Is your company resilient? Here are five tips to make sure it is
Even two-plus years after the onset of the global pandemic, a large number of Australian businesses are not resilient and continue to rely on temporary band-aid solutions.
Gaps in crisis preparedness and corporate security were readily apparent during the first year of the COVID-19 pandemic as organisations grappled with increases in cyber-physical threats, supply chain disruptions, political instability, reputational risks and more. While many of these risks were spurred by the pandemic, they can no longer be considered new. They are known risks for which organisations must prepare.
Yet even two-plus years after the onset of the global pandemic, a large number of Australian businesses are not prepared and continue to rely on temporary band-aid solutions. Such quick fixes are superficial and therefore allow vulnerabilities to persist — and consequently fail to build business resilience.
Protecting your business means strengthening and constantly reviewing risk mitigation strategies to improve resilience to future shocks. Leading organisations use stress-testing exercises to ensure they can identify weaknesses and inflexibilities and then adjust their strategies, or adapt new ones, to better achieve resiliency.
A recent study from Dataminr, the leading real-time information discovery platform, showed that 64% of Australian organisations are confident they have what they need to effectively manage risk in 2022, yet almost a third have made no investment in risk resilience. Additionally, less than 19% of Australian businesses are able to detect their own business risks.
Below are five tips that will help to ensure your company is resilient enough to withstand major disruptions, crises and other unforeseen high-impact events.
Five tips to building a resilient company
Know your supply chain
Don’t underestimate the value of supply chain resiliency. Supply chain issues often extend beyond your immediate suppliers. Think back to the height of the pandemic when the Ever Given cargo ship was stuck in the Suez Canal. It disrupted multiple industries and sectors worldwide, including grocery stores, restaurant chains, various retailers, automotive repair services and surgical and medical equipment suppliers. Identify your supply chain weaknesses and then work to strengthen those areas. For example, diversify the places from which your products are manufactured or sourced and improve internal storage processes to withstand shortages.
Identify your businesses blind spots
Don’t take your periods of smooth business operations for granted. Even when they are efficient and seamless, leaders must be aware of potential vulnerabilities. That means working continuously to identify blind spots and taking 360-degree views of your known risks and potential vulnerabilities within the organisation. If you have a holistic view, you can better detect and prepare for potential disruptions, allowing you to quickly, and more effectively, mitigate risks.
Embed scenario planning into your processes
When done right, scenario planning strengthens business resilience by helping organisations identify appropriate actions for a range of situations, such as an economic downturn or a high-risk geopolitical event. It’s important to remember that the scenarios should focus on what’s possible and plausible, not just probable. According to Gartner, the objectives for scenario planning — be it at the organisational or functional level — should be to:
- Maintain focus on critical growth and transformation initiatives during disruption;
- Identify “surefire” strategic decisions to pursue, regardless of which future scenario unfolds;
- Perform due diligence on critical short-term decisions and make strategic course corrections as needed; and
- Prepare teams to mitigate potential risks and provide timely risk-aligned guidance for different scenarios.
Note that scenario planning should be done in addition to stress testing.
Understand your business structure and hierarchy
To build risk resilience, it is crucial to have an understanding of how each level of an organisation functions with each other. A minor disruption at any one level can have a significant impact on another part of the business. When corporate security teams have a full understanding of cross-functional dependencies and risk responsibilities, you are better able to minimise the impact of unexpected crises by making adjustments where needed.
Be sure your corporate security teams understand your organisational structure. This is helpful in creating clear lines of responsibility across the team — significantly minimising misunderstandings around ownership.
Secure an executive sponsor
The importance of having a C-suite member, such as a chief risk officer (CRO), dedicated to building a resilient company cannot be understated. Executive sponsorship is critical to building and maintaining organisational resilience, a non-negotiable in today’s post-pandemic world. Having an executive sponsor also elevates the importance of risk preparedness and helps to ensure senior leadership and the board commit to the right level of investments needed and set the right tone and priorities.
