Building a more resilient business

Covid-19 has highlighted just how fragile our systems are. Supply chains are snarled up, economies are reeling, and healthcare services around the world have almost been overwhelmed.

For many businesses, the last two years have brought unprecedented adversity. Covid-19 has also made us keenly aware that unknown risks could lurk just around the corner. And next time, we want to be prepared. That’s where business resilience comes in.

Why is resilience important?

Simply put, resilience is a company’s ability to absorb shock and continue to operate – even thrive – in a crisis.

While most would agree that such a trait is critical to a company’s long-term success, few organisations actually make resilience an integral part of their business strategy.

In today’s climate, that is particularly troubling. We face extraordinary uncertainty in the business environment. Technology is advancing at a break-neck speed, politics is becoming increasingly volatile, and climate change threatens to destabilise global systems on a truly unprecedented scale.

So what can businesses do to build resilience?

Practical ways to build a resilient business

1. Make resilience a focus

To successfully build resilience you need to give it the time and attention it deserves. Assign a person or team the task of managing, monitoring and improving the company’s resilience.

This may mean conducting a large review based on the structural principles of resilience (see ‘A deeper dive’ below), or simply observing how the company deals with unexpected events and looking at ways to improve its ability to quickly adapt.

For instance, a marketing agency with a high turnover of staff may want to improve company culture and pay to attract and retain the best talent. They also might look to build a trusted network of freelancers to deal with absences or periods of higher demand with minimal disruption.

For larger ventures, you might need a dedicated role or department to manage resilience. For small businesses, it could be just an additional responsibility for one employee. Of course, the more resources you can devote the more effective you’ll be, but even the smallest step is better than no step at all.

2. Mitigate known risks

Now, real resilience is all about a company’s ability to absorb unexpected stress, but we’d be amiss not to mention mitigating known risks. By preparing for the threats you can foresee, you’ll free up resources to deal with any unanticipated shocks. And you might also find that your risk mitigation strategies offer some protection against these shocks.

For those who handle multiple currencies, volatility in the forex market is one risk you can effectively mitigate. Tools like forward contracts can protect you from unfavourable swings while options allow for a more nuanced approach.

3. Plan ahead

One of the best ways to both mitigate existing risks and build resilience is to plan ahead. Of course, you’ve likely got a long-term business plan already, but make sure it has contingencies and flexibility baked in in case things go awry.

You also need to maintain that focus on the future when a crisis hits. While the typical reaction is to go into damage-limitation mode, try to step back and take a long-term view. Disruption in the market can create opportunities, so assess the situation and think about the best course of action on a bigger timescale.

4. Diversify

Diversification has been an effective business resilience strategy since 17th-century investors bought shares in multiple ships, minimising their losses should a vessel founder in a storm or succumb to pirates.

These days, we tend to think of diversification as developing new products and services, or entering new markets. Once again, the principle is the same: the more baskets you put your eggs in, the fewer eggs you’ll lose if one basket breaks.

But diversification can go even further than products and markets. For instance, the global disruption caused by Covid might mean you’re looking into diversifying your supply chains. Meanwhile, having a diverse workforce will help you see new perspectives and generate novel ideas.

Diversity in and of itself is a force for resilience, so think about how you can apply it in new ways and prize diversity in all parts of your business.

5. Be agile

The companies that thrive during uncertainty and crises are the ones that can best adapt to change. So by making your business more agile, you’re making your business more resilient.

One way to do this is to continually change. If change is part of your business’s day-to-day operations then having to adapt to shock will be far easier. By making incremental adjustments you can help the business evolve while also developing its agility. Not all experiments will work, but you’ll learn from them and likely grow in the long term.

With these changes, and indeed with all processes, its best to review and reflect on them. This way you can tell what’s working and what isn’t, and come up with new ideas to try.

You should also look into how you can empower your employees. This enables change to come from the ground up in a much more flexible and organic way. Plus, your employees will be better able to solve problems themselves without the need for extra managerial resources.

Greater collaboration is another good way to increase agility and resilience. Sharing resources and ideas can lead to more innovation and flexibility from the micro to the macro levels. This could be collaboration of employees, departments and subsidiaries all the way up to working with other businesses and organisations.

Consider ways to encourage a more collaborative approach within your company and also seek opportunities for working with others for your mutual benefit.

6. Turn adversity into advantage

Finally, resilience requires a mindset shift. In the words of Roman emperor and Stoic philosopher Marcus Aurelius:

‘The impediment to action advances action. What stands in the way becomes the way.’

In other words, often obstacles contain opportunities. We just need to change our perspective.

If the previous five points are the tools and training you need for a resilient business, this is how you apply them.

As we said earlier, true resilience isn’t just about damage limitation, it’s about finding advantages in adversity. Crises can open up new opportunities for innovation and change where the most resilient businesses can get a leg up on their competitors.

Crises can also often be the best time for a business to accelerate change. Think about how the Covid pandemic turbocharged the growth in online retail and homeworking. The companies that could capitalise on these were the ones that thrived.

A deeper dive

Hopefully we’ve given you some actionable advice on how to build a more resilient business, but there’s heaps more to learn. If you want to do a deeper dive into resilience as a business concept, it’s certainly worth looking into this guide from the Harvard Business Review.

In the guide, the authors cite six characteristics of resilience in biological systems which can be applied directly to business: redundancy, diversity, modularity, adaption, prudence and embeddedness. Using these principles to restructure your business is a far more radical approach but could also be more effective.

In the meantime, get in touch with us if you’re interested in how we can help you build resilience and mitigate risk through your currency exchange strategy.