What Is Operational Resilience? Definition & Strategies
Imagine you’re at a party. You're spending time with interesting people and having a grand time. Suddenly, the lights go out. People panic, drinks spill, and there's a general sense of chaos. But there’s this one person who calmly pulls out a flashlight and sets up some candles.
The party keeps going. That is operational resilience in a nutshell.
Operational resilience is the ability of an organization to keep the lights on - or quickly get them back on - when things go sideways. It allows you to not just survive disruptive events but efficiently navigate them or even use them to your advantage.
Read on to learn more about how to achieve operational resilience and overcome business disruptions with effective strategy and grace.
What Is Operational Resilience?
Operational resilience is your organization’s ability to anticipate, prepare for, respond to, and recover from disruptions.
These disruptions can be natural disasters, cyberattacks, supply chain hiccups, or even something unexpected like a global pandemic (sounds familiar?).
When your organization has operational resilience, you can keep your critical operations going and prevent problems from getting worse. Overall, it helps you make sure that when unexpected operational disruptions happen, your business isn't caught off-guard.
Why Operational Resilience Matters
So, why is operational resilience important? Simply put: disruptions happen, and they happen often. If your business isn’t ready to handle them, you’re setting yourself up for eventual failure.
In fact, research shows that supply chain disruptions can cost as much as 6-10% of your annual revenue, not to mention the costs to your reputation.
When your business is operationally resilient, you can protect your:
Customer Trust: Your customers want to know that you’ve got it under control. When you’re operationally resilient, you can be reliable even when the world is chaotic.
Brand Reputation: Handling disruptions poorly damages your brand reputation. In turn, when you can get the situation under control quickly, your customers will continue trusting you in the long-term.
Financial Stability: Disruptive events come with lost revenue, extra costs, and even fines. When you're operationally resilient, you can minimize the negative impact to your bottom line.
Competitive Advantage: Being able to recover faster than your competitors gives you a leg up in the market.
If your business resilience is not where you want it to be, it's a sign you'll benefit from operations consulting.
Elements of Operational Resilience
Operational resilience consists of key components that every organization should pay attention to.
Operational Risk Management
Risk management helps you identify potential operational risks before they even hit you. When you can identify the threats that could affect your business, you can put measures in place to mitigate them.
Here are a few risk assessment tools that can help you identify and manage potential threats:
Risk Matrix: A tool that helps you visualize risks based on their likelihood and impact so you can prioritize which ones need your immediate attention.
FMEA (Failure Mode and Effects Analysis): A systematic approach to identify potential failures in business processes and analyze their effects.
SCRM (Supply Chain Risk Management): A tool for identifying potential risks in your supply chain so that disruptions don’t derail your operations.
HACCP (Hazard Analysis and Critical Control Points): A tool often used in the food industry to identify and control potential hazards for product safety and compliance.
Scenario Planning: A strategic planning method that creates detailed scenarios of possible future events and allows you to prepare for their potential outcomes.
Bowtie Model: A visual tool to help you understand the pathways of risks and identify barriers that can prevent those risks.
Learn more about our risk management services for better business continuity management.
Business Continuity Planning (BCP)
Business Continuity Planning helps you come up with a detailed plan that outlines how your business will operate during and after a disruption. It creates a system of prevention and recovery to deal with potential threats.
A well-crafted BCP takes into account not just recovery, but also the continuous delivery of products and services to clients to mitigate disruptions.
Here are a few tools that you can use to do BCP and deliver critical operations:
BCP Builder (or Excel Modeling)
Agile Adaptation Strategies
Resilience is also about flexibility. Your dynamic organization needs to be able to quickly adapt to disruptions while maintaining operational integrity.
You can cultivate agility in your organizations by adopting flexible work processes, diversifying supply chains, and being ready to pivot business models as required.
Good examples of agile adaptation strategies include:
Continuous Improvement (Kaizen): A strategy that focuses on making small changes to processes for ongoing improvement.
Incremental Delivery: Delivers products or services in small, manageable pieces to allow for quick feedback and adjustments.
Cross-Functional Teams/Growth Mindset: Having diverse teams that embrace change and foster a growth mindset to encourage collaboration and adaptability.
Empirical Process Control: Using real-world data to guide decision-making so that your actions are based on actual results, not assumptions.
Lean Thinking: A strategy to eliminate waste and optimize efficiency.
Learn more about change management and communicating change to employees.
How to Assess Your Operational Resilience
Before you take any business continuity measures, you need to understand how operationally resilient your business is right now.
Use this self-assessment checklist:
Risk Awareness: Do you have a comprehensive understanding of all potential risks facing your organization?
Preparedness: Are there clear procedures in place for responding to various types of disruptions?
Response Capacity: How quickly can your organization respond to and recover from a disruption? Do you have the necessary resources and liquidity?
Communication Plans: Are there efficient lines of communication open for internal and external interconnections during a crisis?
Agility: Is your business capable of adapting its operations and strategy swiftly in response to changes?
If you're not ticking these boxes, consider hiring a capable consultant to help you improve your core business lines and operational resilience.
How to Improve Your Operational Resilience
Technology & Cybersecurity Investments
Technology is your best friend when it comes to resilience. Having the right tech can help you detect risks early, respond to them quickly, and speed up disaster recovery.
Especially when it comes to cybersecurity, you can’t afford to cut corners. Even a single cyberattack can be costly and result in serious data leaks.
Focus on:
Cloud Computing: This allows you to access your data and systems from anywhere (even if your physical office is compromised).
AI and Machine Learning: These technologies can help you predict potential disruptions and automate responses to them for better operational resilience.
Cybersecurity Tools: Invest in firewalls, encryption, and multi-factor authentication. Don't forget to keep these cybersecurity tools up to date.
Technology is key to building an effective operational resilience and infrastructure.
Employee Training & Well-Being
If your employees aren't equipped to handle disruptions, your business won’t be either. Organize regular training programs to teach your teams how to respond to different types of crises. Also, try to cross-train them in different roles so that if someone is out, there’s always a backup.
Regular Testing of BCP
It's not enough to just have business continuity plans - you also need to regularly test them. Drills and simulations help you identify gaps in your BCP and update it accordingly. Remember, operational resilience is an ongoing process.
Operational Resilience and Cybersecurity
Almost all businesses face cyber threats now, and even one breach can create serious consequences. This is why cybersecurity should be a part of every organization's operational resilience.
This means protecting your data and systems from hackers AND having a solid plan in place for when (not if) something goes wrong.
Invest in advanced cybersecurity tools, do regular security audits, and train your team to recognize threats to mitigate cybersecurity risks. Learn more about our risk management services.
Future Trends in Operational Resilience
Your organization's operational resilience should be always adapting to the new challenges. Pay attention to these trends:
Increased Use of AI and Machine Learning: These technologies can predict potential disruptions before they happen and allow you to react to disruptive events faster.
Greater Focus on Supply Chain Resilience: Technologies like blockchain can improve transparency and reliability in supply chains and make them more resistant to disruptions.
Remote Work as a Permanent Fixture: The COVID-19 pandemic accelerated the move toward online work and many teams are now remote. It means that businesses need to invest in remote working technologies and digital collaboration tools.
Sustainability and Resilience Convergence: Climate change is posing increasing risks, and businesses are starting to see the overlap between sustainability efforts and operational resilience. There's a growing need for integrated strategies.
The bottom line is, it's essential to protect and prepare your business to take advantage of the future, not fear it.
Build Your Operational Resilience with Solvers Collective
At Solvers Collective, we can help safeguard your business from potential threats and equip you with strategic, well-considered plans to respond to crises fast.
Learn more about our risk management services.
