Operational resilience: what is it and why is it important

The ability of a company to prevent, respond, recover, and learn from operational disruptions without causing significant harm to its customers is known as operational resilience.

Why is it important?

In today's business environment, companies operate in a constantly evolving and interconnected landscape where operational disruptions are bound to happen. It could be a ransomware attack or supply chain issues; such disruptions are more certain than ever before. These severe disruptions can result in customer dissatisfaction, cause financial losses, and harm a company's reputation and competitiveness.

Operational resilience approaches enable companies to improve the effectiveness with which they can respond during a crisis and ensure their customers aren’t significantly impacted.

What value does operational resilience bring to businesses?

• Business continuity - it helps ensure that a business can continue to provide its critical services even in the face of disruptions such as natural disasters or cyberattacks, reducing downtime and financial losses.
• Risk mitigation - operational resilience reduces risks associated with unexpected events. It allows a business to identify potential vulnerabilities and develop strategies to mitigate them.
• Competitive advantage - resilient businesses can gain a competitive advantage as they are able to adapt to changing market conditions more effectively and may even be able to seize opportunities during disruptions that competitors cannot.
• Cost savings - while investing in resilience measures can have upfront costs, it can save businesses money in the long run by avoiding costly disruptions and expensive remediation and damage control.
• Supply chain resilience - operational resilience also extends to supply chains. Businesses that ensure their suppliers are resilient are less likely to face disruptions due to supplier issues.

Ultimately, operational resilience leads to improved trust and reputation:

• customer trust - maintaining operational resilience builds trust with customers. Customers who see that a business can weather challenges without major interruptions are more likely to remain loyal
• reputation management - a resilient business is better equipped to manage its reputation during crises. Swift and effective responses to problems can protect a company's brand.

So, what do companies need to do to implement operational resilience?

Let's explore the key concepts of operational resilience in practice, using the example of the ABC Railways company, a large and listed company.