What is business resilience and how does corporate governance play a critical role?

The need for organisations to be nimble and responsive has never been more necessary. The pace of technological advancements, the global and mobile nature of today’s marketplace and rising regulatory burden mean that having resilience and continuity plans are critical. Today business leaders must expect the unexpected – which might be pointing out the obvious. 

What techniques can a Board deploy to help prepare for the unexpected? I have identified below just some elements that should be considered by Boards: 

Checking your 'licence to operate' is valid
What I mean is making sure the organisation has put in place and made effective the foundations of good governance, risk and compliance. For example, that policy and procedures are understood, that activities are subject to regular (rigorous) risk assessments, assurance over the operation of key controls is actively sought out and provided - the list goes on. The existence and effective application of these components keep your organisation safe and enable it to remain steady. 

Undertaking horizon scanning
A regular term used in the boardroom, but how many organisations really take time to do this ? I have found that organisations that do this well make time for it. They use it as part of their board development – they do it at least every six months, often at an external venue and sometimes externally facilitated. Some even run a similar session with groups of managers and staff or canvass them for their view – but the point being to understand what might happen to the organisation in the future so that they can prepare. Capturing the outcomes of the horizon scanning exercise is crucial, summarise these, create appropriate actions and monitor progress – make them core to your future boardroom agenda. 

Stakeholder canvassing and engagement
It still surprises me how few organisations really tune in to their various stakeholders, be these internal or external. Boards can get a good sense of things that they may need to look out for or be aware of, so having effective and efficient mechanisms in place to obtain stakeholder feedback is essential, but also most importantly ways and means of interpreting and acting on what is being learned. Consider how your organisation is engaging with stakeholders – how it is doing this, what intelligence it is gathering and what is being done about it.

Testing business interruption and continuity plans
Do they exist and are they up to-date and tested? Most importantly how do we know that the plans are focussed on what is now a rapidly changing set events, driven by not just local actions but initiated from somewhere across the globe. I would say to all Boards that it is worth undertaking stress testing exercises based around key risks and ensuring that the business can respond effectively.

Securing the required knowledge and experience in the boardroom
All organisations go through change, it’s a necessity to ensure sustainability. There will likely be a need for different knowledge, experience and leadership set to cope with the changes that occur, as well as diversity. All these components ensure that as a whole the Board is able to keep up with the changing pace of the business they are in. The Board’s role is to drive the business forward so it must constantly reflect on what is needed to ensure that its make up is fit for the future.  All Boards should constantly review and reflect on its performance and be identifying knowledge and experience gaps as part of its on-going development to stay relevant.

All of the elements listed above form part of the way in which an organisation is governed – keeping the organisation safe as well as prepared for what might lay ahead and ensuring it remains sustainable (this is all embedded in company law). Boards need to ensure they are allowing and encouraging an environment where they have the expertise to predict (as far as possible) and respond quickly, and this cultural shift is certainly a core component of effective corporate governance. I often hear it said: 'the benefit of hindsight', however nowadays in this current business climate, 'the benefit is foresight' – something all Boards now need to be more mindful of. 

Boards should take time out to assess the organisational resilience from a capacity, capability and emotional perspective and as a starting point they should ask themselves: 

  • How comforted are they that the licence to operate is valid?
  • How are they undertaking and making use of horizon scanning?
  • What are our stakeholders telling us?
  • How do we know our business interruption and continuity plans are effective?
  • What knowledge and experience do we need in the boardroom for the future?
  • How does the Board gain visibility of the above?

RSM’s Governance, Risk and Control software products provide management teams with the technology infrastructure to monitor and control performance, track assigned actions, improve employee awareness and ensure company policy acceptance. In doing so the Insight4GRC™ technology can help in creating a more resilient organisation with the following:

  • deployment, measurement, monitoring and reporting on the effectiveness of the organisations licence to operate;
  • the capture of horizon scanning exercises, the measurement of potential events and tracking of actions;
  • provide a means for surveying, capturing and compiling stakeholder feedback on an on-going basis or through targeted exercises;
  • bringing business continuity plans to life in the form of risk assessment and work flow to ensure that those involved know what they have to do; and
  • allows the Board to have visibility of what is going on across the organisation in real time, providing them with assurance as well as identifying areas which may need to be fixed.

Each of our Insight4GRC™ products has initial training and implementation services available and ongoing hosting, support and maintenance is provided through our dedicated support programme.  RSM also have a robust risk and resilience advisory team to help with strategic advice and planning. 

For more information, please contact Matt Humphrey or take our free Insight4GRC corporate governance effectiveness health check

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