Drought, fires, floods, a pandemic and subsequent global economic downturn: 2020 has already presented significant challenges to the Australian business community - and it isn’t over yet.
Businesses of all kinds have been deeply affected by one or more of these events, from insurers covering estimated $1.65 billion in losses in the aftermath of devastating bushfires, supermarkets experiencing logistics challenges due to coronavirus-inspired panic-buying, through to airlines entering voluntary administration in the face of lockdowns and border closures. Many are now assessing how to recover or maintain their businesses in the aftermath of - and in some cases, during - unexpected events.
There is one particular quality that can denote the difference between a business able to survive such events and another that is pulled under, and that is resilience: the capacity to recover quickly from, or spring back into shape after tough challenges. And as leaders who dictate the culture and direction of their organisations, boards and executive teams have a key role in building this quality into the business, and promulgating it throughout the organisation as a whole.
Traditionally, it has been the risk manager’s role to implement protocols and strategy after a crisis. But as the past 12 months have shown, a more proactive approach is necessary to help your company hit the ground running after major setbacks: if we can prepare for some of the challenges we are likely to face, we can more easily rise to meet them when they arrive.
Of course, events can be hard to predict. For example, while bushfire is a known risk in many parts of Australia, the 2019-20 bushfire season began ahead of its official period, burned more intensely than previous years and spread beyond its usual range, causing unprecedented environmental and property damage.
Likewise, few would have anticipated that what began as a mysterious pneumonia-like illness in a market in Wuhan, China back in December 2019 would develop into the global pandemic we are grappling with today.
However, disease outbreaks and natural disasters are both general types of recurring risks, meaning teams have the opportunity to learn from past events and establish and implement plans for the future - and yet we often remain unprepared.
Business leaders are no exception, as a recent survey by Deloitte shows: while nearly all CEOs and board members - 95 and 97 percent, respectively - knew their organisations would face serious threats and disruptions to growth prospects over the next two to three years, many hadn’t planned for or made the appropriate investments to manage them.
As those who make key decisions for and oversee the business health of their organisations, boards and executive leadership teams have a duty of care to lead strategy and set a culture of risk preparedness and resilience from the top down. This involves best-practice measures such as including risk management and business resilient updates within board agendas; assigning dedicated responsibilities for risk management across the organisation; creating a clear process for risk escalation; and capturing and analysing data clearly, concisely and in a way that can be understood at all organisational levels.
Implementing such measures and modelling them at leadership level also sets a clear example for employees to follow in their own daily processes, ensuring they infuse the entire organisation.
Information and agility
To create robust risk analysis and management processes, businesses require good data. But how to find the right data? The development of communication and information technologies over the past two decades has seen many organisations drowning in data from a multitude of sources, from social media platforms and live news feeds to government and NGO press releases. If your business operates on a global scale, keeping up with policy information and events in other countries adds further layers of complexity to a tangle of inputs. Parsing this information for the vital nuggets that inform key business decisions is a time-consuming and difficult process, often further complicated by a climate in which some actors may be spreading misinformation, intentionally or otherwise.
Without the right tools, this density of data and the task of its collection can be overwhelming - 95 percent of CEOs see customer and client data as vital in assisting decisions in a crisis situation, but only 15 percent of companies are successfully collecting such data.
Having access to the right information at the right time is always important, but becomes especially critical when a crisis hits. AI can do much of the heavy lifting in this area, detecting early indications of risk from publicly available data sources at great scale, and sending them in real time to business decision-makers. Such alerts can inform vital risk management decisions, whether they are in relation to a storm causing possible supply chain interruption, a crash in a city centre that may pose risk to employees, or a customer complaint that could cause harm to business reputation. This assists split-second decision-making that can protect personnel, inform processes and save money, contributing to a business’ resiliency and ability to rebound from crisis.
As we pass the halfway mark of what has already been a challenging year, it is clear we cannot always be certain what lies ahead. But we can learn from the crises we have already faced, and feed that learning into processes and cultures that support our businesses into the future, building a resilient and healthy organisation from top to bottom.