RISKworld / The Newsletter of Risktec Solutions / Autumn 2020 p2-3

Harnessing Chaos – The antifragile approach to Business Continuity Management Resilient businesses are able to recover effectively from disruption. When the business is also agile it can recover quickly. But what if the business actually harnesses the created by the disruption and grows stronger as a result? This is the defining characteristic of the ‘antifragile’ business model.

THE EVOLUTION AND REVOLUTION AGILITY: A KEY INGREDIENT IN THE OF BUSINESS AS USUAL RECIPE FOR SURVIVAL We live in a chaotic world, and the By agility we mean that the business realm of business is no exception. is quick to mobilise and respond, and Every organisation faces unexpected flexible enough to adapt, and does fluctuations in business conditions this decisively with high conviction. from time to time. These deviations The ability to rapidly understand and from ‘business as usual’ are often react to an evolving scenario sets outside an organisation’s influence, up a business to minimise both the and can emerge slowly and magnitude and the duration of the © Wikimedia Commons apparently (e.g. market trends), or disruption. Moreover, a truly agile strike at random with little warning response can enable a business to When dark clouds form, search for (e.g. natural disasters or epidemics). extract value out of the disarray. the silver linings

The fact is that businesses, by Inspiration can be drawn from necessity, must adapt if they wish to General Sun Tzu’s 5th century BC opportunities from the pandemic survive; either by continual evolution treatise on military strategy and through transformation and innovation to gradual change, or by immediate tactics “The Art of War” (Ref. 1), in – the ‘pandemic pivot’. revolution when the unexpected which he submits that “in the midst occurs. of chaos, there is also opportunity”. Restaurants moved towards take- Whilst the modern commercial out, delivery and catering rather than Succumbing to the hidden forces environment may at first seem an eat-in service. Textile and apparel of entropy which bid constantly to worlds apart from ancient Chinese manufacturers switched to producing derail business plans is plainly not an warfare, BCM leaders today can face masks. Fast-moving consumer attractive option. So business leaders still take motivation from Sun Tzu’s goods companies transferred focus turn to the practices of Business fundamental messages on tactical from products where demand had Continuity Management (BCM) to operations and management strategy. fallen (like skincare) towards surface offer a route map towards building cleaners and personal hygiene resilience to disruptions. Take the COVID-19 pandemic for products. Breweries even repurposed example. It has forced companies Resilience in this context means distilling equipment to produce hand to adapt to change and redesign that business are eliminated or sanitiser. their products or services – or even mitigated to a low level; that there is create new ones – to respond to the These are all examples of businesses a built-in tolerance to disruptions, and developing demands of millions of which, despite the disruptions and that the business is able to recover. people around the world. While some impending hardship, have been agile But there is an important facet of businesses shut down or suspended enough to pivot in new directions resilience in BCM which is often their activities, others forged conducive to survival. overlooked – agility. RISKTEC.TUV.COM

BEYOND RESILIENCE AND AGILITY Simply having a business continuity coined the plan which promotes antifragile term ‘antifragile’ as an alternative responses is not sufficient. The AGILE ANTIFRAGILE to resilience (Ref. 2). He argues value of business continuity planning • Reacts • Benefits that if fragility is the quality of being lies not in the plan itself, but in the • Adapts • Grows damaged by stressors, then resilience organisational capabilities developed cannot be the opposite of fragility. through the planning process. Only

Resilience is more geared towards when an antifragile approach is baked FRAGILE RESILIENT a neutral outcome, whereas to be into the BCM process, can it create a • Suffers • Sustains truly antifragile the result must be collective mindset which is embedded • Fails • Maintains a positive one. Although resilient throughout the organisation. businesses have an ability to resist An antifragile business culture shocks and remain unchanged, decentralises control and empowers antifragile businesses are able to Figure 1 – Beyond resilience and individual business units and leverage an unpredictable environment agility, towards employees with the autonomy to and actually grow stronger from the embrace , innovate, and – crucially knocks they receive (see Figure 1). – to make mistakes and learn from Consider, also, that disruptions naturally Antifragility is a nice notion, but how them. An antifragile approach actually trigger customers to seek alternatives can it be translated into practice requires failures in the short term for currently unavailable products and through BCM? In short, antifragility in order for it to succeed in the long services. If the alternatives prove more must be implemented throughout the term (see Figure 2). As long as failures convenient, the customers may never business via a BCM approach which are on a manageable scale, acting on return. So the antifragile approach includes: feedback is what enables the business yields twin benefits – securing the existing customer base through Strategies that recognise potential to learn lessons, fortifying it for the · innovation, as well as capturing market upside as well as downside future. share from competitors. Risk and impact analyses · TO THE VICTOR BELONG THE CONTINUOUS RECALIBRATION that identify and categorise SPOILS opportunities arising from Antifragile businesses will be the All adaptations or transformations of disruptions first movers into new arenas, and a business’s operating model come · Implementation of business will gain a competitive advantage by with changes to that business’s risk continuity measures geared being the first to market. Being first landscape. BCM – and enterprise risk towards agility enables the business to establish management in general – therefore · Business continuity plans which strong brand recognition and customer needs to evolve in step with the ramp up quickly from ‘survive loyalty before competitors enter the business to ensure that emerging mode’ to ‘thrive mode’ fray, some of which may whither and risks are identified and managed. · Embedding a business continuity fold in an analogous way to natural This makes the continuous review culture which accelerates decision selection. and improvement step of the BCM making and innovates at pace system all the more important for agile businesses.

CONCLUSION STRENGTH OPERATIONAL Change is inevitable, and ANTIFRAGILE business leaders can’t afford to BUSINESS AS USUAL treat BCM as an afterthought. RESILIENT AGILE A reliance on organisational resilience may suffice for short- term interruptions, but to thrive following major disruptions

FRAGILE requires an antifragile mindset which is most effectively DISRUPTION TIE implemented through BCM. Figure 2 – Antifragile businesses benefit from disruptions

Contact: Matt Baggaley References: 1. The Art of War, Sun Tzu, circa -500 BC 2. Antifragile: Things That Gain from Disorder, Nassim Nicholas Taleb, 2012 [email protected]