Learned a lot lending an editorial hand here:
MIT Sloan Management Review, June 13, 2023
by Ananya Sheth and Joseph V. Sinfield
Simon Prades
Building the resilience of large, complex enterprises is critical in today’s uncertain and interconnected world. At a time when a container ship grounded in the Suez Canal can bottle up 12% of the world’s trade, or a virus can disrupt the global flow of commodities, components, and talent, a corporation’s ability to quickly adapt in the face of unfolding events is essential to its survival and prosperity.
Business resilience is a dynamic property that is retrospectively measured by the stability and longevity of corporate value across changing contexts. In real time, it manifests in an enterprise’s timely adaptation to both immediate and gradual changes in the business environment.
Our work, which employs a complex adaptive systems view of businesses, shows that resilience derives from three fundamental adaptive capacities: sensing and monitoring, to recognize emerging changes in the business environment; business model portfolio development, to build and test capabilities across operating contexts; and fundamental capability development, to drive growth with longevity and avoid corporate stall. Moreover, each of these capacities hinges on the development of a capability for risk intelligence.
We define risk intelligence as the honed ability to rigorously interpret risks and the consequences or opportunities they pose for a company. It allows leaders to see through environmental complexity and systematically identify, categorize, and interpret risks. This enables them to look beyond known risk factors and intentionally explore yet-to-be-known risks, thereby embracing rather than avoiding uncertainty. Importantly, risk intelligence brings recognition that individual risks or the forms in which they manifest matter far less than the often-shared consequences they have on a company’s value exchange system — that is, the manner in which it manages, identifies, creates, conveys, delivers, captures, protects, and sustains value. And finally, it provides leaders with a network view of risks that enables more effective allocation of risk mitigation resources by illuminating not just the direct consequences of risks but the manner in which they could cascade across the company’s value exchange system. In this article, we break down risk intelligence into actionable elements that leaders can pursue to help toughen their organizations for the long term. Read the rest here.
Business resilience is a dynamic property that is retrospectively measured by the stability and longevity of corporate value across changing contexts. In real time, it manifests in an enterprise’s timely adaptation to both immediate and gradual changes in the business environment.
Our work, which employs a complex adaptive systems view of businesses, shows that resilience derives from three fundamental adaptive capacities: sensing and monitoring, to recognize emerging changes in the business environment; business model portfolio development, to build and test capabilities across operating contexts; and fundamental capability development, to drive growth with longevity and avoid corporate stall. Moreover, each of these capacities hinges on the development of a capability for risk intelligence.
We define risk intelligence as the honed ability to rigorously interpret risks and the consequences or opportunities they pose for a company. It allows leaders to see through environmental complexity and systematically identify, categorize, and interpret risks. This enables them to look beyond known risk factors and intentionally explore yet-to-be-known risks, thereby embracing rather than avoiding uncertainty. Importantly, risk intelligence brings recognition that individual risks or the forms in which they manifest matter far less than the often-shared consequences they have on a company’s value exchange system — that is, the manner in which it manages, identifies, creates, conveys, delivers, captures, protects, and sustains value. And finally, it provides leaders with a network view of risks that enables more effective allocation of risk mitigation resources by illuminating not just the direct consequences of risks but the manner in which they could cascade across the company’s value exchange system. In this article, we break down risk intelligence into actionable elements that leaders can pursue to help toughen their organizations for the long term. Read the rest here.
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