How Strategic Resilience Can Facilitate Business Changes

Resilience is one of the primary requirements to endure and excel in the modern corporate sector. The pandemic has been one of the journeys that taught companies the importance of resilience. It has become vital to acknowledge your firm’s vulnerabilities and tackle the concerns with strategic resilience. Besides, business dynamics are changing frequently, be it consumer demand, geopolitical tension, or digital disruption. Companies should plan their future with effective response measures. In their article for McKinsey, Alfonso Natale, Thomas Poppensieker, and Michael Thun talk about the importance and future of strategic resilience.

FERMA Survey Report on Strategic Resilience

McKinsey supported the Federation of European Risk Management Associations (FERMA) in its reports based on the role of resilience in the corporate sector. Here is what they found:

1. Almost two-thirds of companies state that resilience is central to their firm’s progress model. Risk and insurance professionals are relatively more involved in the resilience expansion area.
2. Almost half of the executives never used strategic decision-making processes. The other half often uses them along with strategic resilience.
3. Risk managers and executive teams play a crucial role in shaping the strategic resilience culture of a firm.

How Resilience has Changed Over Years

Earlier, resilience was used as a response to a crisis such as a workforce discontinuity and supply chain disruption. However, the value of resilience has improved to a new dimension in the post-pandemic world:

1. Most firms have begun to provide digital solutions and advanced analytics before the beginning of a crisis.
2. Technology resilience is rising drastically too. Companies do not shy away from spending a major chunk of their profits on digital security.
3. Companies are looking to re-work their cyber strategy for remote employees.

Here is a list of core resilience areas that companies must optimize:

1. Financial resilience
2. Operational resilience
3. Technological resilience
4. Organizational resilience
5. Reputational resilience
6. Business-model resilience

The current resilience process has transformed from a weak focus on governance, risk, and controls to an effective emphasis on long-term business strategies. One of the reasons behind this transformation is the implementation of a holistic approach toward strategic resilience.

How to Implement Strategic Resilience

Here are some tips to introduce resilience:

1. Measure and report it internally.
2. Choose your field of disruption where you want to implement resilience.
3. Focus less on estimation.
4. Look for options to replace old methods that do not accommodate resilience.
5. Recognize your firm’s natural strength.
6. Make a portfolio of resilience investments.
7. Build interpersonal and intra-personal resilience capabilities.
8. Introduce an early warning system to detect issues beforehand.

Click on the link to read the original article: https://www.mckinsey.com/capabilities/risk-and-resilience/our-insights/from-risk-management-to-strategic-resilience