Unforeseen incidents such as the blockage of the Suez Canal in Egypt, the wave of cyber-attacks across MENA and KwaZulu Natal flooding in South Africa have shown us how unexpected shocks can impact organizations and test their resilience plans. Resilience is about adaptation, so it is critical to continuously learn from exercises and actual crises. And then, by implementing those learnings within your resilience strategy, you can emerge stronger, more agile, and better prepared and alert to changing circumstances that may demonstrate elevated risks and course correct as needed.
Five steps organizations can take now
While there is no certainty as to what may happen in the short or long term, organizations can be more prepared both for the ongoing crisis and future disruptions through five main actions.
- Shore up your crisis management plans. As the situation continues and potentially evolves, risk managers should regularly refresh crisis management plans and retrain teams so they are able to respond effectively. If you don’t have crisis management plans in place, now is the time to prepare your organization for what is likely to be a prolonged period of disruption.
- Understand your immediate supply chain concerns. It is critical to identify suppliers that are likely to be most vulnerable to the direct consequences of events.
- Make and retain contact. Where possible, speak to suppliers and trading partners that are either based in the region or have operations there. Ask how they are impacted by the ongoing events. And ask what additional impacts they may expect and what could trigger them. Where possible, validate their responses with information from credible and trusted sources to minimize the risk of taking important decisions based on misinformation.
- Make a plan for today. Prepare a plan that allows you to respond to challenges related to each critical supplier and trading relationship. Your response plan should set out options in case of disruptions of the services and products each of your partners supplies.
- Think about the future. Major events, like the Suez Canal blockage challenge the ‘just in time’ approach to managing supply chains. With increasing incidence of disruptive events, greater focus should be given to understanding these potential critical points of failure. As organizations look to the future, they need to set out a strategy that allows them to build back stronger, and allows them to tackle future, and perhaps even greater, challenges.
Focus on resilience through scenario analysis
As senior leaders continue addressing the immediate challenges, they should not allow today’s priorities to stop them from preparing themselves for tomorrow’s problems. Instead, they should continue improving longer-term resilience by focusing on two time-horizons:
- What needs to happen today and over the short term.
- What will need to be done to protect the business in the longer term.
Scenario analysis can be an important part of business planning. By structuring how impacts are likely to materialize over time, businesses should become more proactive in their approach to dealing with issues just over the horizon.
As they focus on improving today’s outcomes while also preparing for tomorrow’s risks, organizations should:
- Ground their analysis in delivery outcomes. Instead of starting with specific risks, look at different potential types of failure, damage, and impacts that could affect your core business goals. Looking at individual points of failure can help you to build a more comprehensive all-risks approach, especially amidst uncertainty about how they might materialize.
- Embrace a diverse set of resilience strategies. When faced with unknown risks, organizations should be prepared to respond through a variety of approaches, allowing them to cover as many bases as possible and reduce the risk of single points of failure, such as when you have a single team, location, technology, or critical supplier. This diversity can provide you with the resilience you will need to absorb shocks or adapt to changing circumstances, which will need to be balanced against the costs involved in maintaining it.
- Connect resilience efforts with other goals. There is a substantial crossover between resilience and other initiatives to improve your operations, including wider environmental, social, and governance (ESG) activities. Having competing or, worse, conflicting initiatives can be harmful to the wider goal.