5 ways that help the board build business resilience
5 ways that help the board build business resilience
Unforeseen risk is a subject of concern for directors and whilst they would love to see into the future, companies will always be challenged by unexpected events. These events always contain elements of both threat and opportunity and a resilient approach to their navigation can have multiple advantages. What more can boards be doing to oversee risk and make the business resilient in the face of unexpected disruption?
The cost-of-living crisis has overtaken extreme weather as the most severe risk facing the world within the next two years, according to the World Economic Forum’s (WEF’s) 18th edition of its Global Risks Report[1]. However, environmental challenges, geo-economic confrontation, erosion of social cohesion and social polarisation, and widespread cyber insecurity also feature in the top ten threats. Building and practicing a satisfactory corporate response to potential disaster is further up the non-executive director’s agenda than ever before.
1. Lines of communication
How quickly the unforeseen risk comes to the attention of the board is critical to delivering a swift and decisive response. Strengthening and stress testing the lines of the communication between the executive team, significant stakeholders and relevant outside agencies is a simple but key way to build in resilience.
Board members can be busy, geographically distant people. However, today’s board members are more technically savvy and might benefit from embracing the convenience of an online portal for board communications.
“More and more of the boards we work with have adopted an online board portal. It makes it much easier to access, review and exchange critical business data wherever they may be. An online portal also affords the ability to grant access to specific documents to external consultants and partners when the need arises. Often it helps speed up response times and get valuable input faster.”
2. Technology and innovation
Innovation is alive and well, and this is a moment when everyone is thinking through how to take advantage of digital, improve productivity levels, and drive innovation and growth. Resilience is also about anticipating and adapting to change. Businesses and occasionally whole sectors have sometimes been slow to recognise the transformational impact of new technologies in their market space. It is important that the board is briefed on what is appearing on the perimeter of the radar screen in terms of innovative technology or practices. This allows them to plan a response rather than be blindsided by change.
3. Widening perspective
Board members through their typical career trajectory tend to lean towards being more mature and established in their own way of thinking than a typical hotshot, bleeding edge entrepreneur. Directors need to examine whether their long-held assumptions are still relevant and sufficiently open to debate and change.
“Alumni has helped our clients both bring in and develop internal fresh insight into the boardroom for many years now. Diversity of thought and expertise within the board composition is key to having the breadth of perspective necessary to respond to the unpredictable.”
4. Closer to the customer
The marketing department is the lifeblood of building brands, gaining and retaining customers. Whilst marketing may be recognised as the most potent weapon a business can use to gain and sustain competitive edge, it does not always command the respect and recognition it seeks and deserves in the Boardroom.
For every business the customer is key. Resilient companies engage more closely with their end-users, understand their changing expectations and can be seen to be responding to these shifts. Having the board briefed on latest customer survey results, or changing customer behaviours can help add another layer of understanding for the business amongst the board of directors and ensure focused efforts to retain competitive edge.
5. Practiced responses
Being prepared for worst case scenarios is a sure-fire way of boards being more able to deal with a real crisis. Playing ‘war games’ can be a useful exercise in showing where the stress lines will appear in the event of a sudden disaster. Security breaches, key personnel loss or market crashes can all be used in a game of let’s pretend that allows the board to see where their strengths and weaknesses will impact on final outcomes.
Boards are also increasingly called on to plan their corporate response to environmental risk factors and catastrophic events like floods and droughts. Climate change and supply chain resilience are both key components of the operational risk landscape. According to the 2022 Global Resilience Survey by Deloitte[2] just over a third of boards have specifically addressed all areas of operational resilience. Modelling responses to scenarios can help to build strength and flexibility in advance of an actual event.
Individual and team skills in the boardroom
Underpinning every factor that boards might be expected to address to create a resilient organisation is how well the directors work both on an individual and team level. Alumni has extensive experience in analysing and improving board dynamics through both building more diverse capacity into its composition and analysing and improving on the dynamics of how board members interact with each other and the executive team.
Boards that understand themselves at a personal and group level and work to improve their skills will be best positioned to weather any approaching storm with confidence and capability.
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