For businesses and global financial markets, the scenario they faced in the past two years was far from rosy. Organizations implemented business continuity measures that were understandably not clear-cut to withstand the extraordinary disruptions posed by the COVID-19 pandemic.
Two years on, we have learned so much and realized that there is still so much to be done to prepare for disruptions of similar magnitude. The terms business continuity and operational resilience became buzzwords overnight when the lockdowns and remote work began to be implemented. We hear these terms often today, but it can be difficult to point the difference between these concepts, and much harder to say what strategies they cover.
In a nutshell, business continuity refers to strategies geared towards the development of the internal functions of an organization, or, as the Business Continuity Institute defines it, “the strategic and tactical capability of the organization to plan for and respond to incidents and business disruptions in order to continue business operations at an acceptable predefined level”. On the other hand, the Financial Conduct Authority refers to operational resilience as the ability of firms to “prevent, adapt, respond, recover and learn from operational disruptions” in order to minimize their impact on the delivery of critical operations.
Wait, aren’t they the same banana? The short answer is no.
While both terms may be deemed to imply similar concepts, they differ when it comes to the scope and scale of initiatives that are undertaken. Business continuity deals with internal strategies that can help an organization mitigate risks to its business activities. Compare this with operational resilience which goes beyond internal frameworks and considers effects to external entities that include not just clients, but other stakeholders (including your third-party service providers), the market where a business operates and on a larger scale, the overall business landscape. One complements the other. Business continuity refers to the reactive ability of a company in the face of a critical unforeseen event, and operational resilience deals with an organization’s preventive capacity which allows it to anticipate that a disruption can happen and forestall operations at any time.
How prepared are you?
A Forbes article cited that when laying the groundwork for business continuity, the first question to ask is whether your business is really prepared for unforeseen critical events. From here, the next step would be to assess factors such as your organization’s level of resilience in terms of financials and your capability to still be able to provide quality products or services while navigating unprecedented impacts due to these unpredicted events. Essentially, operational resilience is the outcome of an effective operational risk management framework.
The follow-up question would be: how confident are you that you can respond well to disruptions? Once you have gauged your organization’s capacity to function efficiently in the midst of a crisis, you can then see gaps to be filled and from there, plan your next course of action as part of boosting operational resilience. Remember: ensuring that your organization can handle disruptions (business continuity) will not be as effective if you do not anticipate the possibility of such critical events happening (operational resilience) and develop the flexibility to withstand them. The concept of impact tolerance and identifying and testing scenarios are integral to implementing effective operational resilience.
What to do during a crisis
Once flexible operational resilience strategies are in place, businesses can “contain most disruptive events and prevent them from escalating into larger crisis situations that would require the activation of business continuity strategies”.
In the event that these larger crises do occur, including events that make resources and assets like staff, infrastructure, ICT and suppliers unavailable, it is time for an organization to activate its business continuity plans.
In our previous article, we emphasized that being prepared is the way to go. As businesses continue to recover from the ills posed by the pandemic, there is no other path to take but to be as best prepared to withstand potential disruptions. Business continuity and operational resilience blueprints are tools that must be continuously improved. This way, companies can continue building businesses that are future-ready and designed to pave the way towards a more vibrant tomorrow for their respective industries.
As published The Manila Times, dated 14 December 2022
