Creating sufficient organizational resilience to…mitigate cascading effects and depth of adverse outcomes to business risk, when it materializes…really matters today! Especially with the increasingly predatorial, aggressive, stealthy, and winner-take-all global business transaction environment in which R&D, alliances, partnerships, and collaborations routinely occur.
it’s a globally universal and irreversible economic today that…
- 80+% of most company’s value, sources of revenue, competitive advantage, and sustainability today lie in – emerge directly from intangible assets…
- more specifically, companies – organizations – institutions are rapidly becoming intangible asset intensive and dependent!
Collectively, these economic facts – business operation realities...make it all-the-more essential for business leadership to recognize their company’s thresholds – tolerances for risk to materialize…
- for every transaction and initiative being considered or undertaken,
- its prudent to identify, assess, and mitigate the relevant risks and their adverse impact and potential to cascade, and
- have effective contingencies in place to achieve rapid, and ‘as complete as possible’ recovery of all intangible assets ‘in play’, if-when disruptive risks materialize!
Underlying risk mitigation of course, is the prudence for business leadership and management teams to…acknowledge, that the impact of certain risks and its potential to cascade internally and/or externally, i.e., to have adverse affects on company’s value, sources of revenue, competitive advantage, reputation, and sustainability, etc., really matters!
And, it is also prudent in such instances, that…organization leadership avoid presuming business ‘risks’ are necessarily synonymous with today’s widely referenced, perhaps overused, notion of ‘threats’.
Even though the words ‘risk and threat’, as they are frequently applied, they’re not as interchangeable as many assume…i.e.,business risks are (a.) mercurial, that is, they (b.) manifest as market changes and (c.) politically induced instability, (d.) supply chain fragility, (e.) interconnectivity and interoperability challenges, (f.) problems associated with infrastructure in need of repair and maintenance, (g.) changing demographics and behaviors, and, of course, (h.) climate. etc.
Ensuring companies have achieved the necessary – relevant level of resilience – agility to… accommodate – deflect these and other challenges, are key to (a.) preparing for risk and uncertainty, and (b.) achieving organizational resilience.
Striving for – achieving organizational resilience should not be construed…as a necessarily complex or costly undertaking. Instead, companies today variously have fiduciary obligations to…
- not only identify potentially (cascading, business-wide) disruptive risks.
but also, mitigate those risks and measure same objectively.
- substantially elevate the probability that any business activity, initiative, or transaction being considered or engaged.
- will achieve the desired-projected outcome, and,
- any potential disruption caused by a materialized risk will not cascade to adversely – irreversibly affect a company’s ability to operate.
Again, the prudent path to achieving organization-wide resilience (to the materialization of risk) includes recognizing-distinguishing…
- the various and particular, types and/or sets of risk which may
- the various circumstances which cause – contribute to such risks
- objectively assess (measure) each, relative to the company’s
vulnerability, the probability the risks will materialize, and their
criticality to the business operability should they materialize.
A common challenge company leadership may experience insofar as assessing business (disruption) risk, lies in…
- transcending the subjective (guesses, anecdotes) to the quantifiably
- effectively integrating the lesser intrusive measures to monitor,
preclude, and mitigate designated risks.
- preparing a business to rapidly, but effectively respond to and
commence organization wide recovery from materialized risks, especially those which can – do disrupt (adversely affect) a business’s value, revenue producing capacity, reputation, and essential components to its supply chain.
Seldom can every organization (private, for profit, public, not-for-profit, startups, etc.) wholly avoid – mitigate all risk…for one reason, the keystroke speed which risk can materialize and cascade today requires constant vigilance. It’s prudent, in my judgement, therefore to consider risk as being…
- asymmetrically persistent and present, and
- embedded with variables which affect how, when, where, why, and what type of risk will materialize.
In-order for businesses, and the transactions they engage, to sustain their desired level of organizational resilience…leadership is obliged to have systems, practices, and procedures in place to…
- not-so-much manage, rather mitigate – suspend the most significant
- objectively reaching consensus insofar as the level, type, duration of risk and uncertainty a company can tolerate or is willing to accept.
- how to (cost, resource) effectively the monitoring and mitigation of specific risk and uncertainty, and
- recognize when either measurably rises above the tolerable –
acceptable level to warrant additional interventions.
- all-the-while, meeting the organizations’ operational and financial objectives!
Respecting the resource limitations – parameters most businesses operate…it is increasingly important to have a repertoire of ‘risk resiliency’ options at the ready.
Please note…business leadership and management teams engaged in achieving – executing ‘organization resilience’ strategies, are obligated to factor intangible assets in their resilience planning and practice.
For most businesses, this translates as having sufficient layers-levels of resilience to…monitor, mitigate, and recover from various hazards and risks which are…
- sector specific, and
- a company may prudently assume will – may be encountered,
- particularly with respect to intangible assets, i.e., intellectual, structural, and relationship capital, which are invariably in play and at risk.
Similarly, it’s important to recognize the principles – foundations of… organization resilience are not merely (superficially) tweaked versions of conventional (business) ‘continuity and contingency planning’.
Admittedly, the latter variously remains a common framework…that many business leaders and management teams conceptually rely, irrespective of its reactive, and far less proactive inclination.
Whereas, organization resilience, in principle and practice…is embedded with a singularly proactive mantra through its execution as an informed ‘management system’.
It’s surely (increasingly) self-evident, that an organizations’ ability to quickly, efficiently, and rapidly adapt to change…whether the change manifests as market forces, environmental factors, or various types-levels of risk, or a host of other potentially disruptive acts – events.
Organizational resilience, could be considered in the proverbial…good, better, best options. Of course, and again, the organizationally resilient options any company should undertake, should be…
- responsive, and
- provide for comprehensive and rapid recovery.
In other words, organizational resilience should no longer be…dismissed nor subordinated to convention, i.e., a tweaked version of continuity – contingency planning.
Not surprisingly, national, professional association, and international standards will be playing…ever-increasing roles in the management of operational risks organizations face, e.g., ANSI/ASIS American National Standard, Organizational Resilience: Security, Preparedness, and Continuity Management Systems— Requirements with Guidance for Use (ASIS SPC.1-2009).
In today’s predatorial, go fast, go hard, go global…business transaction environments, in which risks are persistent, asymmetric, and ‘coming at businesses’ at keystroke speeds, 365/24/7, taking time to objectively examine the benefits of becoming more organizationally resilient in posture and practice can indeed, be a worthy use of time for any business leader, management team, board, and stakeholder.
Michael D. Moberly July 12, 2017 St. Louis [email protected] the ‘Business Intangible Asset Blog’ since May 2006, 650+ published posts, read in 137 countries, ‘where one’s attention span, businesses intangible assets, and solutions converge’!
Readers are invited to explore more blog posts, position papers, video, and books at https://kpstrat.com/blog