By Marcus Vaughan
The world isn’t in a recession just yet. Well…actually it depends on who you ask. There are a lot of different definitions floating around right now. But ask any economist for their take on the current financial climate and they’ll pretty much all tell you the same thing: the economy is slowing down worldwide.
And as they begin to sound the alarm bells, CFOs everywhere are starting to reevaluate their budgets and scale down spending.
While a budget reduction is obviously less than ideal for any organization, it doesn’t have to spell disaster for your resilience program. However, as a potential recession looms, it’s important to safeguard your budget in anticipation of belt-tightening.
For many businesses, resilience is an established and emphasized cornerstone of the organization’s risk management. For others, the critical role resilience plays in crisis mitigation isn’t fully embraced.
In either scenario, however, the resilience budget will come under scrutiny and potentially be cut down. As a resilience professional, ensuring that your executive team understands just how valuable a well-funded resilience program is to your organization, becomes mission critical.
So how do you go about “recession-proofing” your resilience budget and saving it from corporate cutbacks?
You show your executive team the importance of resilience through simulation.
This is much easier said than done, however. With time becoming an increasingly valuable currency for your already overbooked executives, you might not have the time or budget to run your C-Suite through a traditional tabletop exercise.
That’s why iluminr has curated three Microsimulations you can run to bring attention to the organizational levers deemed critical in a recession. These 20-minute scenarios are a quick and efficient way to demonstrate the efficacy and necessity of your resilience program to your executive staff. Let’s break them down, one by one.
Microsimulation #1: Loss of a critical application – Customer Service
- Mitigate unacceptable levels of customer churn
- Mitigate unacceptable levels of revenue loss
- Protect brand and reputation
Resilience Program Objectives
- Build awareness of critical system failures
- Validate impacts on customer
- Validate roles for response and recovery
When times turn bad, every customer counts. In a recession, customers are the lifeblood of survival, with churn being treated as public enemy #1. This is a fitting Microsimulation to start off with because it tangibly shows how a sufficiently funded resilience program can prevent financial losses in the case of an unforeseen disruption.
In this scenario, the problem is the loss of a critical application that directly impacts customer service. For an insurance company, this could be a claims system. For a bank or credit union, this could be the online banking or transaction service platforms. And for many organizations, it could be as simple as losing the CRM for an extended period.
This Microsimulation will touch not only on the threat to an organization’s brand and reputation when a critical application fails but also outline the deep and lasting impact on the bottom line. Outlining the potential financial impacts of this scenario empowers Resilience Managers to build a highly credible business case for the criticality of building in resilience at both an operational and strategic level. This includes the need for crisis communication, recovery and contingency planning.
Microsimulation #2: Life Safety
- Minimize harm to life in the workforce
Resilience Program Objectives
- Build awareness of life safety threats
- Build capability in immediate response
- Validate roles and responsibility
Above revenue goals, profits and business growth is employee well-being. Without employees, there is no business. And no employee will work in an environment where they don’t feel safe. They need to know inherently that their physical, emotional, and mental security is looked after. And in the case of an office emergency (fire, flood, active shooter event, etc), preparedness is everything to ensure the safety of all employees.
That’s what makes a life safety microsimulation so compelling. Financial officers can nitpick aspects of the budget, and try to justify that certain expenditures aren’t necessary. However, that conversation ceases when it comes to the safety of their employees. There are no corners that can be cut or pennies that can be pinched when it comes to preserving life.
By engaging your executive team in a Microsimulation about a life safety event, you’re guaranteed to get attention, participation, and ultimately, budgetary consideration.
Microsimulation #3: Competitor Brand Impact
- Create a strategic market competitive advantage
Resilience Program objectives
- Build awareness of the upside of resilience
- Build capability for proactive market response
- Validate roles and resources
A common misconception about resilience is that it is used solely as a tool for crisis mitigation and response. Far too few people see a well-funded and managed resilience program as a means of gaining a competitive advantage. This Microsimulation explores the scenario of a major market competitor experiencing customer and employee churn through their own poorly executed crisis response.
Instead of managing an internal crisis, the aim of this simulation is to take advantage of the failed resilience program of a competitor. When they falter and lose customers as a result, it’s an opportunity to capture their lost share of the market. To do so, you need to have a plan in place for this unique scenario. Money talks, and demonstrating to your executive team the potential of a financial boon as a result of a well-funded resilience program is an easy way to ensure funding.
With an economic downturn inevitable, executives everywhere will be looking for ways to trim the budget. The microsimulations listed above, as well as many others, are a cost-effective, and time-efficient way to demonstrate to your C-Suite that the resilience budget is a necessary expenditure. In fact, a well-funded resilience program can actively counter the recession and drive business growth. To learn more about microsimulations and include them in your resilience program, check out Resilience Fundamentals – a set of six Microsimulations designed to help leadership and response teams meet key program objectives such as validating roles, response protocols and plans.