Airmic offers advice on resilience

Airmic has today (Monday, June 3) published a boardroom edition of its flagship research report, Roads to Revolution. The report provides advice for boards and senior executives who are seeking to manage risk and resilience in the context of the digital age.

The report stresses that the digital revolution has profoundly altered underlying business and organisational dynamics to the extent that approaches to risk, governance and resilience need a major rewiring.

It argues that the challenges of the digital age are far broader than cybersecurity issues. As a result, businesses will need to reskill and introduce new mechanisms to ensure effective governance, monitoring, strategic leadership and, ultimately, legitimacy for their organisations.

It advises that the risks associated with digital transformation can be addressed effectively given the right approach, and outlines Airmic’s Resilience and Transformation Model—a comprehensive and coherent structure designed to enable organisations to embrace advances in technology.

Roads to Revolution, written by Cass Business School on behalf of Airmic, was published in June 2018.

It is the third part of Airmic’s highly acclaimed ‘Roads’ research, which includes Roads to Ruin (2011) and Roads to Resilience (2014).

To compile the report, Cass Business School studied a number of leading organisations that are active in the space of digital transformation. Research concluded that “walking the roads to the digital revolution is not an option, it is an existential must”.

It noted that as new technologies emerge, there may not be enough information on which to base reliable risk assessments of the intangible risks associated with digital technologies. “Boards must be alert if risk assessments of the risks associated with new technologies are directly compared to assessments of better understood, more traditional or tangible risks,” the report said.

It said that while it is clear that technology represents significant transformational opportunities, organisations will need to spend more time managing and coordinating across different organisational boundaries which, in a digital environment, creates risks that are more complex, connected, uncertain and ambiguous.

Embracing advances

The research concluded with the need to extend the five principles of the Airmic Resilience Model to include three additional resilience principles for digital transformation. These changes have resulted in the development of the Airmic Resilience and Transformation Model, which provides a comprehensive and coherent structure to enable organisations to embrace advances in technology.

The report recommends that boards should seek assurance that the eight principles of resilience and transformation are implemented.

“However, the conversation about resilience and digital transformation is most likely to focus on the associated business enablers within the organisation, rather than the principles,” the report states.

It suggested there are four types of organisational resilience: integrative, structural, transformational and contextual.

“Each type of resilience can be used to guide the board conversation on resilience and transformation. Although all four types of resilience are required for an organisation to achieve successful resilience, they represent an aspirational hierarchy,” the report stated.

It suggested that integrative resilience is the strongest as it is from this point that the three other types of resilience are developed into creating a mature resilience agenda. One of the keys to an effective board is that it has a diversity of perspectives, based on a range of skills, knowledge and experience.

“Many industry sectors will change fundamentally in the next few years and a large part of that will be driven by technology. While the governance functions of monitoring, strategy and legitimacy remain valid, they need to be enhanced beyond the traditional approach described in the report as ‘legacy governance’,” the report stated.

Commenting on the release of the boardroom edition of the report, Julia Graham, deputy CEO and technical director at Airmic, said: “Achieving and maintaining resilience in the digital era is a huge challenge and requires significant board-level support.

“The digital era is fundamentally altering the basic principles of resilience. Constant reinvention is now necessary for success and that’s a vital message for boardrooms.

“This report distils our research into the key messages for board members. Resilience is not an end game, it’s a constant process, and it’s important that the risk community continually reinforces this message at the very top of their organisations,” she concluded.