The pandemic has ended, but it does not mean that another disruption will not come in the future. In a time of uncertainty, is it really possible for an organization to stay resilient?
Risk is a persistent component of any organization. Enterprises can never predict uncertainties like a pandemic, political unrest, technological advancements, or environmental changes. But for a corporation to remain resilient in the face of any adversary, recognizing corporate risks is necessary.
Naturally, these circumstances place organizations at a crucial time to reevaluate their risk profiles. Pre-pandemic risk management is obviously out of the question now, and this may possibly include even an enterprise’s current risk framework in the near future—as other corporate risks increase in the years to come.
Risks at Present
Reputational Risks
In the age of cancel culture, it is easy to bring down corporate reputation. Negative social media posts resulting from customers’ bad experience, or internal issues being disseminated by former employees can easily result to bad publicity. Once shared in multiple online platforms, employees and customers will lose trust and confidence to a brand, and even convince potential customers to boycott anything related to the organization.
Compliance Risks
Laws and regulations may possibly change over time. For example, in some countries, data regulations are in placed by several supervisory boards such as the GPDR in the European Union and the CCPA in California. Part of an enterprise’s legal responsibilities is to comply to these laws and regulations. Non-compliance will reflect the organization’s unethical values, and place the entire company in a legal battle with authorities. Such cases would easily result to financial damages, loss of reputation, or immediate shut down of business operations.
Technological Risks
Innovation is the core competency of today’s enterprises. It is not enough that one knows technological advancements—it is important that organizations maintain them sustainably and responsibly. Companies must carefully review their innovation processes and new technologies, since some technologies may, surprisingly, become obsolete in just a few years. Organizations who fail to innovate risk loses customer relevance and face bankruptcy in no time.
Environmental Risks
Intense storms, melting glaciers, and rising sea levels are some of the destructive effects of climate change. To prevent climate change’s worsening effects, everyone—especially businesses—must take necessary steps to practice sustainable and safe operations to minimize or eliminate their environmental impact. In the process of doing so, business operations may change such as sourcing or replacing previously-harmful materials and funding for better waste disposal systems. Without doing so, enterprises not only put their businesses’ supply chain and operations in jeopardy, but also the future of the world.
Geopolitical Risks
Changing political conditions pose an alarming risk to enterprises. Instances of political conflicts and rising cases of racism and civil unrest can impact management decisions, and even halt businesses in the process. For example, wars can prevent cross-border exchange of good and services, destruction of offices and warehouses, disrupted or non-existent supply chains, and loss of life within the workforce and customers. Geopolitical risks, like environmental risks, are one of the most difficult risks to maneuver, as it has a wide impact to the lives of people as well.
Building a Dynamic Organization
As our world evolves for better or for worse, organizations must equip themselves with a risk profile that is ready for anything. A standard risk approach is not viable anymore, given the many unpredictable risks resulting from a single global phenomenon like a pandemic. In a world full of uncertainties, a dynamic risk approach is the best solution for corporations to effectively manage present and future risks.
Take note of these necessary steps to create a dynamic risk management approach to decrease business risks and to increase enterprise resiliency instead.
- Widen the scope of risk evaluation.
Old reviews and assessments of enterprises may give an idea of risks, but it may not be enough to effectively navigate through future risks. For example, an enterprise might be exploring an emerging technology like artificial intelligence in their systems. The organization cannot just rely on the risks they have evaluated on their previous system, but also had to reflect on the risks that their new AI-enabled systems may cause.
In response, corporations have to seek comprehensive feedback from the different workforce divisions that directly or may indirectly use the new systems. Performance indicators like metrics and reviews may help business leaders have a clear view of risk interconnectivities that they are possibly up against. Building and exposing the entire workforce to scenario-based approaches will also help prepare individuals to employ rapid and appropriate response and protocols if a situation arises.
- Monitor resilience resources.
In the face of a disruptive risk like COVID-19, most organizations have faced losses in their finances, workforce, and supply chains. Some enterprises are fortunately recovering their losses for the past few months, while some unfortunate ones, are still trying to cope with the losses.
A dynamic risk management is not just finding a way to solve the problem at hand, but also creating steps to ensure business recovery. To do this, enterprises must have clear and solid plans for the aftermath of risks. These plans must also come with resources ready, such as finances, technology, and a risk-dedicated workforce, to enable the continuity of organizational operations.
- Strengthen your greatest risk asset.
A great workforce can turn into an organization’s best risk asset, if given the proper training and care. The pandemic has shown, through the Great Resignation phenomena, that employees nowadays do not just seek employment opportunities that give value to their talent. Today’s workforce prefers to stay with organizations that also provide them with work-life balance and wellness benefits.
Start with developing managers that have agile capabilities, expanded knowledge, and empathetic leadership skills. Let business leaders encourage workforce empowerment and foster a culture of exchanging ideas comfortably. Enable faster and insightful business decisions by maintaining open communication and providing learning opportunities for all employees.
- Inculcate a dynamic risk culture.
According to McKinsey & Company, a great risk culture enables organizations to deal with external and internal risks more efficiently. Enterprises with mature risk culture are able to navigate their operations more smoothly even in the midst of uncertain risk factors like a pandemic or economic crisis. Good risk cultures also lessen the occurrence of reputational and compliance risks, and increases the satisfaction and engagement among the leaders, employees, and customers.
A strong and dynamic risk culture begins with clear definitions, measurements, and reinforcement across all workforce divisions. The corporation must coordinate these essentials to the workforce, and how it would be integrated into everyday business operations, services, and products. On top of that, accountability must be imbibed in the executive level for meeting and resolving any cultural concerns that may arise.
- Make clear and consistent CSR efforts.
Practicing corporate social responsibility is one effective way to eliminate certain risks, such as environmental and operational risks. CSR goals are not just built to benefit corporations and its stakeholders, but also makes cleaner and socially responsible examples to the society. Through CSR efforts, organizations help communicate their corporate values and makes true environmental, economic, and social impact.
To establish clear and consistent CSR initiatives, ensure that all connections—whether internal and external—are oriented regarding the enterprise’s CSR goals. Communicate with departments, stakeholders, and partners about their roles in the said initiatives so that all business operations and resources are aligned. Also, make sure that these CSR goals are SMART (specific, measurable, attainable, relevant, and time-bound) according to the industry and environment to which the corporation is operating in.
Conclusion
We may not foresee everything that awaits us, but it always pays off to inculcate an enterprise culture that is prepared for what is to come. It is definitely the better option than being complacent at the present, and only dealing with problems when it is already closing in or is already disrupting the entire organization.
Reference Links
https://www.who.int/news/item/28-11-2021-update-on-omicron
https://link.springer.com/article/10.1007/s40171-021-00277-7#Sec5
https://www.weforum.org/agenda/2021/01/risk-management-post-covid-agile-business/
https://hbr.org/2015/01/the-truth-about-csr
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