However, in tough economic times organisations are far more aware of the mundane, everyday risks that can have crippling consequences on normal business operations, such as supply chain problems a power outage or redundancies. Indeed, many firms experienced problems not created by themselves but a partner or supplier had caused through unavailability of resources and/or staff.
This increased risk is aggravated further by the shift towards outsourced business functions. As technology continues to play a critical part within risk management, organisations continue to spend money on technologies to support and backup their operations. Increasingly, this involves outsourcing to specialist third parties - which offer a cost-effective level of resilience, thus leaving the IT department better able to focus on strategic innovation to help the business grow.
As entire IT such as storage and communications are outsourced to third parties, organisations open themselves up to huge risks should these suppliers run into trouble.
The role of outsourcing
During the downturn we have seen a dramatic shift in the approach that companies are taking towards resilience planning. Most noticeable is the sea-change in thinking when it comes to ensuring data centre and technology resilience. Whereas the vast majority of firms previously looked to keep as much of their risk management and resilience provision in-house many are now more comfortable taking an outsourced approach.
However, the most important considerations when it comes to outsourcing the business critical IT functions, concern the overall security and resilience of the managed service provider's data centre facilities. The managed service provider should have a network of resilient facilities to provide total failover in the event of a major disaster impacting the primary data centre.
During the downturn we have seen a dramatic shift in the approach that companies are taking towards resilience planning
As organisations have looked to cut expenditure and reduce headcount, they have faced a variety of new operational risks. The first of these is that of departing employees looking to maliciously cause damage to the business' operations as a means of enacting ‘revenge' on the employer. Incidents such as these are hard to prevent and protect against and many organisations struggle to find the right balance of approach when dealing with departing employees.
Companies have also had to face up to and protect against another risk caused by wide-scale redundancies, namely the risk of knowledge departing the company or loss of Intellectual Property. If an employee that is responsible for a crucial element of the day-to-day operations of the business is made redundant, organisations need to ensure that all of his or her knowledge, relevant experience, and relationships is passed on effectively, otherwise the organisation becomes less resilient. This is particularly true if an employee such as a business continuity manager or risk manager is made redundant.
Over half of respondents surveyed in the ICAEW poll believed that redundancies had impacted on the effectiveness of day-to-day operations and increased operational risk. For this reason, many organisations are now acknowledging the benefits of using risk management and business continuity software to properly document resilience planning, ensuring information is captured within the company's IT systems, rather than in one person's head.
Moving forward
Clearly, the recession has certainly helped to bring the whole issue of operational risk management and resilience planning to the forefront of the business agenda. these organisations are now starting to recognise the benefits of understanding the exact nature of the information that flows through them and the competitive advantages and cost savings that can be gained through sound resilience planning. The current shift towards data centre outsourcing and managed services is one area where organisations are able to increase resilience, whilst streamlining processes, freeing up staff time and reducing capital expenditure.
This downturn has taught us many things but one of the most worthwhile lessons has been that organisations can no longer afford to neglect operational risk management. The businesses that win in the coming decades will be the ones that understand the digital age we now live in and have the resilience in place to serve their customers, no matter what happens.
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