Page 33 - Risk Management Bulletin April-June 2022

RMAI BULLETIN APRIL - JUNE 2022

or physical assets), market flexibility, and optionality— their future growth; where many others fail, they
can by design create a competitive advantage that find a way to secure sought-after people—with
drives superior performance through the next industry scarce analytics or cybersecurity skills, for
cycle. example. Such organizations foster a diverse
workforce where everyone feels included and can
The core resilience areas can be grouped as perform at their best. They deliberately recruit the
follows: best talent, develop that talent equitably, and
upskill or reskill flexibly and fast. They implement
Y Financial resilience. Institutions must balance
short- and longer-term financial aims. A solid strong people processes that are free of bias and
capital position and sufficient liquidity enable maintain robust succession plans throughout the
organizations to weather rapid drops in revenue, organization. Culture and desired behavior are
increased cost, or credit issues. Resilient mutually reinforcing, supported by thoughtful
companies are able to achieve superior margins by rules and standards that promote fast and agile
increasing revenue more than controlling costs. decision making.
But McKinsey research also suggests that
Y Reputational resilience. Resilient institutions align
tomorrow’s resilient firms are more likely to be
values with actions and words. A wide range of
those driving value-added growth while balancing stakeholders—employees, customers, regulators,
optionality (retained earnings growth)—rather investors, and society at large—are holding firms
than those that focus most of their attention on accountable for their actions, brand promise, and
maintaining operating margins at the expense of stance on environmental, social, and governance
other proportionate measures.
(ESG) issues. Resilience demands a strong mission,
Y Operational resilience. Resilient organizations values, and purpose that guide actions. It also
maintain robust production capacity that can pivot requires flexibility and openness in listening to and
to meet changes in demand or remain stable in communicating with stakeholders, anticipating and
the face of operational disruption, all without addressing societal expectations, and genuinely
sacrificing quality. They also fortify both their
responding to criticism of firm behavior.
supply chains and delivery mechanisms to
maintain operational capacity and the provision of Y Business-model resilience. Resilient organizations
goods and services to customers, even under develop business models that can adapt to
stress of all forms ranging from failures of significant shifts in customer demand, the
individual suppliers or distributors to natural competitive landscape, technological changes, and
catastrophes and geopolitical events. the regulatory terrain. This involves maintaining an
innovation portfolio and valuing entrepreneurship.
Y Technological resilience. Resilient firms invest in
Particularly during times of crises, resilient
strong, secure, and flexible infrastructure to
organizations are able to adapt business models
manage cyberthreats and avoid technology
breakdowns. They maintain and make use of high- to the dynamic and uncertain environment.
quality data in ways that respect privacy and avoid
biases, compliant with all regulatory requirements. Resilience as a competitive advantage

At the same time, they implement IT projects both The holistic approach to building resilience advances
large and small—at high quality, on time, in the organization from a narrow focus on risk, controls,
budget, and without breakdowns—to keep pace governance, and reporting to a longer-term strategic
with customer needs, competitive demands, and view of the total environment. Rather than hunting for
regulatory requirements. If something does go blind spots in risk coverage within today’s business
wrong, they maintain robust business continuity model, resilient organizations embrace the holistic
and disaster recovery capability, avoiding service view, in which resilience becomes a competitive
disruptions for customers and internal operations. advantage in times of disruption.

Y Organizational resilience. Resilient firms are able
to attract and develop talent in areas critical to An important aspect of the holistic approach involves

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