The need for organisations to be nimble and responsive has never been more necessary.
The pace of technological advancements, the global and mobile nature of today’s marketplace and rising regulatory burden mean that having resilience and continuity plans are critical.
To assist, we have identified 5 techniques which today’s business leaders can use to be prepared for the unexpected.
1. Checking your 'licence to operate' is valid
Making sure the organisation has put in place and made effective, the foundations of good governance, risk, and compliance. For example, that policy and procedures are understood, that activities are subject to regular (rigorous) risk assessments and assurance over the operation of key controls is actively sought out and provided. The existence and effective application of these components keep your organisation safe and enable it to remain steady.
2. Undertaking horizon scanning
Understanding what might happen to the organisation in the future enables you to both mitigate the risk of negative events occurring and prepares you for them if they do.
Capturing the outcomes of the horizon scanning exercise is crucial, summarise these, create appropriate actions and monitor progress – make them core to your future boardroom agenda.
To gain further value from this, use the outcomes as part of your board development, potentially undertaking the exercise at least every six months. Often these are undertaken at an external venue and are sometimes externally facilitated.
Some organisations even run a similar session with groups of managers and staff or canvass them for their view.
3. Stakeholder canvassing and engagement
Few organisations really tune in to their various stakeholders, be these internal or external.
Boards can get a good sense of things that they may need to look out for or be aware of, so having effective and efficient mechanisms in place to obtain stakeholder feedback is essential. It is also a vital way and means of interpreting and acting on what is being learned.
Consider how your organisation is engaging with stakeholders – how it is doing this, what intelligence it is gathering and what is being done about it.
4. Testing business interruption and continuity plans
Do they exist and are they up-to-date and tested?
Most importantly how do we know that the plans are focussed on what is now a rapidly changing set of events, driven by not just local actions but initiated from somewhere across the globe.
All Boards would benefit from undertaking regular stress testing exercises based around key risks and ensuring that the business can respond effectively.
5. Securing the required knowledge and experience in the boardroom
All organisations go through change, it is necessary to ensure sustainability. There will likely be a need for different knowledge, experience, and leadership set to cope with the changes that occur, as well as diversity.
All these components ensure that as a whole the Board is able to keep up with the changing pace of the business they are in. The Board’s role is to drive the business forward so it must constantly reflect on what is needed to ensure that its make up is fit for the future. All Boards should constantly review and reflect on their performance and identify knowledge and experience gaps as part of its on-going development to stay relevant.
All the elements listed above form part of the way in which an organisation is governed – keeping the organisation safe as well as prepared for what might lay ahead and ensuring it remains sustainable (this is all embedded in company law).
Boards need to ensure they are allowing and encouraging an environment where they have the expertise to predict (as far as possible) and respond quickly, and this cultural shift is certainly a core component of effective corporate governance.
All boards need to be more mindful of 'the benefit is foresight'
Boards should take time out to assess the organisational resilience from a capacity, capability and emotional perspective and as a starting point they should ask themselves:
- How comforted are they that the licence to operate is valid?
- How are they undertaking and making use of horizon scanning?
- What are our stakeholders telling us?
- How do we know our business interruption and continuity plans are effective?
- What knowledge and experience do we need in the boardroom for the future?
- How does the Board gain visibility of the above?
Business leaders need to be prepared for the unexpected. Having resilience and continuity plans should be a critical part of this process.
For more information about resilience and corporate governance, please contact your local RSM office.