The Cornerstone of Success: Cultivating Organizational Resilience
- Written by: Ryan Mosher
In a world where data is as valuable as currency, the resilience of an organization's data protection and recovery capabilities is not just an IT concern but a cornerstone of business survival and continuity.
Nearly 70% of small businesses close within a year of significant data loss — this highlights an existential threat that modern companies face. It is a stark reminder that organizational resilience — maintaining business continuity amid various disruptions — is non-negotiable.
The Cost of Downtime
Whether a natural, physical, or technology-based disaster, any disruption in an organization's day-to-day or even hour-to-hour operations can prove costly.
IT leaders estimate downtime costs $88,000 per hour, with only 2% of businesses able to fully recover in less than 60 minutes. Additionally, a prolonged data loss can cause severe—often irreparable—damage to an organization’s reputation.
Downtime costs $88,000 per hour on average.
Only 2% of businesses can fully recover in less than 60 minutes.
96% of businesses with mature organizational resilience fully recover operations.
With more than half of companies experiencing lengthy downtime due to data disruptions, the urgency for robust business resilience becomes clear.
Understanding Organizational Resilience
Organizational resilience is more than a simple crisis management plan. It's a comprehensive approach that encompasses the readiness to deal with unexpected events and the agility to bounce back stronger than before.
At its core, organizational resiliency means fostering a culture that is not only reactive in the face of challenges but also proactive in anticipating potential risks and vulnerabilities.
Resilience combines both physical and cyber defenses in an effort to prevent possible attacks, as well as respond to active threats.
Five Pillars of Business Resiliency
To achieve a high level of organizational resilience, companies must build on several key pillars:
1. Risk Assessment and Planning:
Identifying potential threats and assessing their impact on the business is the first step toward resilience. This involves conducting thorough business impact analyses (BIAs) to understand the critical work processes and the dependencies that keep the organization running.
2. Financial Preparedness:
A crucial aspect discussed in the context of business resiliency is understanding an organization's maximum tolerable loss (MTL). This is the financial threshold beyond which a company's survival is at risk. Knowing your MTL is a pivotal part of financial planning.
3. Strategic Response Framework:
A well-defined incident response plan that outlines roles and responsibilities is essential. However, it should be part of a broader strategy that includes disaster recovery and business continuity plans, ensuring that the organization can maintain or quickly resume critical functions.
4. Recovery Objectives Alignment:
Aligning recovery time objectives (RTOs) and recovery point objectives (RPOs) between business expectations and IT capabilities is vital. Organizations must balance the desire for rapid recovery with the practicalities of technical capabilities and the financial implications of such readiness.
5. Communication and Collaboration:
Effective communication and a collaborative culture are instrumental in navigating crises. Bringing together diverse teams to contribute to recovery plans, including personnel from across your entire organization, ensures a comprehensive and practical approach.
Resiliency Capability Maturity Model
The journey to organizational resilience takes time and effort, and many organizations never reach full resilience maturity. However, for those organizations that do, the ROI is immense. 96% of businesses with mature organizational resilience FULLY recover operations following a disruption.
So, how do organizations reach this level of resilience?
Initially, organizations respond to disruptions as they occur without prior planning or preparedness. Gradually, businesses start to plan for potential disruptions, developing processes and strategies to mitigate risk. Finally, the mature organization proactively manages risks with a clear understanding of its risk appetite and a strategy tailored to its unique operational landscape.
By elevating the approach from reactive to proactive, organizations can do much more than survive disruptions. They can leverage these challenges as opportunities for growth and improvement.
The Scorecard for Organizational Resilience
Assessing resilience is like preparing a scorecard.
It is about understanding the impact of disruptions on financials, customers, employees, and compliance. Scoring each domain helps prioritize recovery efforts and resource allocation during a disruption.
These scorecards are crucial for any organization's resilience before, during, and after a disruption to business operations. They also help craft a blueprint for action during and after a crisis, ensuring that the most critical business functions can be restored with minimal delay.
The Resiliency Ecosystem
Resiliency is not just disaster recovery. It’s an ecosystem that includes preparing for risks with a comprehensive threat analysis, understanding the financial implications through concepts like maximum tolerable loss, and aligning recovery objectives with business expectations.
Organizational resilience is a process that is constantly evolving. Business continuity, disaster recovery, incident response, and business impact analysis should be active verbs and not static nouns. Mature resilience involves continuous action — updating playbooks, researching new tools, and allocating resources — to keep the organization ahead of potential threats. This ecosystem also fosters a culture where every level of the organization is security-aware and risk-conscious, and communication channels are clear and open.
In a strong and resilient organization, that resiliency culture starts at the top. Executive support is crucial for any organization to reach mature resilience — budgets, resources, and priority are given to resiliency initiatives. Risk is identified, assessed, treated, and reported on with effective communication running throughout an organization.
Resiliency is not JUST an IT issue – it is an organizational one.
The Benefits of Organizational Resiliency
Organizations that invest in business resilience reap numerous benefits. These range from maintaining competitive advantage to high employee retention rates, as a resilient organization is often synonymous with a supportive and stable workplace.
The path to true organizational resilience is both challenging and rewarding, offering not just a safeguard but a means to turn adversity into opportunity.
If the idea of building such resilience within your organization is daunting, remember that you are not alone on this journey. HBS is dedicated to assisting businesses in cultivating robust organizational resilience.
We understand the intricacies of risk management, planning, and recovery, and we are ready to help you develop and implement a tailored strategy that aligns with your unique operational needs. Do not let potential threats to business continuity keep you up at night. Reach out to HBS today, and let us fortify your organization together.
