Risk Management And Strategic Resilience

The epidemic, like many crises, exposed undiscovered flaws in organizations’ defense mechanisms and reaction capacities. Several new operational hurdles had to be immediately addressed by executives, including personnel inconsistencies, supply chain problems requiring urgent shortages, and logistical obstacles. Decision-makers gained valuable experience in appreciating timely and significant data as they established priorities and took decisions under pressure. There are several obstacles caused by the pandemic, including:

• Supply chain and operations difficulties. Since the start of the crisis, several businesses have implemented digital solutions, including sophisticated analytics, to address supply chain concerns. An energy company implemented a smart supply chain digitization plan to ensure business continuity, a leading global consumer company improved the reliability of its supply chain by switching to predictive maintenance of its machinery, another global company used next-generation AI technology to monitor and identify unusual ordering patterns and respond accordingly. Ports grew crowded as the crisis progressed due to an increase in cargo demand. In response, several businesses made daring moves. For example, a large beverage company switched its operations from container shipping to bulk carriers. Big-box shops started renting their own containers and hiring ships.

  

  Need a proactive business strategy that goes beyond reactive measures to uncertainty.

• Technological difficulties. Cybercriminals have been exploiting security flaws brought on by the move to work-from-home operations during the epidemic. Many firms have upgraded their security in response, plugging any openings that would allow hackers to penetrate networks. Some businesses have made large expenditures in their capacities, occasionally by recruiting professionals; internet behemoths and other multinational corporations have also bought smaller cybersecurity businesses.

• Organizational difficulties. For office work, remote working arrangements needed to be ramped up and deployed from the outset of the crisis, while on-site personnel needed the proper safety precautions, such as testing and protective gear. It has been difficult to track on-site efforts, especially in the early stages of the epidemic, and many lessons should be learned for the future. But a lot of big businesses accomplished the transition from the workplace to the house with ease. A new cyberstrategy was necessary for the remote workforce, extending the security barrier into the remote endpoints found in people’s homes. Then, leaders looked at ways to keep company culture from being fragmented, maintain high performance, and promote the health and wellbeing of the distant workforce.

Few businesses, however, have adopted a thorough strategic view to tackle the difficulties of the upcoming disruption in addition to these frequently well-executed reaction activities. However, in order to pivot during crises and adapt into the new crisis-defined environment, companies must take this action. A proactive, business-based strategy is required that goes beyond a second-line, reactive approach to uncertainty. Organizations need to increase resilience in a variety of strategic areas and create specific cross-functional competencies in order to include resilience into their long-term strategic decision-making.

Resilience – an unique selling point

The company shifts from a limited emphasis on risk, controls, governance, and reporting to a longer-term strategic perspective of the entire environment thanks to the holistic approach to creating resilience. Resilient firms use the comprehensive viewpoint, in which resilience becomes a competitive advantage in times of upheaval, rather than looking for blind spots in risk coverage within today’s business model.

Using crisis scenarios to assess resilience in a downturn is a crucial component of the holistic approach. The scenarios are therefore created using foresight capabilities, and scenario-based modeling can then pressure-test strategies and business models through potentially unstable future environments, such as those brought on by economic downturns, rising geopolitical tensions, changes in the regulatory environment, and technological disruptions. With this strategy, executives may go beyond assessments of their resilience capabilities and engage in active strategic thinking to identify new possibilities and create new business models.

Resilient companies view resilience as a competitive advantage during times of disruption.

Solid steps for building sustainable resilience

Businesses from many sectors have discovered how to effectively handle fundamental upheavals, come out stronger, and gain a competitive edge in challenging times. The steps that follow provide a quick overview of how to avoid mistakes while methodically enhancing and increasing strategic resilience. Of course, the steps are hardly a straightforward how-to manual. Instead, each component depends on ability, skills, and a strong dedication to the coordinated effort.

• Start tracking resilience and reporting it internally. Review resilience aspects often and methodically, evaluating strengths and shortcomings in comparison to competitors in the sector. The capacity to undertake these evaluations is crucial for decision-making and for striking a balance between wealth generation and resilience development.

• Select your discruptions. It is rarely helpful to create a resilience agenda around general disruptions or extremely detailed situations. Instead, pick one particular disruption type to examine closely for predicted immediate impacts as well as longer-term secondary and tertiary consequences.

• Lessen your reliance on extrapolations derived from budgeting and planning procedures. The strategy is too sluggish and limited for our jumbled reality. Create a framework for systematically building situations instead. Define disruptive situations that spread out across a larger circle and incorporate the effect of structural elements.

  

  Solid steps for building sustainable resilience

• Both the formal methods for risk assessment and the formal perspectives of administration, control, and governance need to be abandoned by risk functions. Find a solution to replace these structures while including the strategy-relevant actions that make them up. A strong business and market perspective, a risk-taking attitude, and multidisciplinary thinking are necessary for risk and resilience management, much like for strategy. This is a call to action for risk experts to leave their ivory towers and enter the real world.

• Determine the organization’s inherent advantages and weaknesses. By using qualitative and quantitative scenario assessments, for example, you may test your strategy and underlying assumptions against various situations.

• Establish an investing portfolio for resilience. To allow longer-term profitable growth, this stage will involve updating short-term performance and organizational resilience plans. When necessary, strategically choose your bets and invest in the resilience elements to reinforce your tactics. Create strategies for potential futures.

• Develop first-line resilience skills, as well as team and individual resilience. These initiatives also help individuals adjust to the change more smoothly.

• Establish a mechanism for early detection that really keeps track of internal and external hazards. The board should be involved, but for a more secure perspective of the threats the business is facing, crowdsourcing can be utilized sparingly.