In response to ever increasing complexity, and in a world of accelerating change, leaders need to apply a holistic approach to decision making, to survive and thrive - oftentimes when complete information is not available. The ultimate objectives of any organisation, regardless of its size, industry, or nature, are to meet the expectations of its stakeholders (customers, shareholders, clients, suppliers, communities etc.); remain relevant; and operate in an economically viable and sustainable manner while avoiding harm to the natural environment and society. The disciplines of strategy, risk and resilience contribute to these objectives in different but interlinked ways.
In decision-making, the process of integrating strategy, risk and resilience challenges leadership to concern themselves with performance against strategies. It also challenges them to continually test their strategic direction and strategic decision making from a risk perspective, whilst considering that risk is the effect of uncertainty on objectives (threats and opportunities). It will shine a light on the benefits of breaking down typical siloed approaches of effort across the disciplines – establishing the internal and external context; identifying the business-value drivers for value creation, growth and protection; and setting the tone of the organisation to allow for integrated thinking and reporting.
For more details, you can read the comprehensive Guideline on Integrating Strategy, Risk and Resilience published by the Institute of Risk Management of South Africa.
So, what happens when leadership has set a robust strategy and effectively applied risk management - and risks still materialize? What is the “expanded” value proposition, from a risk management perspective, for example, a global pandemic?
A key enabler for this integration to be successful is collaboration. This collaboration is both internal to the organisation as well as external. Internally, collaboration is required between disciplines as well as between functional areas of the organisation. External collaboration extends beyond the organisation’s boundaries into its business ecosystem. This includes its suppliers, partners, customers, regulatory bodies and other stakeholders, as well as the communities in which it operates.
An organisation owes a duty of care to a wide range of stakeholders within and outside the organisation. An organisation should ensure that the needs, interests and expectations of stakeholders are taken into consideration. Integrated thinking also refers to the awareness and management of the interconnectivity and interdependency between the company’s resources and relationships over the short, medium and long term.
No organisation operates in isolation in the globally connected business environment, with seemingly insignificant or small events triggering disproportionate impacts. It is becoming more important to ensure integration and collaboration within and outside of the organisation. All organisations operate in an ecosystem comprising various stakeholders, which may be other organisations, individuals and/or communities. Collaboration with external stakeholders offers benefits to the organisation itself, but also to the industry/community/environment in which it operates.
An organization is faced with a multitude of challenges not only in setting the strategy and direction of the organization but with weighing up the appropriate risk appetite and building the correct level of resilience to survive and thrive. The benefits of an integrated approach include: