Steps to Achieving Operational Resilience
Businesses of all sizes face operational disruption. One of the most important things for businesses to achieve is the ability to come back from these disruptions. This is what we call Operational Resilience.
Operational Resilience is an organization’s ability to predict, mitigate, respond to, and bounce back from disruptions in operations that may hinder important business activities.
According to Protiviti, a global consulting firm, to achieve operational resilience, an organization must define their most important business activities and impact tolerance “as well as completing end-to-end mapping, scenario testing, and regular self-assessments.”
In this article, we will talk about the different steps an organization can follow to achieve Operational Resilience.
Defining Impact Tolerance
Impact Tolerance tells a firm how long after a disruption they need to have operations back in place, so each level should only correlate to one disruption. This is a major step for all kinds of organizations that want to achieve operational resilience.
According to PWC, a professional service company that originated in London over a century ago, organizations should set impact standards “at least annually for their important business services.”
Impact tolerance levels should measure each of the following:
- Market participant & consumer harm.
- Harm to market integrity.
- Threat to policyholder protection.
- Threat to safety.
- Financial stability threat.
End-to-End Mapping
End-to-end mapping is important for operational resilience because it allows an organization to see its business processes from beginning to end. When an organization uses end-to-end mapping, it can find a complete solution for its entire process, often without having to involve any third parties.
When an organization adheres to an end-to-end solution, they are working to eliminate as many third parties from their process as possible. This often means an organization will find a vendor who can provide everything, from materials and labor solutions to help complete a project.
End-to-end mapping is important for business because it helps improve organizational efficiency and performance.
When an organization uses end-to-end mapping, operational resilience is much easier to achieve because entire business processes are visible in a single snapshot which makes predicting and identifying risks, easier. It also helps to see the entire business process at once so decision-makers can see how decisions in one part of the process affect the rest.
Scenario Testing
Scenario testing allows an organization to imagine future risks that might otherwise go unnoticed and run tests to see how these risks will play out. The most important aspect of scenario testing is the ability to predict theoretical risks.
A theoretical risk is something that could potentially happen, but there is no evidence of this ever happening in the past. This allows an organization to find risks that have not yet occurred and plan for them accordingly.
Scenario planning helps organizations achieve operational resilience by overcoming obstacles that otherwise would be left untreated. Some of these obstacles include:
- Assumptions about the impact of a risk.
- Discomfort employees face from uncertainty.
- Failure to identify and define responses and outcomes.
- How to strengthen the chance of success.
Self-Assessment
Organizational self-assessments help organizations collect data on where they have sound plans to come back from operational disruptions and where they need to devise stronger plans.
These self-assessments should happen in every department and for every business process regularly to make sure nothing has changed that will hinder operational resilience.
For example, regularly checking the compliance status of each department is a form of organizational self-assessment. If one department falls out of compliance, the organization knows they need to work to get this department back into compliance as soon as possible.
A Software for Operational Resilience
One of many ways to achieve operational resilience is using software that tracks compliance documents and tells you where requirements are met and where there is room for improvement. By using SmartCompliance, you can upload or have clients upload Certificates of Insurance (COIs) so there are safeguards in place to fall back on when a risk occurs. By having this, you can make sure requirements are met to keep business operations on track.