Roads to Resilience

Section 8: Implications for Board Members

Overview of the implications for board members

The aim of resilience is to help an organisation protect its brand and enhance its reputation. The case study organisations also showed that highly focused customer- centric behaviour is a key part of resilience. Resilience helps them to deliver consistently on their promises, even under a wide range of challenging conditions and adapt their operations constantly to stay successful. The ability to achieve high levels of customer satisfaction, even in challenging circumstances, enhances the most valuable asset of an organisation – its reputation. Although the advantages of resilience are clear, lessons from the research show that achieving it is not simple. In particular, it requires board members to provide a mandate to their risk professionals to facilitate the many enhancements required to achieve resilience. proactively driving this change in behaviour and culture. This section includes an extensive checklist of questions the board and senior executives should ask to gain assurance that the required level of resilience has been achieved. The resilience matrix from the research illustrates how (often separate) risk management and crisis management activities need to be co-ordinated to create a resilient organisation that is prepared for and protected from the expected, as well as being able to cope with and learn from the unexpected.

Introduction to implications for board members This section considers resilience from the point of view of the board and senior executives of an organisation and it describes the benefits of increased resilience. Resilience brings significant business benefits that were identified by the case studies (see Appendix A). In particular, resilient companies have highly developed early warning systems (termed risk radar in this report) that help them prevent issues developing into problems and crises. Resilient organisations recognise that repeated small issues can mark the beginning of a trend that may be detrimental (or beneficial). So a significant benefit of resilience is the ability to recognise the early indications of an emerging threat or opportunity and respond rapidly. Another key benefit is that developing responses to expected problems helps identify actions that should be taken when the unexpected occurs. The research identified other considerable benefits. For example, the case study organisations apply risk management thinking to tactics and strategy, as well as their operations. Analysing both the upside and downside of their chosen business strategy increases their awareness of business risk. The scope of resilience practices spans three times horizons of risks, from long-term strategic to medium- term tactical to short-term operational risks. Strategic or long-term risks are related to the brands, business model and reputation across key stakeholders. Tactical risks are medium-term and can impact the delivery of strategy, commercial targets and plans for change. Finally, short- term operational risks can affect the safety and security of physical assets, people, systems and processes. Board members need sufficient and timely risk information to determine whether appropriate resilience is being achieved. If risk information is not being supplied to the board because of a ‘glass ceiling’, risk blindness will prevent the board fulfilling its risk governance responsibilities. Business enablers are present in every organisation and they help define the business model and culture. Increased resilience is achieved when the business enablers are enhanced by taking specific actions identified in this report, with board members

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Section 8: Implications for Board Members