While it might be tempting to focus on the greatest risk at hand, it’s crucial to prioritise resilience in the pandemic recovery.
The pandemic has disrupted many things. Business as usual, supply chains, our work routines and workplaces, not to mention all other parts of life. But there are many things it hasn’t impacted – including the possibility of other risks arising to threaten businesses.
From natural hazards to mechanical failure, cyber attacks or fire – each of these ongoing risks remain critically important to acknowledge, prepare and train to mitigate through strategic planning.
Losses from any of these risks can be exaggerated during a pandemic. With fewer staff on hand, repairs may be less accessible and supply chains delivering replacement equipment less reliable. This can prolong recovery times and compound costs.
While it might be tempting to focus on the greatest risk at hand, we will only have a resilient recovery if we put holistic resilience building in the driver’s seat.
Ongoing risks to business
While the combination and level of risk that bedevil each business will be unique, it is helpful to highlight a few prime examples. Among them is cyber risk. With businesses increasingly interconnected within their own operations and with others, cyber attacks can spread rapidly – and widely.
Like a communicable disease, the impact of a cyber attack will usually extend far beyond one facility, potentially shutting down all locations at once.
The immediate impacts can range from not having access to vital IT systems to physical damage to equipment that can be hacked and forced to operate at a speed that leads to damage, such as fire.
All companies need to act now to mitigate their chance of being hit, and to prepare for it if they are. This requires leadership from the very top – and less reliance on their IT department to carry the burden.
When it comes to supply chain risk, the pandemic has demonstrated the need to diversify supply chains to strike a more reasonable balance between cost-effectiveness and accessibility. However, in actuality, companies should continually scrutinise their supply chain partners as they would risks at their own facilities. Due diligence is key.
Climate risk is also clearly here to stay. This is intensifying existing natural hazards risks, like bushfire and flood. The long-term impacts of such natural hazard losses can be broad ranging – from loss of market share to stock price.
In research commissioned by FM Global and conducted by analytics advisory group Pentland Analytics, shareholder value declined by an average of five per cent in the year following a flood event at 71 of the world’s largest publicly traded companies.
Not time to cut back on risk mitigation
Being prepared to confront these risks does have cost implications. However, cutting back on risk mitigation measures now may lead to additional and increased expenses in the future.
Insurance can help offset some of the impact of a loss that is poorly planned and prepared for, but not the impact of your business shutting down and competitors taking over market share. Business leaders focused on recovery from a loss are also more easily distracted from strategic plans.
If you are forced to shut down or limit output due to an equipment failure, fire or flood, customers are less likely to forgive the resulting disruption than they may have been during the pandemic, and competitors will look for any opportunity to gain an advantage.
Review, develop, designate, train
The core steps of building resilience do not have to be hugely costly. These include reviewing exposures, developing a plan to mitigate those, and raising awareness across the business so everyone knows and can execute their role.
Key things to keep at top of mind include: designating one person with the authority to take charge and make quick decisions, as well as a designated back-up; designating someone to contact emergency services and not solely rely on alarm systems; and start salvaging as soon as possible rather than waiting for the adjuster, so long as employees are not at risk.
Planning in a timely way will not only reduce the possibility of losses but also make it easier and less expensive to find necessary materials. Try to purchase needed supplies for the next season six months in advance, and test response plans to see if anything’s been missed.
Improve efficiency in decision-making by taking a data-driven approach to building business resilience. A growing number of tools are available to help navigate risks in your own business and those you work with, including FM Global’s Resilience Index.
In these unusual times, we must be focused in our resolve not to let more usual risks go unmanaged. By taking a holistic approach to planning and preparing for risk, organisations can put resilience in the driver’s seat and emerge stronger.