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From risk to resilience
Date of Issue: Monday, 1 May, 2017
Risk-taking has always been an inherent part of business – the more risks you take, the more you stand to win or lose. Fundamentally, this hasn’t changed. But the quotient of risk needed to deliver the target reward has. To prosper in the face of a rapidly changing world, organisations need to improve how they deal with unexpected disruptions to complex issues. Companies can cultivate such resilience by understanding their vulnerabilities — and developing specific capabilities to compensate for those vulnerabilities.
How should risk managers respond to these developments? One way is to become much better at risk assessment and analysis and avoid actions that entail more than moderate degrees of risk. This approach can ensure survival in the short term since the company will avoid major disasters, but it will put its long-term survival at risk since it will lose out to more aggressive competitors who are successful in the risks they take.
Companies must be strategic in the risks they take, doing so in an intelligent manner by becoming risk-resilient organisations. By risk-resilient we mean the ability of an organisation to recognise, take, and quickly and effectively adapt to changes and the resulting risk. This requires rapid acquisition and analysis of vast quantities of information; generating knowledge out of this analysis based on recognising patterns; having a flexible and nimble organisation where local units have the autonomy to respond to changing circumstances; and having strong risk governance procedures at the board and executive level.
“While some businesses have started to engage with risk resilience through training, very few have integrated it into their HR or health and wellness strategy and processes – meaning they have just scratched the surface in terms of what’s possible when you get resilience right,” says IIRSM Deputy President Andy Hawkes.
“Resilient employees, resilient teams and, ultimately, whole organisations that are ready and able to thrive in the face of the challenges and uncertainties that lie ahead will be the winners,” he adds.