If the COVID-19 crisis taught us one thing, it’s the need for businesses to be resilient during uncertain times. After all, disruptive events can happen at any time — and they don’t always take the form of a global pandemic. Cyber attacks, supply chain issues, and other disruptions may be on a smaller scale, but they can still tank your business operations if you aren’t adequately prepared.
When planning for 2023 and beyond, it’s crucial for organizations to become as resilient as possible. That means engaging in risk management tactics, identifying your key vulnerabilities, and becoming more cyber resilient. That way, should an unexpected disaster or disruption occur, you’ll be able to quickly adapt to it and continue as if it never happened.
It’s important to note the difference between adaptability and resilience. True business resilience implies that you not only adapt to an obstacle but you’re continuing to thrive in spite of it.
While powerhouse companies like Amazon and Zoom were able to see growth during the pandemic, countless other small businesses weren’t as lucky.
Building resilience should be at the top of your list to ensure that your company can navigate another national crisis akin to coronavirus — and this guide will help you learn how to do just that.
What is business resilience, and why does it matter?
Formally defined, business resilience refers to the ability of an organization to respond, adapt to, and correct disruptions or disasters that affect its:
A resilient business will have numerous contingency plans in place for all the risks listed above.
As an example, a way to prepare for cyber attacks is to invest in cyber insurance that will protect your company and data if there’s a breach.
While organizational resilience was always seen as necessary, the COVID-19 pandemic of 2020 served as a crude wake-up call for most. Pre-COVID, most companies took a reactive approach to disruptions — meaning they would wait until an issue happened before dealing with it. Post-2020, there’s far more emphasis on predicting issues and planning for them before they happen — which is a preventative approach.
After all, it’s much better to predict a natural disaster and have a plan set up for it instead of waiting to come up with a plan after it already hits. As such, risk and crisis management play prominent roles in business resilience. If you want your organization to become more resilient, you need to assess your top risks and develop business continuity plans for them.
The difference between business resilience and business continuity
While business resilience and continuity often get used interchangeably, there is a difference between the two.
In a nutshell, business continuity refers to an organization’s ability to continue to deliver products and services as they usually would during a disruption. An example would be a short-staffed company continuing to ship the same number of products they would if they had adequate staffing. Despite the setback (not enough staff), the business continues as normal.
Business resilience is the organization’s overall ability to continue to thrive during a disruption or disaster. In this sense, business resilience and business continuity work hand-in-hand. The plans you form to make your business more resilient are called business continuity plans because they help your business ‘continue’ as normal.
Preparedness is the name of the game for both continuity and resilience, which is why you need to know how to form a solid continuity plan for each significant business risk.
What does a resilient business look like?
For a business to be truly resilient, it needs to achieve consistent growth in both stressful and desirable environments. That takes intelligent decision-making, flawless risk assessment, and being able to execute plans quickly and efficiently.
The most resilient businesses out there have some similarities, including:
An open and positive attitude toward change without any negative resistance.
An agile IT department that can quickly adopt new technologies with an open mind.
Buy-in from all levels of the organization, from stakeholders to base-level employees.
Active future planning that examines recent trends and technologies.
Being able to implement changes faster than the competition.
It would be best to strive to include these characteristics in your company to become more resilient.
What types of disruptions should you plan for?
Now that you know why business resilience is essential, it’s time to learn more about the type of disruptions that may occur. That way, you’ll know what you need to plan for the most. In general, there are two types of hurdles that can cause business stress; direct and indirect disruptions.
Indirect disruptions refer to anything that’s outside of your organization’s control, such as:
These are all real threats that are entirely outside your control, so putting plans in place for them is a must.
Direct disruptions are problems that occur inside your organization, like:
These are all internal obstacles that affect your business from within. Direct disruptions tend to be easier to resolve since the issues are within your control. Yet, that doesn’t mean that they can’t wreak havoc if you aren’t adequately prepared for them.
You’ll need to form continuity plans for direct and indirect disruptions to build successful operational resilience.
Developing a business resilience framework
You should conduct a business impact analysis for potential disruptions. That will help you gauge how damaging a short-term or long-term disruption will be to your operations.
That way, you can form a hierarchy covering your greatest and least significant threats.
As an example, a crippling cyber attack will have more of an impact on your business than employees with too much downtime. Both are disruptive, but it’s important to distinguish which risks are the most pressing, so you know where to focus a majority of your disaster recovery plans, resources, and efforts.
When it comes to business continuity management, there are three steps to follow during risk mitigation; plan, respond, and recover (PRR).
During the planning phase, you brainstorm ways to mitigate all your identified risks. An example would be taking measures to ensure cyber resilience against hacks, breaches, and attacks. Your plan needs to address how you’ll respond to the threat, as well as the recovery process.
Going with the cybersecurity example, you’d need to plan your response to cyberattacks and how you intend to recover from them. Besides putting measures in place to prevent attacks, you should also have a detailed plan if a breach occurs.
For the response phase, you could train your IT staff to immediately do what they can to contain the attack — lessening its impact. For recovery, you can train your IT staff to analyze the breach to ensure it never happens again.
Now let’s take a look at some of the most common business risks and how to enact PRR for them successfully.
Planning for reputational risks
Even the most trusted companies can face industry backlash for various reasons. It could be that a new product failed to deliver or that a new ad you ran rubbed your audience the wrong way. Whatever the issue, it’s essential to plan for the worst regarding your brand and reputation.
Should you get buried by the press unexpectedly, you’ll want to have a plan in place to counteract it (much better to be safe than sorry in this regard).
To plan for this risk, you should do your best to avoid offending or disappointing customers.
How do you do that?
You can start by implementing stringent quality control measures. That will ensure that your products and services are always top-notch, which will help avoid disappointing customers.
Beyond that, you need consistency in your messaging. Whether it’s a social media post or a significant advertisement, your tone, voice, and messaging need to stay respectful and consistent. If you do that, you shouldn’t end up offending anyone. Or, at least, you decrease your risk.
Responding to reputational risks
Sometimes issues happen in spite of the most air-tight plan. That’s why you need to have a response in place should you take a hit to your reputation.
Designate someone from your public relations department to immediately respond to offended or disappointed customers diplomatically. When doing so, ensure that the messaging is respectful, apologetic, and professional.
You may even want to have plans in place for different types of issues, along with how you would respond.
Recovering from reputational risks
Once the smoke settles, you’ll need to plan how you’ll recover and return to normal.
Besides issuing apologies, you can also introduce new policies that will prevent issues from occurring again. That will let your customers know that you care about the incident and are trying to prevent it from happening again.
Planning for security risks
Cyber attacks are an ever-present threat, and they pose risks not only to your business but also to your customer base. Should a breach happen, hackers can access sensitive customer data, such as their email addresses, payment information, etc. That’s why it’s so crucial for every business to have cybersecurity measures in place.
The planning phase is key to building business resilience against cyberattacks.
Start by conducting a thorough cybersecurity audit (including vulnerability scanning) to identify all your significant weaknesses. From there, develop ways to reinforce weak areas to prevent attacks from happening.
Responding to security risks
Should an attack take place despite your best prevention efforts, you need to have a response plan. Responding to a cyberattack involves containing the damage and stopping the attack (if possible).
You should train your IT staff to do what they can to protect sensitive customer and company data in case of an attack.
Recovering from security risks
Once the attack has ceased, it’s time to pick up the pieces and return to the status quo. In the recovery phase, you can contact your cyber insurance provider to see if you can recoup some of your losses.
Also, every cyberattack is a serious learning opportunity. IT staff should study the attack closely to determine how to prevent it from happening again in the future.
Planning for financial risks
Both direct and indirect disruptions can cause financial issues at your company — such as a downturn in employee productivity (direct) or an economic recession (indirect).
Either way, you’ll need a plan in place to protect you from financial risks. The best way to do so is to diversify your cash flow.
Meet with key business leaders to discover new revenue streams for your business. That will help you accrue enough capital to withstand a financial disruption without missing a beat.
Responding to financial risks
Should a financial disaster take place, your response will determine how successful you’ll be with navigating it.
Once again, it will come down to the cash flow that you have available. The additional revenue streams you acquired during the planning phase will help keep you afloat here.
This is also the phase where you should turn to emergency credit lines and federal loans to cover operational costs during the crisis.
Recovering from financial risks
You’ll need to repair any direct obstacles within your control to recover from a financial downturn.
For instance, if your financial situation turns dire due to a lack of productivity, you need to supercharge your efficiency. That could mean implementing new training programs or hiring more staff.
If the obstacle was indirect, meet with your stakeholders to determine how you can prepare for a similar hurdle in the future.
Concluding thoughts: Business resilience
For any organization to thrive in 2022, 2023, or beyond, a healthy amount of business resilience is an absolute must.
Having survived the COVID-19 pandemic, companies are now infinitely more aware of the importance of being resilient during uncertain times. Cyber attacks and supply chain issues are around every corner, which is why proper planning and continuity management are so critical.
By now, you should better understand how to plan, respond, and recover from common business risks and obstacles.