According to Christopher Palm, chief risk advisor at the Institute of Risk Management South Africa (IRMSA) resilience is the key to enabling business growth in a hostile market environment.
In its most general human context, resilience is defined as the “ability to recover from or adjust easily to misfortune or change”. Expanding this basic definition then one will need to have the ability to anticipate, respond and adapt to, and/or rapidly recover from a disruptive event – in other words to “keep going” – it doesn’t have to be pretty or convincing it just has to have a preventative capacity as well as an adaptive capacity in response to the disruptions.
In fact, those that achieve perfect resilience, that is, avoid interruptions altogether, are transformed by it.
“Every time a business anticipates and counters all threats at its current level, and learns from it, it then empowers itself to operate at a higher level, thereby compounding its gains,” says Palm. With nothing holding it back, it can focus on and elevate its growth strategy.
While the function of a business is to deliver goods or services to a market that needs them, its purpose is to grow. Sole proprietors and corporate shareholders alike invest their capital into a business hoping it produces a tidy return on investment.
The more market share it can gain, the higher the returns. Yet, when adverse conditions in its internal, market or macro environments delay its progress, its growth trajectory veers ever further from its original projections. The sole proprietor loses faith.
Corporate shareholders lose confidence. The business loses ground.
It seems obvious that an organisation should understand its various environments and identify the threats and opportunities within each. It will then be able to respond to the risk, at the very least, develop the means to continue operating in spite of them, and, equally and maybe even more importantly to also leverage the opportunities identified.
At best, its growth will not be disrupted at all. At worst, it will be able to recover operations rapidly with minimal impact to its progress.
So, a business’s ability to anticipate and either avoid or counter setbacks and responding to opportunities with agility must be a core ingredient of its resilience.
Resilience, therefore, is a direct product of integrating strategy development and execution, effective risk management, business continuity planning and excellent decision-making.
However, according to Palm, resilience shouldn’t just be about being able to rapidly bounce back from disaster.
Rather than a set of preventive and corrective steps, it should have a lasting impact on the organisation’s capabilities.
“True resilience means a business has transcended the risks that threatened to prevent its growth and has transformed itself to achieve greater performance because of it,” he says.
For an organisation to truly benefit from resilience, it should integrate what it has learned into its strategy.
This means that resilience should be highly valued by its leadership and risk management must be deeply integrated into the strategy development process.
So, organisations that build up their resilience will be better able to protect their growth and be transformed by what they have learned.
Since resilience is the direct product of risk management and business continuity planning, it follows they will reap the greatest benefit if risk management is a permanent component of their strategy and decision-making.
“Businesses that want to grow without hindrance must realise that risk management and business continuity planning are no longer obligatory support functions. Rather, they are accelerators of business growth,” says Palm.