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Navigating the path to resilience

Enterprise resilience is undoubtedly on the board agenda in the last few years. In times of constant turmoil, recent research has found that resilient organisations outperform those that are unprepared. But 70% of CXOs surveyed (Deloitte's Global Resilience Report) say that they do not have complete confidence in their organisation’s abilities to pivot and adapt to disruptive events. What may be the role of boards in supporting management develop such abilities?

An agile and well-prepared organisation can identify and seize opportunities even in the time of change.

The sources of challenges are and continue to become more complex: geopolitics, tsunami of resilience regulations, natural disasters and climate risks, supply chain issues, increased technology disruptions, including cyber-attacks, following the digitalization to name a few. All of these can have operational, financial and reputational impact on organisations.

At the joint event organised by Deloitte and Directors' Institute Finland (DIF) on 13th March, Stefanie Ruys (Partner, Nordic Crisis & Resilience Leader at Deloitte) spoke on how organisations could enhance and embed resilience across their people, operations, eco-systems, and brand. An agile and well-prepared organisation can identify and seize opportunities even in the time of change.

Resilience is the coordination of disciplines to create organisational and operational efficiency, flexibility, and adaptability to respond to real and perceived disruptions and opportunities by design to ultimately thrive and create competitive advantage. It starts from taking a holistic approach not just looking at the organisation itself but the end-to-end value chain. To establish resilience as a strategic priority, it is important to understand which areas of the organisation require resilience, identify vulnerabilities, and determine the organisation's risk appetite during a disruption. This is followed by assessing challenges in the organisation’s specific context, taking into account the organisation’s own awareness, preparedness response, and recovery capabilities – including how long the organisation can tolerate disruption.

Enhancing organisational resilience takes leadership commitment to take the organisation on the journey. 

Enhancing organisational resilience takes leadership commitment to take the organisation on the journey. It involves considering the appropriateness of capital and operational budget allocation, done in a manner consistent with the organisation’s business strategy. Trust is another important factor contributing to resilience, both within the organisation and its employees and externally with vendors, regulators, and customers.

Organisations cannot plan for the unknown, but the more an organisation proactively identifies risks and builds resilience to crises through organisational, cultural, and technological facets, the more capable it can be at bouncing back from a broad set of disruptions and crises. However, disruptions may be inevitable and, in today’s environment, without proper planning and practiced response, even “small” disruptions can have severe consequences in a matter of minutes.

To remain viable in this environment organisations should be resilient—that is, they should be able to quickly and effectively continue or resume operations and execute their strategic plans in the wake of a crisis, whether caused by external or internal forces. Resilience is an intrinsic component of risk mitigation; without it, the organisation may be unable to survive a disruption or crisis, even one that the organisation has anticipated and planned for. A truly resilient organisation fosters a culture that responds quickly and effectively to disruptions.

Today’s risks and crises are rapid, dynamic, and disruptive. Directors can no longer assume that the organisations’ static risk management techniques and un-tested, years old response plans will keep the organisation running in the age of exponential change. As such, boards should oversee and, as appropriate, be involved in management’s resilience building efforts that prepare the organisation for both the knowns and unknowns. The more the organisation prepares, the more capable it is to be agile and resistant to disruptive crises as they unfold.

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Deloitte partners with DIF on risk management and technology matters. For more information on DIF events, go to DIF website (dif.fi)