Resilience amid complexity

As featured on BusinessMirror: Resilience amid complexity  

In today's rapidly evolving and interconnected business landscape, organizations face unprecedented challenges and an increasingly complex and volatile risk landscape that can threaten their competitiveness and future survival.

The World Economic Forum’s Global Risks Report 2024 notes that amid rapidly accelerating technological change, economic uncertainty and geopolitical tensions, global sentiment for short-term growth is low, with the potential for further deterioration over the next decade.   

Resilience has emerged as a critical factor — and a significant differentiator — for businesses looking to navigate today’s challenges, drive strategic agility and achieve sustainable growth. By developing the ability to anticipate, respond to and adapt to disruptive events, while embracing a forward-thinking, flexible and adaptive mindset, organizations can not only survive but also thrive in the face of adversity.

Future-focused companies are embracing the power of data and artificial intelligence (AI) to help build and strengthen enterprise resilience. This article illustrates how agile decision-making, empowered employees and a willingness to experiment and learn from failures are among the keys to resilience in a bold new era of rapid change.

We share revealing real-world examples of how companies have overcome their challenges and emerged stronger as the rapid pace of change accelerates. And look at the key components of KPMG’s enterprise resilience framework and how it is helping these businesses build resilience and achieve their strategic objectives in an increasingly uncertain world.

While resilience is often associated with the ability to respond to and recover from disruptive events, it is equally important to recognize its strategic significance. Resilience is not just about bouncing back from adversity. It is about developing and sustaining the agility, adaptability, foresight and competitive advantages that have become critical to thriving in the face of today’s adversity.

The accelerating pace of change — driven by geopolitical tensions, climate change, technological advancements and shifting consumer preferences — has created an environment where traditional sources of competitive advantage are no longer sufficient. Economies of scale, vertical integration and even cohesive cultures have given way to time-to-market economies, flexible structures and organizations with fluid cultures that embrace experimentation and innovation.

In the current landscape, enterprise resilience emerges as a key differentiator between organizations that simply react to change versus those that proactively anticipate and strategically shape their future. Resilient organizations can not only recover from disruptions but also use these challenges as opportunities for growth and transformation. They are characterized by their ability to continuously create new competitive advantages that can help keep them one critical step ahead of rivals. This can require shifting from a problem-solving mindset to an opportunity-seeking orientation, where challenges are viewed as catalysts for innovation and growth.

Moreover, enterprise resilience is not a one-time achievement but an ongoing process that demands constant attention and nurturing. In our view, it requires visionary leadership that fosters a culture of innovation, anticipation, experimentation and continuous learning. By embedding innovation into their organizational culture and putting it at the core of their growth strategies, resilient organizations can be positioned to continuously create new sources of competitive advantage. 

Traditionally, resilience has been viewed as a qualitative attribute, often discussed in abstract terms such as adaptability, robustness and flexibility. However, to truly understand and enhance the resilience of an organization, we believe it’s essential to take a quantitative approach to resilience management — one that’s data-driven and AI-enabled.

Quantitative enterprise resilience frameworks offer businesses a powerful tool to navigate today’s unprecedented challenges. By leveraging advanced computational techniques, businesses can integrate various factors associated with resilience principles into a comprehensive model that supports decision-making in a very complex and fast-changing world.

Data-driven and AI-enabled decision-making is positioning more organizations to make the timely and informed decisions needed to make a difference in today’s environment. Increasing business complexity has, in most cases, rendered the traditional approach obsolete for informed decision-making.

KPMG’s enterprise resilience framework helps organizations anticipate and flexibly adapt as they navigate the complexities of today’s business environment with foresight, predictive capabilities and informed decision-making. The key components of enterprise resilience include strategic, operational, reputational, financial, technological, and organizational resilience.