If we've learned anything from the ongoing Covid-19 pandemic, it's that the things we so often rely on in business are more fragile than we might have realised. Change and unpredictability have been magnified by the effects of the pandemic – affecting even the most successful business models and companies right down to their core.
As organisations seek stability amidst the uncertainty, business resilience comes to the fore. But what exactly do we mean by this? And how can businesses enact the principles and methods they need to remain strong when waters get choppy?
Here, we'll take a look at how a business can strengthen its resolve during periods of adversity, and what it can do to be in the right position for when change inevitably comes.
What is business resilience?
An enterprise-wide term, business resilience encompasses crisis management and business continuity, and covers all types of risk that an organisation might be faced with – from cyber-attacks to natural disasters. In addition to addressing the consequences of a major incident, business resilience also concerns how adept organisations are at adapting to new environments and circumstances that follow incidents.
In order to survive and thrive amidst unpredictability, business resilience planning is a governance and risk responsibility that companies large and small must address.
What are the principles of business resilience?
Through the following six principles, companies can provide their organisation and decision-making processes with greater resilience.
Redundancy: By backing-up existing processes and outputs with duplicates (e.g., the same product produced at two sites), redundancy can protect against unexpected shocks, though it does come at the expense of short-term efficiency.
Diversity: Employing people from a variety of background can help to foster more diverse ways of thinking when exposed to challenges.
Modularity: By acting as circuit breakers, individual elements of an organisation can prevent total collapse. Modular organisations that can be divided into smaller chunks can be rewired more rapidly during a crisis, compared to tighter, more centralised organisations.
Adaptability: How well can a business evolve through trial and error? This principle requires a level of variance or diversity gained by experimenting with what works and what doesn't. The best ideas are then scaled up. Adaptive organisations favour processes and structures that are flexible as opposed to those which are stable and inflexible.
Prudence: "If something could plausibly happen, it eventually will". Such a principle means developing contingency plans in the event of consequences, which can be envisioned and prepared for with the help of scenario planning, monitoring early warning signals, and analysing system vulnerabilities, among other approaches.
Embeddedness: The alignment of company goals and activities with those of broader systems. Since companies are intertwined with supply chains, other businesses, economies and societies, this is critical in achieving long-term business success. Businesses can do this by making their purpose clear in a way that isn't in opposition to these other broader systems.
Why is business resilience important?
Without resilience, there would be very few businesses that would likely recover from or adapt to sudden changes in market demand or regulatory requirements. Put simply, business resilience is the difference-maker between business survival and failure, and so, it needs to be on the radar of companies of all kinds.
In the business world of today, resilience is particularly important because the environment is one which is becoming increasingly dynamic and harder to predict. Whether it's accelerated technological developments or the link between the global economy and broader issues such as climate change and inequality, organisations are faced with more challenges than ever.
Business resilience, therefore, prepares us for the instances that can have similarly catastrophic results on both a business and global level.
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The benefits of business resilience
By employing resilience principles, a company opens itself up to numerous advantages should unexpected challenges arise:
1) Anticipation benefit: The company can now recognise threats faster. Although this isn't necessarily seen in its initial response to a stressor, it's apparent in other activities, such as when a company articulates its resilience plans throughout the business.
2) Impact benefit: The ability to withstand or resist the initial challenge, achieved through better preparation and a more agile, flexible response.
3) Recovery speed benefit: The ability to rebound from the challenge with a greater speed than before. This is done through the identification of adjustments needed to return to the prior operating level, whereby measures are implemented swiftly.
4) Outcomes benefit: The increased resilience garnered in the post-challenge environment.
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