Roads to Resilience

At Virgin Atlantic, the senior leadership team is intimately engaged in the business: “ I walk around the office a lot but also around the operation at our airports. I get a tremendous sense of input and energy from seeing our global operation in action and witnessing our teams delivering with a great sense of pride ” (Director of Operations, Safety and Security, Virgin Atlantic). In addition to informal visits, Virgin Atlantic also has monthly ‘meet and greet sessions’, where top management visit operational areas for discussions with staff 3 . In addition to their visibility with front-line staff, senior managers in resilient organisations signal the importance of reviewing risk management. Senior managers at Drax take steps to prevent hierarchical barriers from slowing the flow of risk information: “ I’m not a person who makes use of the hierarchy; I break down barriers rather than forming barriers ” (Generation Manager, Drax). Another factor at Drax is that the senior management team all work in a small open plan office, which really helps collaboration between them. Additionally, stakeholder access to management is deliberately made easy and, for example, “ if customers want to talk to directors they get to talk to directors ” (Operations Director, Haven Power). To avoid complacency or ‘group think’ from setting in at the highest levels, a number of the case study organisations conduct annual reviews of their boards and use this to support the review and adapt resilience principle. In these instances, independent third parties audit committee or board members from parent organisations explore and provide recommendations for improving the effectiveness of boards in terms of, for example, board members’ ability to speak up, the soundness of governance practices and the breadth and depth of risk discussions. This demonstrates the link between the principles of resilience by drawing together the risk radar and review and adapt principles. It should also be noted that emerging international regulations and governance obligations often require checks and balances to demonstrate that vigilance is ensured and that complacency is avoided, but resilient organisations go beyond minimum governance obligations to gain benefit from these governance processes.

aggregated. At AIG, the key tools are the vulnerability identification scheme, mentioned earlier, near-miss reporting and scenario planning. Similarly, Drax uses risk scenarios, risk assessment matrices and near-miss reporting (with an emphasis on using photographs and diagrams) and it applies its ‘Golden Rules’ to safety – any work that is identified as being risky is stopped immediately. At Jaguar Land Rover, a trend analysis showed that some suppliers might be unable keep pace with a rapidly increasing global demand for new models. To proactively deal with such issues, Jaguar Land Rover has embedded risk specialists alongside supply chain managers. Working together, they have rationalised the supplier base to reduce the dependence of Jaguar Land Rover on small, low-volume suppliers and have introduced a system to better monitor the capacity and capability of suppliers. This has been vital to the organisation’s on-going success and resilience. Although the tools and techniques of risk management play a role, risk professionals at the case study organisations recognise that they are by no means sufficient on their own. There is a need to ensure that the risk register does not become a static document or snapshot of risk levels on a specific day. “ A risk assessment is not the words on a piece of paper; a risk assessment is the thinking... it is appreciating the risks ” (Generation Team Section Head, Drax). This approach re-enforces the view that resilient organisations treat the risk register as forming the basis of their risk action plan to enhance the level of resilience. In the case study organisations, risk radar is actively led from the top. To demonstrate top management’s commitment to risk, executive committee members typically assign themselves one or more major risks from the organisation’s overall risk register and accept ultimate responsibility for addressing these. Another aspect of leadership that supports risk radar is when senior management is visible on a regular basis at the operational level. This shows that management is on the alert and motivates employees to act accordingly. For example, managers at every level in IHG understand the operational aspects of the business and talk about leading through example by regularly being in the front line. Leadership and governance

3 The focus on being visible in the operational side of the business was found to be common across various levels of management at Virgin Atlantic and other case study organisations.

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Section 2: Resilience Principle No 1: ‘Risk Radar’