Cybersecurity attacks, weather disasters, supply chain disruptions, and the global pandemic show us that threats to routine business operations are ever present. This means that putting a strategy in place to assure your company’s survival in difficult times — otherwise known as operational resilience — should be a paramount concern for any organization.
Operational resilience is your company’s ability to withstand unexpected disruptions. More specifically, it is the set of policies and procedures that bring together people, processes, and technology to respond to those disruptions. The objective is to keep critical business functions running or to re-establish them as quickly as possible.
Operational resilience and business continuity are related ideas, but not identical. Business continuity planning is more precise; you draft specific initiatives and procedures based on various specific scenarios. Detailed steps define actions the company should take in advance to minimize or eliminate the risks that particular disruptions or outages could cause.
Operational resilience is more about the overarching strategy an organization employs to maintain business operations during turbulent times.
Components of Operational Resilience
Operational resilience allows your business to keep working amid adversity. It encompasses the entire organization, including operations, finance, cybersecurity, and compliance. The critical components of operational resilience are as follows.
Having the right people and business processes to govern a company’s strategy is crucial to ensure operational resilience.
Companies should use their existing governance processes to design, monitor, and implement an effective operational resilience strategy that allows the business to respond to, adapt to, recover from, and learn from disruptive events.
Robust governance and controls result in clear roles and responsibilities, visible results and risks for key decision-makers, and well-supported employees and senior management, who are then enabled to fulfill their duties.
Operational Risk Management
Leverage your company’s operational risk management functions to identify external and internal threats. Risk management frameworks help to identify potential failures in people, processes, and systems on an ongoing basis.
Companies should have sufficient controls and procedures so they can quickly identify and assess threats, vulnerabilities, and overall operational risk. The ability to take immediate action will prevent problems from affecting the conduct of critical operations.
Risk oversight functions (compliance, legal, IT security, and so forth) should periodically evaluate the effectiveness of the controls and procedures they’ve implemented. These assessments should also be carried out whenever changes are made to critical operations. Lessons learned should also be conducted after incidents to identify the root causes and eliminate the risk of recurrence.
Business Continuity Planning and Testing
Companies should have business continuity plans and drill with business continuity management exercises to assess their capacity to carry out vital activities and disaster recovery in various unusual but plausible situations.
An effective business continuity plan must be forward-looking in assessing the impact of potential disruptions. Business continuity drills should be conducted to validate system access and connectivity for various possible disruptive events.
These plans should be comprehensive, to incorporate business impact analyses and recovery strategies. Testing and training foster employee preparedness. Define your communication plans and crisis management teams early, to assure that you have the infrastructure for quick response.
Once critical operations have been identified, you should map the internal and external interconnections and interdependencies required to perform those essential functions according to your operational resilience approach.
The map identifies and documents the people, technology, processes, information, facilities, and relationships necessary to carry out the company’s critical operations. Don’t forget about third parties or intra-group arrangements and their relationships to mission-critical functions in your organization.
The map you develop should be specific enough to identify vulnerabilities and complexities in critical operations that could be at risk in the event of a disruption.
A periodic self-assessment allows business leaders to identify and evaluate risks and their associated controls collectively. Risk assessments add value by increasing an operating unit’s involvement in designing risk control systems, identifying risk exposures, and determining corrective actions.
How to Build Operational Resilience
Leverage Existing Processes and Systems
You don’t need to start from scratch with new systems and procedures when implementing an operational resilience framework; your existing risk management program is a good foundation. The goal of an operational resilience framework is similar: providing a structure that helps you anticipate what’s coming next, so you can plan your response to risks and incidents.
Evaluate Third-Party Risk
Third parties may deliver some of your most important business services, including distribution, operations, and financial services. Understand how your service providers interact with the organization and your dependence on outsourcing. Incorporate this information into your resiliency strategy to address and mitigate third-party risk.
Establish Impact Tolerance and Risk Metrics
Organizations are unlikely to have unlimited resources, and it can be challenging to know where to focus efforts. So establish impact tolerances — that is, the amount of disruption you’re willing to accept — to help you prioritize operations and investments.
Set tolerances logically and rationally. Instead of relying on a hunch, construct realistic scenarios that help you understand and analyze the impact of various disruptions. Then determine impact tolerance your organization is willing to accept.
Develop Stakeholder Communication Plans
Make sure you have a robust communication plan in place. Consider how you’ll communicate with employees, regulators, third parties, customers, and other stakeholders if a critical business service is unavailable. For example, staff must be sufficiently informed to respond appropriately in the event of a disruption or outage.
Provide Actionable Reports
Board members aren’t usually risk management experts, but they need access to the correct data and information to make well-informed choices that keep the company on course. So they require visually appealing, easily digestible, and actionable reports. During a disruption, real-time data is imperative to make quick decisions.
Make ZenGRC Part of Your Business Continuity Plan
ZenGRC performs all these tasks and more, including unlimited self-audits, audit trail documentation, and, with our ZenConnect solution, integration with all your business applications.
Increase revenue and productivity with ZenGRC’s compliance, risk management, and governance platform. ZenGRC’s automated features do tedious tasks for you, allowing you to focus on the big picture of compliance. The result: more efficient and effective risk management.
Contact us today for a free consultation and get started on the path to worry-free, comprehensive risk and compliance management.