How companies can survive the unexpected

In the joint study Turbulence: a corporate perspective on collaborating for resilience, Swiss Re risk management professionals and industry experts describe how businesses can survive and thrive in the face of unexpected serious disruptions triggered by events ranging from natural disasters to terrorist attacks.

Resilience can mean a dozen different things. It can imply how well a community as a whole can muster the resources and the collective will to withstand a natural disaster and bounce back afterwards. It can be about private individuals' strength of spirit that puts them back on their feet following personal misfortunes. Or it can spring from a visionary, hard-driving public official determined to find sustainable solutions to the problems facing a community, be they rising social inequality, corruption, crumbling infrastructure or exposure to flooding.

Corporate resilience

But resilience can also be generated from within companies, at least this is the view put forward in the new book Turbulence: a corporate perspective on collaborating for resilience (PDF, 1.19 MB) . With an introduction by Swiss Re Group CEO Michel Liès and including the chapter "A resilience lens for Enterprise Risk Management" authored by Swiss Re experts David Bresch, Rainer Egloff and Jaap Berghuijs, the book sets out to explore ways in which the corporate world can strengthen global resilience, especially at the nexus of water, food and energy.

The Swiss Re authors say that current risk practice no longer adequately protects companies from the highly improbable disruptions known as "black swans." They point out that this weakness is attributable to the fact that much of risk management is still heavily reliant on "traditional Value at Risk analysis which assumes normal risk distributions and to a large extent neglects uncertainty." 

Redundancy can make you strong

They suggest that one of the ways a company can ensure its adaptability when faced with a crisis is to strengthen its structural resilience which, in turn, can take several forms. They cite the example of Deutsche Bank whose IT infrastructure was disrupted following the attack on the World Trade Center. One of the reasons why the bank was able to restore its operational ability so quickly was the fact that its redundant IT systems in Ireland were able to step into the breach the very same day. In short, structural resilience in the guise of redundancy can "put in place buffers that absorb the impact of a shock."

Published 3 July 2014

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