Deloitte report reveals how organisations can better prepare for future disruption
2021 Deloitte Global Resilience Report
Deloitte Philippines Risk Advisory Partner Jet Pampolina weighs in on Deloitte’s survey of 2,260 chief executive officers, which found that most global CxOs believe the disruption seen in 2020 isn't a one-off, and that crises of this magnitude could be a regular part of the business landscape.
MANILA, 5 April 2021 - A Deloitte survey of 2,260 chief executive officers (CxOs) in 21 countries confirms that organizations that plan and invest in anticipation of disruptions – whether on the scale of an isolated cyberattack or a full-blown health pandemic – are better positioned to respond, recover, and thrive. Deloitte’s 2021 Resilience Report validates the notion that early action and advanced preparation matter, and offers proven lessons for increasing the viability of organizations.
The Resilience Report, released in January 2021, explores how organizations have coped with the tumultuous events of 2020 and identifies the traits that characterize a resilient organization – traits business leaders can cultivate to build greater resilience into their own companies.
As the world moves beyond 2020, rebuilding with resilience will become essential to businesses, as evidenced by Deloitte’s survey, which found that 62 percent of global CxOs believe the world could see occasional or regular disruptions of this scale going forward.
“The coronavirus pandemic prompted a renewed awareness, particularly among local risk practitioners, that something unprecedented like this can occur,” says Jet Pampolina, Deloitte Philippines Risk Advisory Partner. “The bias here in the Philippines is to recognize only the risks that are familiar or are known, such as an earthquake or a typhoon. This health crisis was an eye-opener for us that there are unknown threats with wide-ranging impact on businesses and society.”
Even though a majority of CxOs believe large-scale disruptions will persist beyond 2020, only 30 percent of those Deloitte surveyed expressed complete confidence that their organizations can quickly adapt and respond to future threats. And only 34 percent of them feel they are ready to lead their organization through any uncertainty that may arise. It is worth noting, though, that this is an improvement from the previous survey: Before 2020, only 21 percent of CxOs believed their organizations could quickly respond to disruptive events, while 24 percent felt personally ready to lead through disruption.
Pampolina, who has been advocating for business continuity planning through speaking engagements with business leaders and various industry organizations since the country instituted its first lockdown, noted a similar uncertainty in the local business community. “I think the pandemic has seriously affected the confidence of Filipino business leaders to respond and to adapt to future threats but conversely, and perhaps unknowingly, this crisis has also equipped leaders with the mental toughness and agility needed to face the next big threat,” he says.
One looming threat CxOs are particularly worried about is climate change: 75 percent of survey respondents believe climate change is a crisis that is either of greater or similar magnitude as the COVID-19 crisis. Not surprisingly, 47 percent of CxOs said climate change is the most critical societal issue businesses will need to tackle over the next decade, followed by health care issues and disease prevention (42%), gaps in education, skills, and training (39%), and income inequality and distribution of wealth (37%).
In the Philippines, one step business leaders took to respond to the pandemic opened organizations up to a specific kind of risk. “Big and small businesses alike recognized the heightened need to digitalize brought about by this pandemic. Coping in this new digitalized business environment where cybersecurity and data privacy risks are prevalent is becoming the next big concern for local business leaders,” says Pampolina.
The “characteristics of resilience”
Deloitte’s research identified five attributes of resilient organizations that serve as strategic, operational, and cultural guideposts for responding in an uncertain, disrupted world. Resilient organizations did not necessarily predict the events of 2020, but they withstood the immense pressures by enabling and promoting nimble strategies, nurturing adaptive cultures, and implementing and effectively using advanced technologies.
The survey suggests that organizations that deliberately build the following attributes into their operations and cultures are better positioned to overcome disruptions and help usher in a “better normal.” They are:
- Prepared. Successful CxOs plan for all outcomes, both short- and long-term. More than 85 percent of CxOs whose organizations successfully balanced addressing short- and long-term priorities felt they had pivoted very effectively to adapt to the events of 2020; fewer than half of organizations without that balance felt the same.
- Adaptable. Leaders recognize the importance of having versatile employees, especially after a year like 2020. To that end, flexibility/adaptability was, by far, the workforce trait CxOs said was most critical to their organizations’ futures. Nearly three out of four respondents from organizations that had implemented actions to make their workforce more adaptable—such as by training or reskilling workers, implementing worker redeployment programs, or offering flexible working options—said their organizations are doing a good job at cultivating resilient cultures compared to just about half of organizations who didn’t have such programs in place.
- Collaborative. CxOs indicated the importance of collaboration within their organizations, noting that it sped up decision-making, mitigated risk, and led to more innovation. Two-thirds of respondents who said their companies removed silos in their organizations before the pandemic reported managing the events of 2020 better than their peers. Technology was a critical enabler of collaboration throughout the pandemic. Just 22 percent of surveyed CxOs said their organizations had the technologies needed to facilitate remote working before the pandemic. Forty-two percent developed and adopted these technologies out of necessity during the year.
- Trustworthy. CxOs understand the challenge of building trust with key stakeholders, yet many did not feel they had lived up to the task. More than a third of respondents were not confident their organizations had maintained trust between leaders and employees. In the context of the pandemic, physical, emotional, and digital trust were particularly important. Organizations that prioritized their employees' and customers' physical safety, the mental health and morale of their employees and the security of their data weathered 2020 better than those who did not.
- Responsible. Most CxOs acknowledge that the business world has a responsibility beyond the bottom line. Eighty-seven percent of CxOs who said they have done very well at balancing all of their stakeholders’ needs felt that their organizations could quickly adapt and pivot in response to disruptive events. That is nearly 50 percentage points more than the proportion of CxOs who said the same at organizations that haven’t done well at balancing their stakeholders’ needs.
“Businesses have always faced disruption, but the challenges of the past 12 months have been uniquely unrelenting. The confluence of a global health pandemic, social and political unrest, and worsening climate events has presented organizations with tough choices, new ways of operating, and fundamental strategic shifts,” said Punit Renjen, Deloitte Global CEO. “As we look to recover and rebuild, the road ahead is likely to be even more unpredictable. Organizations that plan and invest in anticipation of future disruptions will be better positioned to thrive.”
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