Roads to Resilience

Enabling ‘Resources and Assets’

Developing resilient resources and assets requires the organisation to have a clear understanding of its operational risk appetite and the need to limit dependencies. The attitude of the board to risk is also a key issue when resources and assets are deployed to implement strategy. One of the most important components is that the organisation has built flexibility into how resources and assets are selected and deployed. Finally, resilient organisations undertake scenario testing to prepare for the expected and to ensure that they can cope with the unexpected. Managers need to consider how each of the enablers of resilience, people and culture ; business structure ; strategy, tactics and operations ; and leadership and governance can be enhanced to create flexible and diversified resources and assets . In the face of high business risks, the case study organisations tend to keep their financial risks low. However, their drive to continuously exceed customer expectations ensures that this risk attitude does not translate into an inward-looking perspective geared towards maintaining the status quo. Resilience and risk management are more about mindsets and behaviours, rather than tools and spreadsheets. It requires employees and teams to become not only aware of the risks themselves, but also of how risks are related to particular resources or assets. This requires strong cultural values and the ability to adapt quickly when necessary. These organisations understand the need to repeatedly realign their resources – and not just when major issues arise. The case study organisations use their risk radar to detect issues and constantly look for the resource implications. Through regular conversations, simulations, learning from others (in their own and different business sectors) and investing in exploratory projects, they proactively review their options, so that they can manoeuvre quickly and move forward without becoming unstable. These same considerations apply when the case studies are seeking to deploy resources to take advantage of an opportunity. People and culture

For example, since Zurich Insurance has all its lines of business in the insurance industry, it does not take risks beyond its core competences and always has “sufficient funds to honour all the past promises” (Chief Actuary General Insurance, Zurich) – an essential way to gain customer trust and investor confidence: “Our resilience is part of the customer value proposition” (CFO General Insurance, Zurich Insurance). As one manager said: “We can’t get away from the fact that resilience comes from strong financial management and having, through that, a very robust and strong balance sheet that sits behind the business and you only get to a strong balance sheet if you’ve got the right financial processes, mechanisms and governance structures” (CEO General Insurance, Zurich Insurance). With such upfront risk avoidance and mitigation measures in place, continuously reviewed and improved, the challenge for many of the case study organisations is to proactively avoid and minimise the impact of disruptions on their customer value creation and delivery process. To an extent, this is about protecting normal operations and ensuring these are restored quickly after incidents and crises. The existence of flexible and diversified resources and assets will facilitate this rapid recovery, enable the organisation to learn from the experience and improve allocation of resources. However, the focus is also on anticipating change, exploring the future and adapting the business before competitors, regulators or new technologies force this adaptation. Resources and assets need to be allocated in a manner that is compatible with the purpose and goals of the organisation. Having a clear and compelling shared purpose and values supports the identification of signals and events that could support or impact the organisation’s goals, supports the framing of choices and avoids getting overwhelmed by data analysis.

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Section 3: Resilience Principle No 2: ‘Resources and Assets’