As we head towards the end of what many have found to be a challenging year, with new plans, aims and goals for 2023 one of the things that Andrew Marsh says is critical to get right, right now, is business resilience.
Andrew Marsh is an award-winning chair of Vistage for the North East and Northumberland, NED for numerous businesses and charities, and a successful entrepreneur. He spends his days helping business leaders achieve goal’s and find opportunity. Here, he looks at business resilience, suggesting hints and tips on being better at it.
“2022 has been a tough year for many, but 2023 is expected to be tougher. As we found out in the new budget, we can all expect to pay more tax, cost of living is still rising, inflation is over 11%, the Bank of England have raised interest rates to their highest levels for years, the weight of a recession and supply chain issues continuing worldwide. Business resilience is more vital than ever.
Some companies freeze and fail, while others innovate, advance, and even thrive. The difference is resilience.
What does business resilience mean? It is the ability of a company to quickly adapt to disruptions while maintaining continuous business operations and safeguarding people, assets and economic value.
This means having tools and plans in place that allow your company to deal with and capitalise in the event of threats and challenges. To make a difference and have impact Business Resilience must be built into everyday strategic plans and practiced. It’s too easy for boards of directors to look short-term telling themself “It won’t/can’t happen to us” but the job of the company, and ultimately the board, is to not only create economic value but protect it – that’s where business resilience comes in.
Remember COVID? No company had a resilience plan to deal with a pandemic but what some had was a business continuity plan (or BCP) that had basic scenarios allowing them to get operations back up and running quickly. For those that didn’t have a BCP it took longer.
The difference between Continuity and Resilience is long-term impact. Continuity looks at processes and actions to take if a risk happens, whereas resilience includes holistic and strategic assessment, a crossfunctional and cross-disciplined approach. By identifying issues, they become strategic activities not just a plan in the event of.
There are seven areas of Business Resilience that we must consider.
They are:
Business Model – the way we do business e.g., our Fly Wheel.
Financial – our working capital demands and cash contro.l
Operational – service/production line.
Technology – systems, applications, networks and infrastructure
(external and internal).
Growth – where is the best opportunity.
Organisational – teams and support structures.
Reputational – how we are perceived.
In a nutshell, as a team within your SME or charity, you should be reviewing these areas on a regular basis with real actions and plans executed.
There are many online resources outlining best practice for processes/ policies that help a company work through disaster. The most important are those ensuring a quick return to a fully operational state, safely. Good business continuity plans protect companies by defending data, employees, and public image. The framework shown below really brings home the areas and the intra-dependencies.
My Vistage members benefitted this year from a session delivered by a Business Resilience expert, Steve Williams, founder of BCarm. He shared insights, experiences and several tools that enabled members to test their businesses resilience, allow them to share thoughts with peers and then take solid actions to address”.
“Bcarm specialise in helping companies understand risk profiles and how to deal with them. Steve says: “We believe that risk management delivers more than just protection and compliance. It can enhance operational effectiveness, improves resilience, create employee engagement and accountability, delivering improved business performance and competitive advantage.”
“Employing an agency like BCarm is a solid option, bringing reassurance, but at a cost that some SMEs haven’t budgeted for. Rather than wait to afford to bring in the experts, there are things that leaders and board members can do without any hold up.
As I said earlier there are seven key areas to focus on, so I recommend spending time with your team to understand the risks open to it across those areas and see if perspectives can be widened, looking outside of normal inputs or sources. Remember this is not about operational risk but strategic long-term risk.
When considering these risks, there are three fundamental questions:
What happens in the event of a crisis i.e., how do we recover? Can we still operate and for us what would define a crisis?
How long is it before our clients walk away and use someone else?
(Take this down to each service/product);
Where are your financial sensitives as a result – i.e., clients stop paying, orders dry up, suppliers withdraw credit functions, or employees leave to join other companies for more pay, working capital demands increase etc.
Only when you answer all of these do you get the actions needed to establish business resilience. When considering financial sensitivities, it’s also important that investment doesn’t just stop. It could be that investing increases resilience, de-risk an area or open up new areas not spotted previously.
It’s also important to acknowledge an important process to put in place is communication. Both internal and external. Routes to communicate should be agreed and actioned in event of a crisis or something that will disrupt performance, including emails, phone calls, messenger systems and calling face-to-face urgent meetings.
On a practical level, your plan should include a detailed file of critical information that is easily found. This includes insurance policies, financial documents, other vital records, as well as contact information for employees, suppliers, stakeholders, and key clients. Whilst an electronic copy is obvious, paper copies should be stored in several off-site locations.
Once your resilience plans are established, they should be reviewed regularly via risk management and crisis management processes. There should be a well-tested cycle for business resilience and continuity plans. Analysis, solution design, implementation, testing and acceptance, maintenance… and round again! Business Resilience shouldn’t be a plan put into a cupboard, brought out when needed. It should be a fundamental part of the overarching strategy for the health of your company.”