In a study, only 57% of companies said they feel ready to deal with unexpected changes and disruptions. The pandemic has greatly impacted the global economy and has led to significant changes. As we enter the new year, businesses look towards an opportunity to rebuild and improve, taking lessons from what we learnt during the pandemic. And the most important lesson was to build a resilient business and plan for business continuity.
What is business resilience?
Business resilience refers to the ability of a business to withstand and recover from unexpected events such as natural disasters, market disruptions, or cyber attacks. It involves having strategies and systems in place to mitigate the impact of these events on the business and to bounce back quickly when they do occur.
Managing risks, planning for contingencies, adapting to changes, and maintaining business continuity through it all is at the crux of building a strong, resilient business. It requires a proactive and holistic approach that involves understanding the challenges to the business and developing strategies to address them.
What is the relevance of business resilience now?
Since the Covid-19 pandemic began nearly three years ago, the world has experienced several disruptive events. The war in Ukraine, rising inflation, severe climatic events, supply chain issues, and the ongoing impact of the pandemic are all challenges we have been facing. Through all this, one thing is clear – disruptions are no longer a rare occurrence. Instead, disruptions and volatility are becoming the new normal worldwide.
But even as we acknowledge this new normal, are we prepared to manage disruption better? Apparently not! A survey of 150 companies conducted by BCG and APQC this year found that only 10% of the companies had developed a full range of resilience capabilities. The remaining 90% of companies were simply reacting to crises as they occurred.
Given these findings, it is clear that most companies need to increase their investments in resilience capabilities to stay competitive. Those that make significant investments in this area will have a strong advantage over their competitors.
Business Resilience Goals for 2023
As another year comes to an end and we enter the new year, here are the goals that companies need to meet to build business resilience and ensure a satisfactory level of business continuity in the face of the challenges we might encounter in the near and distant future.
Build a resilient mindset
As the new year begins, it is important to make sure your team is ready to handle any challenges that may come their way. By developing strategic resilience, your organization can gain significant benefits such as improved customer satisfaction, higher employee retention and recruitment rates, better risk management, and progress toward environmental, social, and governance goals.
One effective way to build resilience is to break down silos within the organization and create cross-functional teams that can quickly diagnose and respond to disruptions. To truly drive resilience, this approach should be implemented at all levels of the organization.
Improve supply chain visibility and assess risks
Companies must first establish complete visibility across their supply chain to build resilience. End-to-end visibility enables effective planning and makes it easier to assess the impacts of potential disruptions quickly.
Thus, organizations need to get insights into the operations of their suppliers and vendors including the risk management and compliance activities that they undertake. Organizations should also analyze data from various sources and use key performance indicators and other operational metrics to identify potential points of failure at all stages in the supply chain.
Strategize technology adoption
To be effective in building resilience, companies need to fundamentally change the way they make decisions and prioritize risk identification and mitigation. This requires a strong foundation of technology-aided tools and applications.
Advanced digital tools can also be important enablers of resilience. When used in combination with business processes, they can enhance human capabilities and unlock new sources of value. For example, an AI-powered platform can make real-time supply chain decisions autonomously, helping organizations more effectively navigate market volatility.
Prioritize emergency communication
Having a business continuity management policy in place is crucial for effective communication during an emergency. It should clearly define the roles and responsibilities of recovery personnel in both internal and external communications.
The goal of an emergency communications plan is to help maintain calm within the workforce and ensure that all parties can fulfill their responsibilities. It should also specify alternative communication channels if disaster events disrupt ordinary methods of communication.
Track assets through an IT asset management system
It is crucial to identify critical data and assets as part of an IT business continuity plan. This allows recovery teams to access and begin recovery operations even if key IT personnel are not available. For example, if there is no IT workforce available, it is essential to have a clear plan in place for other personnel or stakeholders to follow to avoid confusion and delays in the recovery process.
An IT asset management system can help companies automate the tracking of assets and reduce errors caused by outdated information, duplicates, etc. These systems also play a role in cyber security by ensuring that all devices connected to the network are protected against viruses and have the latest patches to address known security threats. The pandemic resulted in a significant dispersion of devices making IT asset management systems even more important for tracking and securing them.
Obtain management buy-in for resilience
Obtaining management buy-in for strategies to improve resilience is crucial for the success of any organization in this regard. One effective way to do this is to clearly communicate the potential benefits of such strategies including reduced financial losses, improved reputation, and increased competitiveness. It is also important to present a well-researched and comprehensive plan that outlines the specific actions that will be taken, the resources that will be required, and the expected outcomes.
Additionally, involving key decision-makers in the planning process can help to build ownership and commitment to the proposed strategies. By demonstrating the value and feasibility of the plan, organizations can increase the likelihood of securing management buy-in and successfully implementing key strategies.
Integrate risk management at the enterprise level
Integrating risk management at the enterprise level involves considering risk in all aspects of the business from strategic planning to daily operations. This requires a company-wide proactive approach to risk management. It also needs you to establish clear risk management processes and policies, provide training and resources for employees, and regularly review and update risk management plans. By integrating compliance risk management into all aspects of the business, organizations can better protect against potential losses, improve decision-making, and increase resilience.
Main Enterprise Risks in 2023
Although risk is a part of the business landscape, effectively managing risk by minimizing vulnerabilities and threats may prove to be even more challenging. In one particular survey, when business leaders were asked to identify the top risks for 2023 and beyond, 68% of them identified the following.
- Operational resilience, production continuity, and interruption of supply and delivery.
- Limited growth due to soaring inflation.
- Difficulty in attracting and retaining top talent.
- Lack of organizational agility because of resistance to change.
- Insufficient preparedness for cyber threats.
- Challenges protecting the company’s security infrastructure.
- Existing company culture magnifying risk issues.
- Innovation and emerging technologies that disrupt core business models.
Uncertainty Is High in Today’s Risk Landscape
Business complexities and stakes have continued to rise. Yet, business leaders found ways to overcome the financial crisis from last decade. Now, identifying future risks, and understanding the possible implications of those risks, is more critical than ever.
We know that risk can be found in every industry. Learning how to effectively manage that risk is the first step in mitigation. That’s why the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC) create and publish standards as a blueprint for organizational information security.
Having a well-defined process can help steer your organization in the right direction as it relates to risk assessment, management, and analysis. While the issues never stop, there is a way to be prepared without causing panic within the organization. Knowing the types of risk your organization may face is the first step to put together an effective risk management plan. Here are a few things to consider:
Business Continuity & Crisis Management
Largely, the pandemic proved what we already knew. Effective enterprise risk management requires a proactive, rather than reactive, approach. Crisis planning is critical to business continuity and enterprise risk management. Proper planning works to boost the company’s ability to respond quickly and effectively to related internal and external threats.
Emerging Technologies for Enterprise Risk Management
We know that AI, machine learning, big data analysis, and cognitive technologies will continue to shift the enterprise landscape. The vast array of emerging and improving cognitive technologies are already changing the way many businesses determine risk. Organizations are using smart machines to detect, predict and prevent risks in high-risk scenarios.
Most businesses collect massive quantities of data. Then they must find effective ways to analyze that data to derive invaluable insights. The key is correctly analyzing the data gathered to provide insight into potential risks and threats. This is not easy, and will probably require the assistance of experienced skilled internal auditors.
IoT Tradeoffs Between Risk and Security
Today, the Internet of Things (IoT) is helping enterprises spot risk events and track important risk factors. This technology has furthered the evolution of processing, computing, and analytic capacity. IoT facilitates new levels of insight into business processes that otherwise would be too difficult for management to analyze. It delivers real-time feedback about threats and opportunities, giving businesses the chance to take action when it counts.
With this technology, organizations can gain dynamic risk management and better decision-making related to cybersecurity, internal audits, supply chain management, finance and controls testing. Plus, businesses may find that IoT data can help reduce cybersecurity and fraud risks quickly and easily.
The Internet of Things (IoT) is only expected to expand beyond the year 2023. Though this presents some advantages, it doesn’t come without risk. With the increasing use of connected and smart devices, it’s important to continually evaluate vulnerabilities and implement protective measures. IoT devices must be ready to resist physical tampering, operate in a “hostile” network environment and recover from malicious attacks.
The Rise of Risk Transfer
Impact risk events such as political unrest, climate change, and war are already a disruption to business are also significantly impacting most industries. These real threats point to the need for effective risk transfer tools and third-party risk management solutions. And traditional risk transfer tools – like contracts and insurance – may take on greater importance when it comes to these “mega-impact” risk events.
Reputation Risk Poses High Stakes
Rapid-fire communication via email, texting, and social media makes it nearly impossible to make an error without it becoming big news in an instant. An organization’s reputation could take a massive hit from which it may not easily recover.
Companies must be very careful to avoid the risk of escalation from careless information exchanges. By being proactive in addressing accelerated risk, they could potentially turn those risks into strengths for the organization. This is the power of successful reputation risk management. And we saw some clear examples of corporate reputations being damaged or bolstered this year.
Future Success Drivers
While embracing risk may be difficult, some organizations see this as a viable opportunity to raise the stakes. There is a growing number of businesses that are shifting perspective and looking at risk as a performance enabler.
Many C-Suite team members are looking at success drivers with a positive perspective in 2023, considering risk as an effective way to positively drive value and performance. Instead of operating risk management out of a sense of fear, many business leaders are using tangible and meaningful risk measurement metrics to their benefit. This powerful information fuels smart risk-taking ventures and helps pin-point the balance between risks and rewards.
It’s not all bad news, read: 5 Examples of Positive Risk.
Moving Confidently into the Future
Is your organization ready to move into the future? Do you have an effective strategy in place for risk analysis, assessment and management? It’s vital to have a team that understands how to carefully analyze every aspect of your organization’s infrastructure. Risk analysis and assessment work hand in hand to identify future risk and determine the company’s ability to successfully avert or tolerate those risks.
Financial markets are transitioning, there are mounting legal liabilities, credit risks, cyberattacks, and other events that could undermine the viability of your organization. So, not setting effective risk management protocols really leaves your organization more vulnerable than ever before. In order to avoid risk, you must know what effective risk management looks like.
Risk management is identifying, analyzing, evaluating, and prioritizing risks. It’s a plan to implement the right procedures, risk control, and financial resources for handling any crisis that occurs. The right risk management team has experience and training in helping alleviate risk within an organization at every level. Working with a technical partner to ensure it’s done right makes a difference.
Will Your Organization Stand Up to the Biggest Concerns of 2023?
Enterprise risk— detecting it, managing it, and preventing it—is not static. Corporations must monitor trends and consistently make improvements to stay up to speed, in 2023 and beyond.
If you’re not confident that your organization can withstand multiple risk threats, it’s time to partner with a team that can help. I.S. Partners specializes in finding potential risks and helping to manage them while decreasing vulnerability. For more information, contact us or call 215-631-3452.