Resilience - the strategic imperative

20/03/2023.
Resilience is more than just the ability to absorb and recover from disruptive events. It is the capacity to remain relevant, competitive and drive value for your stakeholders in these everchanging times.

To remain relevant, competitive and drive value for your stakeholders in these everchanging times, organisations must put mechanisms in place to:

  • Build strategies that reflect uncertain and potentially turbulent roadmaps
  • Systematically validate and course-correct their medium to long term strategies, and,
  • Recognise things will not always go smoothly and plan for the inevitable disruptions.

Most organisations of a certain scale or maturity have invested in their enterprise risk management (ERM) practices, which can be an enduring activity. An ERM framework is designed to identify, assess, manage and monitor all categories of risks an organisation may encounter. However, adding the resilience capstone to an ERM framework can enhance its effectiveness by providing an additional layer of preparedness and adaptability to foresee, withstand, pivot and recover from disruptive events and even transform a strategy, to gain a competitive advantage.

  • The number of company insolvencies in Q1 2022 was 6% higher than in Q4 2021 and more than double the number (112% higher) in Q1 2021 according to gov.uk
  • Bankruptcies in the United Kingdom increased to 5,995 Companies in the fourth quarter of 2022 from 5,595 Companies in the third quarter of 2022 according to The Insolvency Service, United Kingdom
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  • In Gartner’s 2023 Audit Plan Hot Spots Report[i] Organisational Resilience was listed in the top five risk focus areas.
  • Drata’s inaugural Compliance Trends Report (2023[ii]) cited 87 percent of respondents having faced consequences as a result of not having continuous compliance with their resilience programmes, including slowed sales cycles, security breaches, business interruption, loss of a business relationship, a damaged reputation, or fines.
  • A Forester 2022 (Q3[iii]) study reported many risk leaders taking too narrow a view of the systemic risks their organizations face, saying “business risk will become more, not less, complicated to manage in the future”, and only 18 percent of respondents reported that their current ERM strategies are effective or very effective across all five capabilities surveyed, including identifying, evaluating, monitoring, responding to, and communicating about risk.

Some organisations have gone as far as introducing horizon risk radars, or the equivalent, to recognise there are risks beyond the next financial cycle.

  1. We need to overlay existing horizon scanning activities with strategic mechanisms for proactively engaging with the future and, to put a positive spin on this,
  2. We need to move from “risk radars” to “risk and opportunity” radars.

The macro environmental turbulence we have seen over the last few years has moved us to fundamentally change the decisions we make as businesses and consumers, reflect on how we interact with each other, and how we prioritise for the future. Baking strategic resilience into our organisations must therefore be a priority if we are to survive and thrive.

Organisations need to move beyond resilience as a function of the organisation, ensuring the ability to adapt and recover from disruptive events, towards resilience as a core component of how they develop their strategies.

A resilient strategy is one which is malleable with the appropriate levers embedded in it, to ensure that an organisation can meet incoming challenges and adapt to take advantage of them. A resilient strategy is not a strategy that is refreshed over an elongated period of time, rather it is one which is agile whilst being true to the organisations purpose and vision.

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Our roadmap to a resilient strategy

Organisations must develop strategies which are resilient through a dynamic programme of interventions which reflect on the changing internal and external environments that they are operating in; enable proactive course corrections to existing strategies based on these interventions; and have clarity on their organisational health and shortcomings.

This approach continuously challenges the purpose and direction of an organisation within the context of the environment they are operating in, both internally and externally, underpinned by a robust enterprise risk management programme.

The journey to a resilient organisation starts by gaining an overarching view of organisational health, and this can be achieved through our Strategic Business Impact Analysis.

Conducting a Strategic Business Impact Analysis (SBIA) enables you to:

  • Validate your strategic direction, emerging themes, and perceived risks
  • Determine functions critical to your mission and understand their characteristics and weaknesses e.g., vulnerabilities such as performance, data or resourcing issues and misalignment with other functions etc.
  • Reflect on key external suppliers/ regulators/ customers, their evolving requirements, and the balance of risk exposure
  • Understand their position in relation to major planned changes and recent disruptive events

With this view of organisational health there are then two concurrent routes to follow. Firstly, remediating exposures that are identified in the status quo across the organisations and, secondly, reflecting on the emerging risks that can derail an organisations sustainability in areas such as financial, regulatory, operational, digital, security and people.

Resilience is more than just the ability to absorb and recover from disruptive events. We say it is the capacity to remain relevant, competitive and drive value for your stakeholders in these everchanging times.

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Please contact us to explore how you can enhance your organisation’s resiliency and take advantage of the opportunities coming down the road.

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[i] https://www.gov.uk/government/statistics/company-insolvency-statistics-january-to-march-2022/commentary-company-insolvency-statistics-january-to-march-2022

[ii] https://tradingeconomics.com/united-kingdom/bankruptcies

[iii] https://www.gartner.com/en/audit-risk/trends/audit-plan-hot-spots

[iv] https://drata.com/resources/2023-compliance-trends

[v] https://www.dataminr.com/report/forrester-constant-disruption-is-the-new-status-quo

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