Operational Resilience

Operational Resilience Meaning

Operational resilience refers to the ability of an organization to maintain its core functions and continue to deliver its critical services during and after a disruptive event. It includes IT systems, infrastructure, processes, people, and supply chains. It aims to minimize disruptions' impact and ensure that the organization can recover quickly.

Operational resilience enhances an organization's ability to detect, respond to, and recover from adverse events, minimize damage and losses, and maintain critical functions and services during and after a disruption. It involves preparing for, responding to, and recovering from adverse events such as natural disasters, cyberattacks, supply chain disruptions, and other incidents that can impact the regular operation of the business.

• The ability of a company to continue providing its essential services and functions in adverse occurrences like supply chain outages, cyberattacks, or natural disasters is referred to as operational resilience.
• It aims to minimize disruptions' impact on critical functions and services and help organizations recover quickly.
• Organizations must meet specific requirements, such as conducting regular risk assessments, developing and testing business continuity plans, implementing resilient systems and processes, and providing employee training and awareness.

Operational Resilience Explained

Operational resilience is a crucial component of organizational resilience. It refers to an organization's capacity to maintain its core operations, like supply chain interruptions, cyberattacks, and natural catastrophes. The operational Resilience framework aims to minimize disruptions' impact on critical processes and services and help organizations recover quickly.

Principles

The principles of operational resilience help organizations build and maintain their ability to withstand and recover from disruptions. These principles include:

1. Anticipation: Organizations anticipate and prepare for potential disruptions by identifying risks and developing contingency plans.
2. Agility: Organizations are flexible and adaptable, able to respond quickly and effectively to changing circumstances.
3. Robustness: Organizations with solid and resilient systems, processes, and people can withstand disruptions without breaking down.
4. Recovery: Organizations can recover from disruptions and restore normal operations quickly.
5. Continuous Improvement: Organizations continuously review and improve their resilience, making changes as necessary to keep pace with changes in the business environment.
6. Collaboration: Organizations work with their stakeholders, including suppliers, customers, and regulators, to build a collective understanding of the importance of such resilience and to develop effective response and recovery plans.

Requirements

The requirements of it help organizations build and maintain their ability to withstand and recover from disruptions. These requirements include:

1. Risk Assessment: Organizations conduct regular risk assessments to identify potential threats to their operations and develop contingency plans to respond to those threats.
2. Business Continuity Planning: Organizations develop business continuity plans that outline how they will maintain critical functions and services during a disruption.
3. Incident Response Planning: Organizations develop and maintain incident response plans that outline how they will respond to disruptions and coordinate their response efforts.
4. Resilient Systems and Processes: Organizations implement robust and resilient systems and processes and regularly test and update them to ensure they remain effective.
5. Employee Training and Awareness: Organizations provide training and raise awareness among employees on its importance and how they can contribute to the organization's ability to withstand and recover from disruptions.
6. Stakeholder Engagement: Organizations engage with their stakeholders, suppliers, customers, and regulators to understand their needs and build a collective understanding of their importance.

Importance

1. Risk Management: It helps organizations manage risk by anticipating and preparing for adversities. It means having plans and processes to respond to and recover from them.
2. Business Continuity: It helps organizations maintain business continuity in unpredictable situations. Maintaining customer satisfaction, reducing business risk, and increasing business competitiveness is critical.
3. Customer Trust: Organizations that have achieved it are better prepared to withstand and recover from adversities. It can help build trust with customers and other stakeholders.
4. Employee Safety: It also helps to ensure the safety of employees by having plans and processes in place to respond to and recover from disruptions.

Challenges

1. Lack of Awareness: One of the biggest challenges of it is the need for more awareness and understanding of its importance within organizations and among employees.
2. Complexity: Another challenge is the complexity of the systems and processes involved and the ever-evolving threat landscape.
3. Limited Resources: Many organizations need more resources, such as budget, personnel, and expertise, making it challenging to implement and maintain an effective operational resilience program.
4. Changing Threat Landscape: The threat landscape constantly evolves, and organizations must adapt to new threats to maintain such resilience.

Examples

Let us understand it in the following ways.

Example #1

Imagine a retail company that operates several physical stores and an online store. One day, a severe storm hit the city, causing widespread power outages and damage to the company's infrastructure. However, the company's resilience measures have been taken:

The company has identified the possibility of natural disasters such as storms and has developed contingency plans. The company quickly activates its incident response plan and assesses the damage to its physical stores and infrastructure.

The company's online store is hosted in a secure, resilient data center and can continue operating even as the storm impacts the physical stores. The company activates its backup power generators and begins to restore power to its physical stores while working with its suppliers to get the additional stock to meet customer demand quickly.

After the storm, the company reviews its response and recovery efforts and identifies areas for improvement, such as upgrading its backup power systems or investing in more resilient infrastructure. In addition, the company works closely with its stakeholders, including its customers and suppliers, to communicate updates and minimize the storm's impact on its operations.

Example #2

After the 2011 tsunami in Japan, the Fukushima Daiichi nuclear power plant suffered significant damage. As a result, the plant's operators, Tokyo Electric Power Company (TEPCO), faced several challenges. As a result, TEPCO took the following actions:

TEPCO had conducted risk assessments and developed contingency plans in advance. It included procedures for responding to natural disasters such as earthquakes and tsunamis. TEPCO activated its incident response plan and began to assess the damage to the Fukushima Daiichi plant.

TEPCO had multiple backup systems, like backup generators, to ensure that the plant could continue functioning even if its primary systems were damaged. In addition, TEPCO worked to restore normal operations at the plant as quickly as possible while implementing additional safety measures to ensure the plant's and its employees' safety.

After the disaster, TEPCO reviewed its response and recovery efforts and identified areas for improvement, such as upgrading its backup systems and improving its disaster preparedness plans. In addition, TEPCO worked closely with its stakeholders, including the Japanese government, local communities, and international organizations, to communicate updates and minimize the impact of the disaster on its operations.

Operational Resilience vs Business Continuity

Business Continuity focuses on maintaining critical business functions and services in the event of a disruption. At the same time, Operational Resilience policy is a broader concept that encompasses Business Continuity.

Some critical differences between operational resilience and business continuity:

Operational Resilience

1. Broader Concept: It is a more general concept that encompasses Business Continuity, such as risk management, disaster recovery, and security.
2. Focus on Critical Functions and Services: It focuses on maintaining an organization's critical functions and services in a catastrophe.
3. Life-cycle Approach: It takes a life-cycle approach to adversities. It covers the entire process, from anticipation and preparedness, through response and recovery, to continuous improvement and learning.
4. Culture of Resilience: It promotes the development of a culture of resilience within an organization where all employees know the importance of strength and contribute to it.

Business Continuity

1. Narrower Concept: Business Continuity is a more limited concept focusing on maintaining critical business functions and services during a disruption.
2. Response and Recovery: Business Continuity focuses primarily on response and recovery from disruptions, including developing and implementing business continuity plans.
3. Limited Scope: Business Continuity is limited to a specific event or disruption. It does not encompass the broader concept of organizational resilience.
4. Plan-driven: Business Continuity focuses on developing and implementing business continuity plans rather than promoting a culture of resilience.

Frequently Asked Questions (FAQs)

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