Operational Resilience: Safeguarding Businesses in a Changing Landscape
Agility Recovery, Preparis, and The Conference Board recently collaborated on a comprehensive study that sheds light on the increasing importance of operational resilience. The study, which analyzed data from over 147 business continuity professionals, 85 executives, and professionals from 56 firms, highlights how operational resilience programs can be the critical element differentiating a business's success from its downfall during crises.
Cybercrime: A Looming Threat
Cybercrime has grown exponentially, casting a shadow over organizations of all sizes and industries. The study reveals that 90% of resiliency professionals foresee a surge in risks over the next three years, with cyberattacks as a top concern. The Deloitte Center for Controllership poll uncovered startling statistics, with 34.5% of polled executives reporting cyber adversaries targeting their organizations' accounting and financial data over the past year. Astonishingly, nearly half of the executives expect an escalation in cyber events targeting financial data in the coming year.
The financial ramifications of cybercrime are staggering. According to Cybersecurity Ventures, the cost of cybercrime is projected to reach a staggering $8 trillion in 2023, a figure set to escalate to $10.5 trillion by 2025. The alarming truth is that no organization is immune, as evidenced by the average cost of a data breach, which hit a record high of $4.35 million last year. Similarly, the average cost of a ransomware attack stood at $4.54 million. The time to identify and contain breaches is also distressingly long, with an average of 277 days – approximately nine months. The need for cybersecurity collaboration across all facets of the organization becomes acutely clear.
Supply Chain Vulnerabilities: A Chain Reaction of Disruption
The resilience study underscores the precariousness of supply chains. Forrester data reveals that over half of security professionals reported incidents or breaches involving supply chain or third-party providers within the past year. This highlights modern businesses' interdependence on intricate supply networks, which can amplify vulnerabilities.
The consequences of supply chain disruptions are glaring. The Conference Board reports that a mere 57% of firms claim to have responded effectively to recent events that hindered their ability to deliver products and services. This underlines the necessity of strengthening supply chain resilience and preparedness. The current scenario demands a proactive approach that integrates operational resilience into the very fabric of an organization. An alarming statistic reveals that only 24% of organizations believe senior management comprehends the firm's operational resilience capabilities, highlighting a critical communication gap.
Increasing Weather Threats: Preparing for the Unexpected
The significance of solutions like backup power and workplace recovery becomes clear when considering the impact of abnormal weather patterns on global businesses. Research indicates that a staggering 70% of companies worldwide experience operational and financial setbacks due to weather disturbances. Shockingly, these disruptions contribute to an estimated cost of $630 billion annually for the United States alone, equivalent to 3.5% of the nation's GDP.
Recent history demonstrates that the increasing frequency, intensity, and unpredictability of weather events pose a substantial threat. From the Gulf states’ energy crisis triggered by a winter storm to the havoc caused by Hurricane Ida on power infrastructure in New Orleans, it’s evident that businesses are vulnerable to the whims of nature. In an era characterized by escalating climate-related challenges, the prevalence of extreme cold, scorching wildfires, and heatwaves further underscores the urgency of bolstering power system resilience.
Investing in Resiliency: Bridging the Gap
Amid these challenges, the study presents a silver lining – budgets for business continuity programs are on the rise. A notable 60% of organizations are earmarking increased funds over the next three years to bolster their operational resilience efforts. This financial commitment reflects the growing awareness of the importance of being prepared for disruptions.
However, a glaring disparity emerges in understanding operational resilience's value. Only 36% of survey respondents claim the ability to quantify the returns on their investments in operational resilience, indicating an opportunity for growth in this area. To capture senior management's attention and support, resilience professionals need to shift their focus toward demonstrating results and showcasing the tangible benefits of these programs. Operational resilience, often seen as an additional expense, is a strategic asset that safeguards revenues, curtails costs, protects reputation, and mitigates disruptions.
Cultivating a Culture of Resilience
Operational resilience must be ingrained at every level of an organization's structure. The study reveals that just 16% of organizations describe their business continuity plans as mature, while another 18% classify them as reactive. This suggests that many organizations are in the early stages of building and refining their operational resilience strategies.
Interestingly, those directly involved in operational resilience express more confidence than CEOs regarding their organization's ability to navigate a crisis. A significant 55% of respondents believe their organization is prepared for most events, while 42% assert they are prepared for at least some disruptions. This confidence is grounded in experience, as evidenced by 57% of firms effectively responding to recent events that hindered their operations.
The study conducted by Agility Recovery, Preparis, and The Conference Board serves as a call to action for businesses to elevate the importance of operational resilience. In a landscape fraught with cyber threats, supply chain vulnerabilities, and unforeseen disruptions, having a robust business continuity program isn't just an expense but an investment in the future. The statistics underscore operational resilience's critical role in protecting revenues, reducing costs, safeguarding reputation, and mitigating disruptions. As businesses navigate an increasingly complex landscape, they must recognize that operational resilience isn't merely an option – it's the cornerstone of survival in an uncertain world.