

Technology plays a crucial role in minimizing human error and enhancing business continuity in CRE. Some key applications include:

Automation

Automating routine tasks, such as data entry, accounting processes, and report generation, can reduce labor costs and minimize human error14. Automation eliminates manual processes, reducing the potential for human error in repetitive tasks.

Data Analytics and AI

Advanced analytics and AI can identify patterns and anomalies in data, helping to detect potential errors and risks before they escalate15. These technologies provide insights that humans might miss, enabling proactive risk management.

Smart Building Technology

Integrating IoT devices and AI-driven systems can improve building efficiency, automate building management tasks, and reduce the risk of human error in building operations14. Smart building technology optimizes building performance and reduces the need for manual intervention, minimizing the potential for human error.

Cybersecurity Tools

Implementing robust cybersecurity measures, such as access controls, intrusion detection systems, and data encryption, can help prevent data breaches and minimize the impact of human error in cybersecurity15. Cybersecurity tools provide layers of protection against threats, reducing the risk of human error leading to security breaches.

Technology in CRE Accounting

The need for accuracy is high in commercial real estate accounting, while the chance for error is also high16. Many teams handle accounting tasks manually, increasing the risk of mistakes. Accounting technology simplifies the process, saving effort and time while allowing for more up-to-date and accurate reporting. The right accounting system helps eliminate human error by automating tasks, ensuring timely payments, and creating organized documentation16.

Smart Technology and Instrumentation

Smart technology and instrumentation can actively prevent errors by flagging potential issues and ensuring smooth workflows17. These technologies can monitor instruments and devices in real-time, alerting users to deviations and preventing workflow interruptions.

Importantly, all the technologies needed to digitally enable these processes are available today17. This means that CRE companies have the opportunity to adopt these technologies and significantly reduce the risk of human error in their operations.

The Importance of Employee Training and Education

Employee training and education are fundamental to preventing human error in CRE. Effective training programs should:

  • Provide Comprehensive Knowledge and Skills: Equip employees with the necessary knowledge and skills to perform their job duties safely and effectively11.
  • Promote a Learning Culture: Encourage continuous learning and development, fostering a mindset of improvement and error prevention. A learning culture leads to better decision-making, increased efficiency, and reduced human error18.
  • Reinforce Safety Protocols: Regularly reinforce safety protocols and procedures, ensuring employees are aware of potential hazards and best practices19.
  • Enhance Communication: Improve communication channels and encourage open dialogue to minimize errors caused by miscommunication or lack of information19.
  • Access Control and Phishing Awareness: Educate employees about granting access only to authorized individuals and recognizing phishing attempts20.

By investing in comprehensive training programs, CRE companies can empower their employees to make informed decisions, follow procedures accurately, and contribute to a safer and more efficient work environment.

Conclusion

Human error poses a significant threat to business continuity in the CRE industry. By understanding the causes and consequences of human error and implementing proactive mitigation strategies, CRE companies can minimize disruptions, protect their assets, and maintain a competitive edge in today's dynamic market. A comprehensive approach that combines employee training, clear policies and procedures, technological solutions, and a culture of learning is essential to building a resilient and error-resistant organization. By embracing a holistic approach that integrates employee training, robust technology, and a culture of continuous improvement, CRE companies can effectively mitigate the risks of human error and ensure the continuity of their operations.

Works cited

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