Adapted from the WEF Global Risks 2013 Report (Minimal editing to focus discussion on “an organization” rather than “a country”)
Resilience Characteristics (Robustness, Redundancy and Resourcefulness)
The following three components of resilience are used to describe an organization’s state of resilience. These components should be designed into a system and, as such, will enable assessments of an organization’s inherent resilience capabilities.
Robustness incorporates the concept of reliability and refers to the ability to absorb and withstand disturbances and crises. The assumptions underlying this component of resilience are that: 1) if fail-safes and firewalls are designed into an organization’s critical networks, and 2) if that organization’s decision-making chains of command become more modular in response to changing circumstances, then potential damage to one part of an organization is less likely to spread far and wide.
Example of Attributes
— Monitoring system health: Regularly monitoring and assessing the quality of the subsystem ensures its reliability.
— Modularity: Mechanisms designed to prevent unexpected shocks in one part of a system from spreading to other parts of a system can localize their impact, as happened with the contagion from investment banking to retail banking during the 2007-2008 financial crisis.
— Adaptive decision-making models: Networked managerial structures can allow an organization to become more or less centralized depending on circumstances, such as when branch offices of the Japanese retailer Lawson’s continued operating through the serious disruptions of the Great East Japan Earthquake in 2011. These measures can include having in place the right investment and incentive structures to overcome competing interests.
Redundancy involves having excess capacity and back-up systems, which enable the maintenance of core functionality in the event of disturbances. This component assumes that an organization will be less likely to experience a collapse in the wake of stresses or failures of some of its infrastructure, if the design of that organization’s critical infrastructure and institutions incorporates a diversity of overlapping methods, policies, strategies or services to accomplish objects and fulfill purposes.
Examples of Attributes
— Redundancy of critical infrastructure: Designing replication of modules which are not strictly necessary to maintaining core function day to day, but are necessary to maintaining core function in the event of crises.
— Diversity of solutions and strategy: Promoting diversity of mechanisms for a given function. Balancing diversity with efficiency and redundancy will enable organizations to cope and adapt better than those that have none.
Resourcefulness means the ability to adapt to crises, respond flexibly and – when possible – transform a negative impact into a positive. For a system to be adaptive means that it has inherent flexibility, which is crucial to enabling the ability to influence of resilience. The assumption underlying this component of resilience is that if organizations can build trust within their networks of suppliers, employees and customers and are able to self-organize, then they are more likely to spontaneously react and discover solutions to resolve unanticipated challenges when larger industry and community institutions and governance systems are challenged or fail.
Example of Attributes
— Capacity for self-organization: This includes factors such as the extent of social and human capital, the relationship between social networks and organizational structures, and the existence of institutions that enable face-to-face networking. These factors are critical in circumstances such as failures of government institutions when organizations need to self-organize and continue to dobtain essential services.
— Creativity and innovation: The ability to innovate is linked to the availability of spare resources and the rigidity of boundaries between disciplines, departments and social groups within the organization.
Resilience Performance (Response and Recovery)
These two components of resilience describe how a system performs in the event of crises. They provide evidence of resilience when actual crises occur. Response and recovery are dependent on risk, event and time. These components will provide the ability to compare systems and feed the measurements and results to calibrate the resilience characteristics.
Response means the ability to mobilize quickly in the face of crises. This component of resilience assesses whether an organization has good methods for gathering relevant information from all parts of society and communicating the relevant data and information to others, as well as the ability for decision makers to recognize emerging issues quickly.
Example of Attributes
— Communication: Effective communication and trust in the information conveyed increase the likelihood that, in the event of a crisis, stakeholders are able to disseminate and share information quickly, and to ensure cooperation and quick response from the audience.
— Inclusive participation: Inclusive participation among all stakeholders can build a shared understanding of the issues underpinning crises and acute risks to the organization, reduce the possibility of important interdependencies being overlooked, and strengthen trust among participants.
Recovery means the ability to regain a degree of normality after a crisis or event, including the ability of a system to be flexible and adaptable and to evolve to deal with the new or changed circumstances after the manifestation of a risk. This component of resilience assesses the organization’s capacities and strategies for feeding information throughout the organization, and the ability for decision-makers to take action to adapt to changing circumstances and incorporating new situations into business strategies,.
Example of Attributes
— Active “horizon scanning”: Critical to this attribute are multi-stakeholder processes tasked with uncovering gaps in existing knowledge and commissioning research to fill those gaps.
— Responsive feedback mechanisms: Systems to translate new information from horizon-scanning activities into action – for example, defining “automatic policy adjustments triggers” – can clarify circumstances in which policies must be reassessed.
As an example of the overlapping and complementary nature of these attributes, inclusive participation is listed as a key attribute of response, but it is also vital in other areas such as recovery and resourcefulness. Also inherent in all resilience characteristics, though referenced above only in the attribute of adaptive decision-making models, are investment and incentive structures and design requirements to overcome collective action problems and competing interests. There are many individual stakeholders who would benefit from greater shared resilience but currently lack either the incentive or feel too pressed for time and resources to take the necessary actions.