As the end of the year quickly approaches, most corporate strategic planning and budgeting processes are in full swing. During this time, resilience professionals across the country are being asked to demonstrate the return on investment of their programs.
Calculating the ROI of resilience programs can be difficult. How do you quantify the business disruptions that have either been avoided or mitigated? How do you assign a dollar value to readiness?
Nonetheless, it is a fair request. Management and budgeting are about tradeoffs, and leaders need data to make informed decisions, even when the results are intangible in some years.
The Business Case for Resilience
We are living in a world in which planning for an incident that can impact a company or its customers is not an academic exercise. According to a recent PwC survey, a staggering 96 percent of organizations experienced a business disruption in the last two years.
Even if the benefits aren’t immediately obvious, investing in resilience pays off in many ways. For example, a Boston Consulting Group study found that, compared to their non-resilient counterparts, resilient organizations experience less shock at the onset of a crisis, recover faster, and emerge stronger. This means that, when a disruption hits, organizations that invest in preparedness lose less in revenue, market value, and/or brand equity.
Furthermore, resilient companies can reap benefits beyond periods of disruption. According to the same study, resilient companies not only performed better during a crisis, but they also maintained higher levels of performance after the incident was over.
On the other hand, because non-resilient companies experience more serious negative impacts during an incident, once they recover, they must operate at high levels for prolonged periods to make up for these losses.
Resiliency, or lack thereof, also affects a company’s relationships with employees, customers, investors, and other important stakeholders who can influence an organization’s long-term success.
To reach enterprise resilience, organizations must break departmental silos and think about readiness holistically. This requires:
Diversification. Organizations that diversify their portfolios, suppliers, and/or operations are in a better position to mitigate the impact of a disruption.
A single source of truth. Organizations can plan, track, report, test, and respond more effectively to incidents when they integrate data from across the enterprise into a single solution.
Adaptability. To ensure they’re prepared for disruptions, companies need to constantly evaluate and learn from past incidents, identify trends and opportunities for improvement, and adapt for future success.
Investment in resilient teams. Lastly, organizations need to invest in resilient teams–ones that are aligned on their roles, responsibilities, and expectations during disruptions. Achieving this takes tools, training, and developing a culture of preparedness.
As corporate leaders set budgets for next year, they should consider that investments in resilience programs transform reactive organizations into proactive ones. They give employees, investors, and customers greater confidence, resulting in lower turnover and churn. Ultimately, this leads to better overall performance.
Few investments yield a greater return.