Business leaders have taken significant steps to shore up the resilience of their companies, but still face significant risks around technology, governance and skills shortages. This is according to the 2018 Organisational Resilience Index published today by BSI. The Index is based on more than 800 interviews with senior executives across the globe.
The annual survey assesses organisations against 16 key elements derived from international standards of Best Practice relevant to resilience.
Despite an overall perceived improvement in resilience, business leaders are wary of what the future holds. Technological challenges emerged this year as the most significant source of risk, identified by more than a fifth (ie 21%) of senior leaders. Governance concerns and skills shortages were similarly recognised as key challenges. More than six in ten considered one of these three factors a top risk for their organisation. Governance and accountability was also the element that rose highest up the importance rankings this year.
As businesses become more aware of the importance of resilience to long-term success, so they’ve increased their focus on governance and internal training, which rose five places on the scale of importance, with a significant reduction in the attention paid to product and service innovation. China is the notable exception to this concern, with senior leaders perceiving innovation as the most important factor in preserving long-term resilience.
The performance of supplier management has dramatically improved in the last 12 months, rising ten places on the scale. This indicates that businesses have sought to firm up their supply chains following a sharp increase in disruption in recent years.
The research also revealed a ‘disconnect’ between the Boardroom and the ‘shop floor’. Members of senior management teams rank their own leadership performance higher than junior managers. This is a trend that’s particularly pronounced in those organisations that are over 50 years old.
Of the 16 elements that make up Organisational Resilience, the report found that the most and least important are as follows (+/- numbers denote annual move in rank):
Most important elements
(1) Financial Management (+1)
(2) Leadership (+1)
(3) Vision and Purpose (+1)
(4) Governance and Accountability (+5)
(5) Awareness and Training (+5)
(6) Reputational Risk (-5)
(7) Information and Knowledge Management (-2)
(8) Business Continuity (=)
(9) Resource Management (-2)
(10) Culture (+3)
(11) Adaptive Capacity (+1)
(12) Innovation (-6)
(13) Supplier Management (-2)
(14) Alignment (+1)
(15) Horizon Scanning (+1)
(16) Community Engagement (-2)
Highest performing elements
(1) Financial Management (=)
(2) Governance and Accountability (+3)
(3) Vision and Purpose (+1)
(4) Reputational Risk (+5)
(5) Awareness and Training (+7)
(6) Supplier Management (+10)
(7) Information and Knowledge Management (+6)
(8) Leadership (-5)
(9) Alignment (-7)
(10) Resource Management (=)
(11) Business Continuity (-4)
(12) Horizon Scanning (+2)
(13) Innovation (+2)
(14) Culture (-6)
(15) Adaptive Capacity (-4)
(16) Community Engagement (-10)
Howard Kerr, CEO at the BSI, commented: “Faced with these challenges, companies must continue to innovate and balance risk against opportunity. This year’s Index sees many firms shying away from innovation and technological disruption. Those that succeed over the long-term recognise that failing to adapt means missing out on opportunity.”
Kerr added: “It’s encouraging that, in this year’s report, we see both higher levels of resilience and an increasing number of resilience specialists within organisations. Leaders around the world have a responsibility to embed a state of preparedness across their organisation, and I’m very pleased to see how governance and training have both risen up the corporate agenda.”