New research report: Roads to Resilience
Companies that create a culture of resilience throughout their organization are likely to be more successful in the long term, according to research by Cranfield School of Management and Airmic.
In the ‘Roads to Resilience’ report, published last week, the Cranfield authors urge boards and business leaders to challenge prevailing attitudes towards risk management and recognize that it should be a strategic priority and not just an operational or compliance issue.
Keith Goffin, Professor of Innovation at Cranfield School of Management who co-authored the report commented: “All industries are now facing unprecedented levels of risk that have real potential for harming their reputations and balance sheets. By bringing together the insights and experiences of those who have succeeded, this report challenges businesses to take the necessary actions to achieve resilience.”
Roads to Resilience examines eight leading organizations that have had to deal with significant uncertainty. Cranfield researchers interviewed senior staff with risk management responsibilities, including CEOs, at AIG; Drax Power; InterContinental Hotels Group; Jaguar Land Rover; Olympic Delivery Authority; The Technology Partnership; Virgin Atlantic and Zurich Insurance.
The researchers found that although these companies operate in very different environments, five common principles underpinned the foundations for them to achieve a resilient organization. The report refers to them as the five Rs, and advises that is not sufficient to have just one or even most of them but that an organization must seek to have all five to achieve resilience.
The five Rs are:
Risk radar - the ability to anticipate problems before they develop. By seeing things in a different way, not only will a company develop an early warning system, it may also identify new opportunities.
Resources and assets - that are well diversified, providing the flexibility to respond to opportunities as well as adverse or changing circumstances.
Relationships and networks–that enable risk information to flow freely throughout the organization up to directors to prevent the ‘risk blindness’ that afflicts many boards.
Rapid response - to ensure that an incident does not escalate into a crisis or disaster and that people and processes are in place to restore things to normal as quickly as possible.
Review and adapt - the ability to learn from experience and make the necessary changes so that every adverse event or circumstance is identified, analysed, evaluated and improvements made to strategy, tactics, processes and capabilities.
The report revealed that the qualities embedded in resilient businesses enable them to succeed in other areas. They are more responsive to their customers and the markets they serve; their staff and suppliers are motivated and loyal and they gain trust by being more dependable.
The research also identified four ‘enablers’: leadership and governance; people and culture; structure; and strategy, tactics and operations. These enablers are central to an organization’s ability to create a dynamic and holistic approach to risk management.
•Date: 4th February 2014 • UK •Type: Article • Topic: Enterprise risk management