Most leaders consider themselves ready for disruptions, but research shows they lack resilience

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PwC’s global biennial survey on crisis and resilience, Global Crisis and Resilience Survey, reveals that organizations and business leaders overestimate their resilience despite operating in an era of frequent disruptions.

According to PwC’s statement, data collected from 1,812 respondents in 42 countries shows how business leaders are preparing for this new world and how they are responding to it. When asked where resilience ranks on the list of corporate priorities, nine out of ten (89 percent) respondents stated that resilience is one of their most important strategic organizational priorities, indicating that organizations are driving a revolution in resilience.

After a tumultuous start to this decade, it is not surprising that nine out of ten (91 percent) organizations reported experiencing at least one other disruption in addition to the pandemic. On average, organizations have experienced three and a half disruptions in the past two years. Three-quarters (76 percent) stated that their most serious disruption had a medium to large impact on their business, disrupting key business processes and services and causing financial problems at the end of the supply chain and reputational issues.

The gap in confidence

The five most frequently cited disruptions include: the Covid-19 pandemic, employee retention and recruitment, supply chains, technological disruptions or failures, and cyberattacks.

Excluding the pandemic, supply chain disruptions had the greatest impact on organizations, whether in monetary or other terms, and their number has doubled since 2019, the report states. The biggest concern for more than half of the organizations (60 percent) whose most serious disruption relates to the supply chain was that they would experience a similar disruption again.

– Business leaders are facing an unprecedented level of disruption and uncertainty in today’s rapidly changing environment. Organizations are grappling with external forces at the macro level and internal business transformations, and it is in this context that resilience has become one of the most important strategic priorities in the corporate world – said David Stainback, co-leader of PwC’s Global Crisis and Resilience Center in the US.

– The research reveals that business leaders around the world are becoming more aware of the risks posed by unexpected events and are taking steps to prepare for them. Croatia, like many other countries, has faced a series of disruptions in recent years. In Croatia, business leaders are also becoming more aware of the need to build resilience. However, there is still much work to be done, especially in the areas of digital transformation and supply chain management. These are critical areas that can help us quickly adapt to changing circumstances and mitigate the impact of crises – commented John Gašparac, partner responsible for PwC Croatia’s business.

While 70 percent of business leaders are confident that they can recover from various disruptions, the survey results show that many organizations lack the fundamental elements of resilience necessary for success. This gap in confidence creates a risk of exposure for organizations, especially if the disruption is focused solely on them and not on broader global or sectoral challenges.

The survey results revealed three significant trends driving what PwC has termed the resilience revolution – integration, leadership, and program implementation approach.

1. Integration

An integrated resilience-building program is essential for today’s organizations. It is no longer sufficient for each department to operate independently, as they must deal with the complex and interconnected risks of today. Companies are actively moving towards an integrated approach to resilience, which is centrally managed and aligns multiple resilience resources to protect critical areas, embedding this program into business operations and corporate culture.

2. Leadership

Progress in an era of permacrisis requires decisive leaders and highly skilled teams. A successful strategy and implementation of a resilience-building program require (1) active support from management, (2) a program leader with clear responsibilities, and (3) a competent team to carry out daily operations.

3. Program implementation approach

Developing operational resilience in key areas. Organizations must build operational resilience and ensure that business planning and preparation are part of a broader continuous cycle. As more companies integrate their resilience programs, many adopt core principles of the operational resilience-building approach, focusing on protecting critical areas and prioritizing investments based on what is essential for their organization and stakeholders. In this way, organizations can manage risks with high confidence and increase efficiency.

Companies that have adopted an integrated resilience-building program are significantly more advanced in many key elements of operational resilience, including processes for assessing risks and threats, exercises and testing, and mapping dependencies on services and processes, enabling them to build a strong corporate immune system that allows them to adapt, align, and operate even stronger in the future.

– The ability to adapt and respond to disruptions is crucial for maintaining the trust built with stakeholders and protecting the value and reputation for shareholders at a time when expectations related to corporate and governmental resilience have never been higher. To build a reliable and agile organization, it is essential for business leaders to invest in the resilience of all functions and people and to focus on an integrated approach, supported by technology, to enable a comprehensive view of their risk and resilience issues – said Bobbie Ramsden-Knowles, co-leader of PwC’s global crisis and resilience center, PwC UK.