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Resilience is more than just a goal that organizations strive to achieve. With an increased number of critical events, including cyber-attacks, extreme weather and violent crime, resilience is vital for the short-term and long-term success of any operation. Everbridge and Atos sought out to find the links between resilience and success, with a report from Dr. Stefan Vieweg, Director of the Institute for Compliance and Corporate Governance (ICC) at the Rheinische Fachhochschule in Cologne, Germany.
The study comprised responses from 226 businesses across Europe, with a range of employees anywhere from under 3,000 to over 100,000, and across numerous industries. Our most recent blog discussed the importance of resilience and the steps organizations can take to achieve their goals. Dr. Vieweg’s research identified seven key aspects of resilience:
- Resilience has a significant impact on the bottom line.
- Money is not everything in resilience.
- Talking is easier than execution.
- There is a reason for resilience among top performers.
- An excess of spending does not necessarily help.
- There is a sweet spot of resilience investment.
- Digitalization and automation matter.
These seven findings can serve as the guide for organizations to assess their own strengths and weaknesses, and map out the policies and procedures they need to implement to improve their resilience.
1. Resilience has a significant impact on the bottom line
Prioritizing resilience means taking proactive measures to reduce the impact of critical events and recover quickly. Resilience directly affects financial stability, and the data tells the whole story. The most resilient companies suffered only a 7% loss in annual sales revenue due to critical events, compared to 145% of annual sales revenue for underperforming companies. The difference is 20x greater losses.
2. Money is not everything in resilience
According to Vieweg’s research, organizations of all sizes showed a similar trend: underperforming companies almost always spent more on risk and resilience measures than the top performing ones. The biggest reason for this is the cost savings of a unified, automated solution compared to putting out fires with disparate systems each time a new critical event occurs.
The top performing companies spent an average of 10% of revenue per year on resilience, but the least resilient companies spent over 18%. Rather than spending on piecemeal solutions or spending as critical events occur, investing in integrated, automated solutions pays off financially and in terms of greater preparedness.
3. There is a sweet spot of resilience investment
That leads to another constant, which is that the optimal financial commitment is between 10-25% of revenue. Companies in this range allowed approximately 30% damage aversion, with companies under 50,000 employees performing slightly better. Spending more is not as important as spending wisely, namely with digitization and automation.
4. An excess of spending does not significantly help
While investing in resilience is critical to success, Vieweg’s research found that spending beyond 25% of annual revenue on resilience has diminishing returns. Organizations need to make careful plans for future investments to maximize return on investment.
Similar to the reasoning in the finding that money is not everything in resilience, some decision makers may feel that spending on specific solutions to solve for risk management, digital security, employee communication, and other aspects of resilience is beneficial, when in reality, investing in one platform that provides an integrated solution for organizational resilience will save time, effort, and money.
5. Digitization and automation matter
Dr. Vieweg’s research found a direct positive correlation between the degree of digitalization and preparedness for a critical event, particularly in terms of identifying risks. Among the top performing organizations, 46% have an early-warning system established, but only 29% of those surveyed reported very high levels of automation across processes.
Dr. Vieweg concluded that there is a significant potential to improve resilience across organizations of all sizes with automated, integrated risk management processes.
6. Talking is easier than execution
Over 60% of the organizations in the study acknowledged that critical events have become more frequent, more unpredictable, and have had a larger impact. But less than 50% have explicit resilience goals operationalized.
While Vieweg’s research showed that top performing companies consider and follow through on specific goals more often than lower performing organizations, there is still an industry-wide need for growth, particularly when it comes to developing risk and resilience strategies.
7. There is a reason for resilience among top performers
The most resilient organizations not only implemented resilience measures and risk management solutions at a higher pace than others, but these methods proved effective, were used continuously, and introduced avenues of mitigation. Over 50% of the top performers have an established risk management process.
Overall, Dr. Vieweg’s findings show that organizations who take a proactive, consistent approach to meeting established resilience goals are among the most successful. Even still, most organizations have potential for improvement in terms of digitalization and automation, and he concluded that digitalization would pay off quickly for all businesses. To learn more about these seven findings and read further analysis from the study, download our eBook “The Research Behind Resilience: Why Prioritizing and Investing in Resilience Matters.”