Organisational resilience is key to managing emerging risks
07/13/2023
In times of uncertainty, senior leaders and risk managers must be prepared to respond to a range of existing and emerging risks.
Six months on from the release of The 2023 Global Risks Report, we are seeing that the risks identified as the most severe to our communities are still all too relevant. The cost-of-living crisis continues to dominate the risk landscape, with prices rising in all areas, and unemployment rates increasing. We are also seeing extreme weather patterns taking hold across the UK as well as socio-economic tensions manifesting in recent industrial action and other protests.
These current crises are taking all available resources and capacity, meaning that climate-related risks looming over the next decade may be being neglected. The ten-year outlook in the Global Risks Report highlighted nature and biodiversity risks and climate mitigation and adaptation as critical.
How do these ‘global’ risks impact the public and voluntary sector?
Zurich Municipal and Zurich Resilience Solutions held a webinar in March 2023 on how global risks impact at a local perspective. Watch the recording below:
This was followed by a workshop at this year’s ALARM conference in July with public sector risk managers, discussing the key risks currently facing the public sector.
The cost-of-living crisis
Even before the COVID-19 pandemic, the prices of necessities were on the rise, and subsequent events further drove inflation. Public sector organisations have seen the impacts of this in increased demand for services at the same time as a reduction in their own spending power, resulting in a lack of funds to complete infrastructure projects.
Economic fragility
The current period of instability has exacerbated funding shortfalls and increased public borrowing levels. Personal debt levels are rising, putting pressure on all levels of the system. Financial uncertainty is making it difficult to invest in the new technologies and innovations which would bring opportunities to effectively deal with continued challenges.
Climate change
Many public sector and voluntary sector organisations are struggling to bring focus to net-zero ambitions and climate emergency plans and initiatives. Constant firefighting on immediate crises can mean the climate agenda isn’t a priority, leaving a void in resiliency planning for ever-increasing climate-related weather events.
Social cohesion erosion
Difficulties in the economic environment, twinned with ‘a new normal’ could see the decline of social stability, as well as individual and collective wellbeing. We continue to see widening gaps in social values and equalities and fracturing of local communities, potentially leading to civil unrest.
The widespread strikes across the public sector have been a recent example of this.
IT architecture vulnerabilities
The pandemic brought new ways of working which have continued, such as hybrid and home-working. With this however, we’ve seen the increased threat of cyber theft and the loss of data. In addition, a deepening divide in digital capability has resulted in skill shortages across sectors.
As our world becomes increasingly connected, so too do the risks we face. Taking just these risk areas above as an example, many are interrelated and can interact with one another, layering into a ‘polycrisis’, if not responded to effectively.
How should we prepare for emerging risks or polycrises?
Resilience requires a deliberate but dynamic approach. To manage these interrelating risks effectively, it is important to act on specific risks, but also use cross-cutting principles to support preparedness across the organisation.
This can be done through four principles:
- Improving risk identification and foresight
Enhancing foresight is a key enabler for strategic decision-making and agenda setting, helping to prioritise risks which might benefit from further research, data collection, monitoring, risk controls, and resources. Methods such as horizon-scanning and scenario planning help to understand and anticipate emerging trends and how they could affect your organisation.
Interrelated risks require a dynamic approach. Another way to improve risk foresight is to map connections between risks, including dependencies which exist between key systems in your organisation.
- Rethinking the present value of 'future' risks
Given their severity and impact, it is not surprising that we often prioritise short-term risks. However, resources and attention could be diverted from future risks which are more important in the long-term.
For better planning and preparedness, organisations should move from risk prioritisation that focuses on short-term goals and impacts to adopt a dual view which balances current priorities with a longer-term lens. Find out more on our series of reports, A wider lens: The risks of short-term decision making, here.
- Investing in multi-domain, cross-sector risk preparedness
As risks become more intertwined, preparedness needs to become a shared responsibility between sectors. Through innovative collaboration with partners, organisations can work on effective responses and to minimise the potential impacts of some risks.
- Strengthening preparedness and response coordination
Cooperation on preparedness and management of risks is more important than ever. Coordinated funding, research and data sharing is critical to help identify emerging threats at both a local and global level.
How can I implement organisational resilience?
Zurich has re-examined the elements of organisational resilience and developed a framework to achieve or maintain it, with three inter-connected layers.
- Managing the need to stretch between being agile and innovative, and consistent and stable
- Being confident in your ability to assess the external environment, and the resilience of your people, services and processes
- Embedding the disruption management cycle - through managing and anticipating future risks; improving preparedness; responding to periods of stress and uncertainty; and finally, returning to a functional state by adapting and improving through change.
We recognise that developing and exercising resilience isn’t something that can happen overnight. Organisational resilience requires a deliberate and dynamic approach that embeds the right processes, systems, and culture. The world around us is complex, uncertain, and changing. To be successful all organisations need resilience.
You can find out more on Zurich’s perspective on organisational resilience and our framework here.
If you would like to find out more, please get in contact with your usual Zurich Municipal contact or get in touch with Zurich Resilience Services at zrs.enquiries@uk.zurich.com
