In today's rapidly evolving business landscape, the need for resilience has never been more important. Organizations are constantly faced with a myriad of challenges, ranging from technological disruptions to regulatory changes and cyber-attacks.
At the heart of this is the concept of resilience, specifically operational resilience and business resilience. While these terms are often used interchangeably, they have distinct differences and clear implications for businesses.
I attended a recent conference in London on Operational Resiliency and had the opportunity to chat with several of the hundred odd participants, who reflected senior risk management, resilience and technology roles within Banks, Asset Management companies, Insurance companies and Financial Institutions operating in the UK and Europe as well as globally.
I picked up on the subtle but defined shift from focusing only on operational resilience, which tends to look at critical operational processes and functions to the more strategic whole-of-business view that looks additionally at the people, technology and wider business processes as well as external factors that might impact the brand or reputation of the companies.
Operational Resilience vs. Business Resilience: Key Differences
Operational resilience refers to an organization's ability to continue its operations or quickly adapt and recover from disruptions. This could be in the face of technological failures, cyber-attacks, or natural disasters. It's about ensuring that critical business functions can continue during and after a disruption.
On the other hand, business resilience encompasses a broader perspective. It not only focuses on operations but also considers the organization's ability to adapt to longer-term changes and disruptions, such as market shifts, regulatory changes, or reputational challenges. Business resilience is about ensuring the entire organization, from its people to its processes, can adapt and thrive amidst change.
The Importance of Business Resilience to Customers
Customers today expect consistency, reliability, and security from the businesses they engage with. Business resilience ensures that organizations can meet these expectations even in the face of unforeseen challenges. A resilient business can quickly adapt and recover, ensuring minimal disruption to its customers. This not only builds trust but also reinforces the organization's reputation in the market. In an era where brand loyalty is hard to come by, resilience can be a key differentiator.
A few interesting trends that I noted from my interactions with the conference participants were:
- Regulatory Compliance: A significant number of attendees are actively engaged in projects to meet FCA and DORA regulations. This highlights the increasing regulatory focus on ensuring operational resilience.
- Success Spectrum: The degree of success in these projects varies widely. While some are making commendable progress, others have faced significant challenges, leading to severe impact on their viability and future. Bottomline, this illustrates the old adage of failing to plan means planning to fail.
- Tools and Processes: Many organizations use one or more legacy tools for mapping business processes. However, a common challenge expressed was the difficulty in mapping lower-level processes to higher-level ones. This often results in a siloed approach, making it hard to get a comprehensive view of the organization's resilience.
- Scenario Testing: Most organizations still rely on manual or at best, semi-automated scenario testing. This not only increases the risk of oversights but also makes the process more time-consuming.
- Challenges in Integration: Linking business processes to people, systems, and databases remains a significant challenge. This is further compounded when trying to connect data from operational risk backgrounds, such as risks and controls, to operational resilience data like processes, services, people, and systems.
- What areas are the constituents of the Resilience domain: The areas that make up operational resilience are vast. They include Third Party/Supplier Risk Management, Operational Risk, Business Continuity, Crisis Management, Cyber Security, Data Loss Prevention, and more. For many attendees, especially those from an Operational Risk background, the challenge lies in integrating these areas seamlessly.
Of the above, the topic of Third Party and Supplier Risk Management seemed to exercise the attendees significantly. More than a few mentioned this as one of their areas of concern, with the realization dawning that the success of any resiliency plan depends upon the third eco-system also being resilient.
Conclusion
Business resilience is not just about recovering from disruptions but also about adapting and thriving amidst change.
It's about the organization's capacity to anticipate, prepare for, respond to, and recover from adverse events, be they natural disasters, cyberattacks, supply chain disruptions, or other unexpected challenges.”
From integrating processes to scenario testing, there's a clear need for more streamlined and comprehensive approaches.
A well planned and executed business resilience framework can allow companies to quickly adapt to disruptions while maintaining continuous business operations and safeguarding people, assets, and overall brand equity.
As the business landscape continues to evolve, so too will the demands on organizations to be resilient. Embracing this challenge will not only benefit the organizations but also their customers who rely on them.
