Roads to Resilience

contractors. The challenge is to have external suppliers adopt the same attitude towards safety because: “I think at the moment we have probably got something like 2,000 contractors on site” (Engineering and Safety Manager, Drax). As contractors are from other organisations, they need to be managed carefully: “Our staff have the ability to learn because it is fed to them all the time. You haven’t time to give some of the contractors the ability to learn, they’re only here short term [so] … you’ve got to be much firmer and you’ve got to be able to get that message round … We take a very firm stance: if contractors break the rules … they’re ‘off site’ [immediately and] the word gets quite quickly round the contracting fraternity” (Generation Manager, Drax). Structures need to be adapted in the face of new learning, although organisational configurations tend to be taken for granted and often remain unchanged. The case study organisations on the other hand have not fallen victim to such malaise and have adapted their structures to ensure enhanced risk management and resilience capabilities. This demonstrates that implementation of the review and adapt resilience principle has a strong influence in achieving success and delivering goals. The annual report of Drax summarises its view of structure saying that “over time, all facets of the business are reviewed to ensure appropriate systems of control are in place and are working efficiently or, where they are not, deficiencies are rectified by timely and appropriate action” 5 . The management of Zurich Insurance knows that a learning culture needs to be driven from the top. “ It has got to start at the top of the organisation, with supportive language that shows we are more interested in how we learn and move forward than holding an individual accountable” (CEO, UK General Insurance, Zurich). Business structure

Although open communication is a component of the relationships and networks principle, it is also vitally important for other principles. Risk information is communicated through the business structure and is vital if the organisation is to learn from experience. All the case study organisations have taken steps to improve communication. For example at AIG, there is a recognition that poor communication leads to operational risk: “Poor communication is probably one of the worst situations because it generally adds a lot of risk (operational risk) because poor communication is generating a situation where there is a lack of understanding from the staff, all over the organisation, of what the organisation wants to achieve. If there is a lack of clarity across strategies you have a recipe for failure” (Managing Director, AIG UK). At IHG, the organisational structure has been changed to match the challenges of protecting the reputation of the organisation and its many brands and hotels, which are mainly managed by franchisees. To achieve this, the organisation created a new function in 2011 called ‘Business Reputation and Responsibility’ (BRR), which brings together Risk Management, Internal Audit, Legal and Company Secretariat and Corporate Responsibility, with the same collective mission. Having risk management so closely linked to other departments has played an important role in raising the profile of risk issues within the whole organisation 6 . Working within BRR, the risk management department comprises subject matter experts in areas such as safety, security, fraud, business continuity, risk training, corporate risk management and risk financing. This creates a critical mass of expertise that helps to deliver the collective BRR mission “to champion and protect the trusted reputation of IHG and its brands” (SVP Head of Global Risk Management, IHG). These structural changes demonstrate the importance of reputation and also acknowledge that reputation is closely linked to the customer experience.

5 Drax Group plc, Annual Report and Accounts 2012, p33.

6 As reported by IHG at the workshop held at Cranfield School of Management on 11 July 2013.

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Roads to Resilience: Building dynamic approaches to risk to achieve future success