Connecting risk and resilience for sustainable growth

Future-seeking leaders create more resilient organizations and sustainable growth by connecting current and future risks in any environment. By viewing risks cohesively through a common lens at the enterprise level, organizations can achieve better outcomes than by managing them independently.

The last two years illustrate the impact of multiple low-frequency, near-simultaneous, high-impact risks:  a global pandemic, financial shocks, a series of “hundred-year” weather events, social disruption and significant labor shortages. The frequency and complexity of geopolitics, economic volatility, population health, climate change, and threats related to supply chain, cyber, talent and technology add to the challenge.

While the concurrence of these events may seem unlikely, analysis across 10 risk categories calculates a 63% probability that one or more “hundred-year events” will occur in any given decade, and a 26% chance that multiple such events will occur in the same decade. The likelihood is even higher when events are interdependent. In essence, by constantly identifying and anticipating threats, preparing for the unexpected and being ready to act decisively, future-seeking leaders gain improved foresight and judgment as well as achieve superior results.

In the following examples, leaders put such practices into action to serve customers and protect employees in new ways during unforeseen events, such as:

• Labor shortages – Life sciences companies use dynamic recruiting and flexible work and pay, benefits, and career programs to attract and retain workers from non-traditional industries and geographies.
• Supply chain disruptions – Automobile industry players use onshoring strategies to meet demand for vehicles and parts from regions otherwise impacted by labor, materials, and/or transportation issues.
• Illness spikes – Retailers use omnichannel sales and distribution strategies to pivot between virtual, brick-and-mortar, and hybrid shopping and fulfillment to meet customers where they are (and where they feel safe and comfortable) as outbreaks expand and wane.
• Extreme weather events – Insurance companies use automated rapid insurance claims management to get money into the hands of policy holders who need it to sustain their basic life needs, such as food, health care, and housing.
• Geopolitical crises – Microchip fabricators use agile manufacturing and distributed production practices to ensure product and workforce availability and safety during blockades, border disputes, embargoes, and military action.
• Cyber attacks – Financial services companies use advanced User and Entity Behavior Analytics (UEBA) to monitor the normal conduct of users, detect anomalous behavior or instances when there are deviations from regular patterns, and take appropriate countermeasures.
• ESG challenges – Technology corporations use data and analytics around environmental, social, and governance challenges from investors, customers, and employees to maintain or restore reputational and brand damage.

Future-seeking leaders develop organizational resilience, the ability to bounce back from adverse events, by understanding lessons from these events and enabling them to emerge better positioned against similar occurrences. Building resilience to address broad risks requires an array of capabilities that are most effectively addressed on three fronts:

• Financial: Experimenting and quickly learning from various risk mitigation and investment opportunities helps enterprises become more adaptable to unpredictable events and achieve more sustainable returns.
• Operational: Developing new ways to conduct business leads to improved risk management and more favorable business outcomes. This requires emergency response planning, crisis management, workforce flexibility and technologies that ensure that business can operate regardless of circumstances.
• Human: Meeting employees’ individual physical, emotional, financial and social wellbeing needs and creating a common, enterprise-wide sense of purpose enables employees and organizations to thrive under the most trying conditions.

Future-seeking leaders use data and analytics to enable a deeper and broader understanding of connected risks and how they impact financial, operational and human resilience. By highlighting broad and correlated institutional (e.g., climate, cyber, capital, reputation) and employee (e.g., pay, benefit, career, skill, equity gaps) risks, leaders look beyond statistics and take meaningful actions to become more adaptive, resilient and profitable, reducing the potential impact of “downward spirals” of intersecting events, increasing speed to recovery and gaining competitive advantage.

The actions of future-seeking leaders demonstrate that it is possible for businesses today to manage successfully through uncertainty and be better prepared for the future – whatever it brings.

A version of this article originally appeared on Forbes.com on February 22, 2022.

Author

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John M. Bremen

Managing Director and Chief Innovation & Acceleration Officer

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