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Moving toward true organizational resilience

Businesses today operate in a world characterized by a breakneck pace of change and evolving risk landscape. As major global events, crises, and little-foreseen “eventualities” materialize more rapidly, they greatly impact business strategy and operations. Without a backdrop of predictability and stability, previous strategic planning assumptions become moot, and questions around change and “what’s next?” become critical.

How businesses anticipate and adapt to “what’s next?” is now inextricably linked to their survival. That’s why resilience is a core, strategic imperative that impacts all parts of the organization. And that’s also why it’s time to revisit what resilience means. 

The evolution of resilience

As times have evolved, so has the notion of resilience. Over a decade ago, it was often data-centric and synonymous with a thick, hard-copy business continuity plan that was feverishly drafted and rarely consulted (more frequently doubling as a doorstop). In more recent years, though, businesses have successfully taken an operational approach to resilience — addressing stressors that impact their products and services, data, technology, cybersecurity, facilities, and supply and demand.

To thrive in today’s highly dynamic environment, it’s important to broaden that approach even further, in a more holistic and proactive way. A new report from Deloitte, “Deloitte’s Global Resilience Report: Toward True Organizational Resilience,” outlines the importance of organizational resilience — elevating resilience to become a core part of who the business is.

As stated in the report, organizational resilience is defined as: “The capability of an organization to be prepared for disruption and to adapt and thrive in a changing environment. It isn’t purely defensive in orientation. It is also progressive, building the capacity for agility, adaptation, learning, and regeneration to ensure that organizations are able to deal with more complex and severe events and be fit for the future.

The report shares findings from a Deloitte survey of 700 board members, executives, directors, and senior leaders with accountability or responsibility for resilience or crisis management within their organizations. It highlights that while senior executives recognize the need for more forward-looking, proactive, and strategic approaches to resilience, there’s also a struggle to develop and implement them within their organizations

The five capitals of resilience

Deloitte’s report also outlines five key capitals of resilience, all of which contribute to and are encompassed in organizational resilience. Because a deficiency in one or more of these capitals can destabilize organizational resilience, it’s important to prioritize and balance investments across each of these domains:

  • People resilience — how organizations support their people and foster creativity and growth by cultivating personal resilience, and instituting the right cultural norms, conduct, and behaviors.
  • Reputational resilience — about being responsive to external perceptions, building brand capital and reserves, and maintaining a foundation of trust and dependability.
  • Operational resilience — how organizations use non-financial resources to withstand, absorb, recover from, adapt to, or regenerate from the impacts of shocks that affect their operations.
  • Financial resilience — the ability to withstand events that impact organizations’ liquidity, income, or assets.
  • Environmental resilience — how organizations work to achieve homeostasis with the natural world, making strategic choices that are both good for the environment and sustainable for business.

Actionable takeaways

Now more than ever, organizations face the need to elevate their resilience agenda: both structurally — in terms of accountability and ownership — and also culturally, integrating resilience principles throughout the business.

Far from a “one-and-done” and “check-the-box” proposition, achieving organizational resilience is a continuous journey that entails:

With resilience a strategic priority, businesses can move from defensive and reactive responses to change to more forward-looking, innovative, and agile ones. To get the attention and funding it deserves, resilience merits a standing place on senior executive and board agendas, rather than as a sub-bullet under risk. In a sign of resilience’s elevated importance, four-fifths of survey respondents (79%) believe their company should create a chief resilience officer role in the next five years.

However, committing to resilience also requires a top-down, embedded, and cohesive approach. The survey data shows a disconnect between how those in the upper echelons of an organization perceive their company’s resilience capabilities, compared to how those on the ground, running the programs, do. Nearly half of C-level executives (46%) say resilience is a strategic priority with executive-level sponsorship; in contrast, only 16% of department heads feel that way — highlighting the need for better alignment, communication, and collaboration.

Major geopolitical events — from trade wars and tariffs to the dissolution of international pacts, energy-market disruption and, unfortunately, outright war — have increased in frequency and generate uncertainty and insecurity that greatly impact businesses and their stakeholders. However, only a quarter of organizations say they have mobilized for geopolitical scenarios. To drive organizational resilience, it’s incumbent on businesses to recognize the ever-increasing geopolitical forces and threats — evaluating their impact and preparing for future ones.

Despite a lack of resilience regulations across industries, there is strong desire for regulatory involvement. In fact, more than 80% of organizations indicate “significant” or “some” appetite for regulatory involvement in the area of resilience. Interestingly, in the many sectors where these regulations do not exist, organizations tend to look to other industries where they do exist, such as financial services, for frameworks and guidance.

As the world continues to transform, and executives understand that many events pose threats too large for any single organization to tackle, the regulatory environment will likely expand to play “catch-up.”

Environmental, social, and governance (ESG) is a broad, multifaceted, and critical area for organizations today, typically atop board priorities. However, less than one-fifth of organizations (18%) say that the function has an active role in contributing to resilience. At a time when ESG risks can greatly impact businesses — from operational, financial, cyber, and reputational perspectives — it’s clear that a tighter link is needed between ESG and resilience thinking. Among other aspects, this entails considering the organization’s role both in generating environmental and social change, and in being resilient to those changes as well.

And while survey respondents expect ESG to play a significantly more active role in resilience over the next five years, companies can’t afford to wait that long. The time is now to make the function a core part of day-to-day resilience.

A business’s reputation is a valuable asset that directly impacts organizational outcomes. And while reputation and brand equity can take years to build, they can also crumble in a matter of days. That’s why, as part of resilience planning, organizations face the need to build, maintain, and measure trust, as well as take steps to foster and bank trust equity. Proactive reputation management involves monitoring the Internet, social media, and other sources to gauge reputation; trust can also be built and measured proactively across quantifiable dimensions.

Across industries, almost all organizations use — or plan to use, within the next three years — digital technologies to support resilience. This speaks to the elevation of digital transformation and enablement from a nice-to-have to a need-to-have in this area.

Importantly, digitalization can address many of the barriers to resilience cited by survey respondents — such as scarcity of talent (59%) — by reducing risks and helping to plug resource gaps. For instance, advances in data mining, analytics, and visualization technology can power risk monitoring and reporting; artificial intelligence (AI) and digital twins can deliver predictive insights and bridge communication silos.