Last month’s CIR summit on ‘Resilience in the financial crisis’ highlighted a number of key themes that are presenting both challenges and opportunities to risk, continuity and resilience experts. One of the strongest messages to emerge is that there is still an element of complacency with regard to business continuity – many organisations take the view that if they have a plan then this will suffice.
Yet the complexity and connectivity of today’s operating environment means that the number of unexpected events is increasing. Experience is showing that even good business continuity plans are no longer enough and the companies that respond best to major incidents have a much broader resilience capability embedded into the way they manage their business.
Rahm Emmanuel, President Obama’s Chief of Staff, said recently: “You never want a good crisis to go to waste.” What he meant is that a crisis often presents opportunities to do things that could not be done before; in the business context this could be buying a competitor, opening in a new market, changing suppliers or adjusting the business mix. Building resilience into an organisation not only enables it to withstand uncertainty but also puts it on the ‘front foot’, ready and confident to pursue opportunities. This switches the focus from one of recovering critical operations after an event – when there is always an impact – to designing the whole business to be resilient.
Embed a positive culture
Despite this fundamental shift, many companies have simply rebranded business continuity as business resilience, without really understanding what it means. As a result, the natural tendency to focus on the negatives when thinking about business continuity persists. This can often lead to a gloomy and uninspiring message for employees and senior management alike. Such an approach is particularly ineffective in the current economic downturn when many businesses are navigating uncharted waters.
In contrast, resilience positions an organisation to think about the new markets that could be opened up, the brand that could be enhanced, the diversified and sustainable profits that could be made and the welfare and protection of your employees. This approach must be shared by all employees, where everyone has a heightened awareness that their objectives are integrated with those of the organisation. A culture of resilience then affords the agility to constantly re-evaluate business strategy, even when conditions are benign.
Engage the whole business
Many organisations are already recognising that resilience is a multi-disciplinary approach and no one area can be looked at in isolation: most of the events that affect an organisation move swiftly across its boundaries. Business resilience does not just focus on people, buildings and technology; it investigates broader areas of what makes a business resilient outside the scope of conventional approaches to business continuity and goes beyond the usual approaches of scenario planning for predicted and predictable events. It relates to the resilience of the organisation’s brand, marketplace, investors and ultimately the business strategy.
Organisations that move to an approach focused on resilience must first implement an operating model that provides clear ownership and accountability for resilience. This needs dedicated and skilled resources, whether internal or external, and those people need to be able to work with and across the different elements of business resilience, switching effortlessly between front and back office functions. Some organisations are already creating Chief Resilience Officers, who have clear responsibility for setting the strategy and mandate for business resilience across the business.
Realise the opportunities that resilience offers
The argument for resilience is compelling as businesses are expecting more, not less, uncertainty.
Firstly, resilient organisations operate at a higher level in terms of performance and service provision than their competitors. Building resilience into their strategy and the services they provide makes them more reliable and efficient, benefiting customers and shareholders alike.
Secondly, there is a better understanding of the business strategy across the organisation, which makes it easier to implement and operate, as well as to change direction quickly.
Lastly, organisations that embrace resilience will have adjusted their business mix and focused only on value-adding activities, and are likely to enjoy higher growth rates and ultimately be much more resilient to sudden downturns in one product or location. As Bob Diamond, President of Barclays PLC, said of the recent banking failures, “95% of the failures were in banks that had one business and one geography.”
Companies that fail to build in resilience will find themselves on the back foot in this increasingly unpredictable world. The age of resilience is upon us - adopting a resilient approach presents real opportunities for organisations to flourish and prosper in the current economic environment.
Stuart Anderson is a principal consultant at PA Consulting Group.
The Sunday Times, Business Section, 14 June 2009.