New and emerging operational threats to business will challenge an organisation’s existing risk management, business continuity, IT crisis management and information security processes.
Business leaders are not doing enough to prepare for the risks that arise from an increasingly inter-connected world, such as social instability, debt crises and extreme weather events.
The warning was issued by industry experts from PwC, the Institute of Directors, Airmic, Marsh and Zurich in advance of the ‘Responding to Global Risks’ panel event taking place next week.
Simon Walker, director general of the IoD, will participate in the debate alongside industry experts including James Crask, business resilience specialist at PwC. The discussion will examine the ‘Responding to Global Risks’ report, which was written by industry experts from the IoD, Airmic, Marsh, PwC and Zurich. The survey builds on the World Economic Forum’s Global Risk 2014 report, giving company directors tools to manage risk not only in order to avoid disasters, but also to identify opportunities that will help gain a competitive advantage.
Businesses must wake up to global risks in order to maximise competitive advantage
James Crask, senior manager at PwC, explained: “Enterprise resilience is not just about surviving in the present. It’s about having the foresight, capability and agility to adapt and evolve. The relentless pressure on businesses to cut costs while enhancing their long-term prospects of survival means that agility can sometimes be at odds with the requirement for robust protection mechanisms. For many, this can result in poorly considered investments in resilience. The ‘buffers’ that contribute to resilience are increasingly seen as an unnecessary expense and are removed to reduce costs.”
Businesses could be harming their longevity
Organisations failing to consider the wider factors that contribute towards resilience could be harming their longevity. A mature business will generally mix operational activities (which aim to address shorter-term risks and impacts) with a consideration of a wider range of resilience factors that draw on the characteristics defining the business and which can guide its decision-making.
However, few businesses have identified these wider elements clearly and consistently in every department and at every level. By way of an example, creating a code of values is useless, state PwC experts, if only half of the workforce identify with it.
Richard Sykes – head of governance, risk and compliance at PwC – stated: “While very important, simply delivering robust risk management activities such as business continuity or IT resilience will not be enough to safeguard a sustainable future and enhance reputations. An organisation’s resilience is about much more than good risk management. It’s dependent on a wide variety of factors that can be measured and leveraged to enhance responsiveness and agility in the wake of upheaval.”
Sykes went on to state: “The most resilient organisations are likely to combine these attributes with a commonly shared set of corporate values aligned with behaviours. They will harness a strong understanding of their business and its context, possess the ability to innovate and also maintain high levels of trust and loyalty from customers and staff.”
In conclusion, Sykes explained: “Leadership also plays a critical role in building resilience, but this can only have maximum impact if it’s allied with the empowerment of those on the ‘shop floor’. Trusting workers to make the right decisions and exhibit Best Practice behaviours also helps to enhance resilience and prevent reputational damage.”
For more information visit: http://www.director.co.uk/Content/PDFs/Responding-to-global-risks-web-edition.pdf
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