Enterprises are forced to ramp up resilience in an increasingly erratic world

A new Ericsson report shows enterprises are more prepared for disruptive events, thanks to digitalization and automation, but leaders need to shift to long-term resilience models.

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The climate has moved into the spotlight in businesses with a new report from Ericsson finding that 42% of decision-makers believe they will face disruptions to their enterprise in the near future due to natural disasters caused by climate change.

Other unforeseeable events are also expected to create challenges, such as the energy crisis, pandemic and global conflict, the study said. And while leaders recognize preparedness is critical, there is a need to move from reactive strategies toward long-term resiliency planning, shifting away from recovery-oriented resilience, the report indicated.

Not all events are equal—energy crises, pandemics and cyberattacks are regarded as the likeliest and most severe events. Four times as many decision-makers and employees agree that there will be more frequent and severe disruptive events in the future, the report said.

After climate change, respondents also cited cyberattacks and ransomware, in particular, as the most experienced events by enterprises, along with supply chain disruptions. Both the COVID-19 pandemic and the current Russia-Ukraine conflict are mentioned as key drivers for these supply chain challenges.

The role of AI and digitalization in resiliency

The good news is that companies are taking resiliency planning seriously: 49% of decision-makers said their company has a well-defined strategy to handle disruptive events and among employees, and almost eight times more said they are prepared than not, according to the report.

Digitalization and automation are driving that preparation: 90% of companies that have well-defined resilience strategies in place are investing heavily in these areas, the report said. However, researchers cautioned that it is important to recognize the value in proactive rather than reactive resilience—something that may not be a part of many enterprises’ strategies.

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Further, natural disasters caused by climate change such as flooding and storms are key challenges for 42% of decision-makers, and more expect it in the future. In essence, more work needs to be done given the current climate, the report stressed.

“War. Energy crisis. Natural disasters. Pandemics. Our world has become increasingly complex, and the time to adopt resiliency strategies is now,” said Patrik Hedlund, senior researcher for the Ericsson Consumer & IndustryLab at Ericsson. “It has never been more paramount for enterprises if they hope to remain competitive and sustainable in the long term.”

Even though many companies already have strategies in place, the report highlights the apparent need for a shift from short-term redundancy-based resilience to a long-term efficiency-based strategy, Hedlund said.

Through the development of a more proactive resilience strategy, even more can be done to mitigate potential disruptions by providing warning signs ahead of disruptive events and understanding the full potential impact, the report said.

In fact, six out of 10 decision-makers said they believe that AI-based services and virtual reality resilience training implemented following disruptive events were key in handling future disruptions, highlighting the need to look at past trends in building future resiliency.

How to become a resilient enterprise

There is a clear need to broaden the scope of resilience in support of sustainability and a forward-thinking business model, the Ericsson report said. Already, 90% of respondent companies with a well-defined resilience strategy invest in technologies such as 5G to enable remote working, digitalization and automation, which better positions them to handle disruptions, the report said.

There are two key shifts in resilience strategy that will be critical moving forward:

  • A move from short-term redundancy-based resilience to a more environmentally sustainable, long-term efficiency-based resilience. Nearly eight out of 10 enterprises said they are still increasing redundancy in their supply chains today.
  • The need for recovery-oriented resilience to shift toward proactive business model innovation. Today, 80% of decision-makers said this is a part of their resilience strategy, and close to six in 10 of them plan to increase these efforts in the future.

Recognizing that companies differ in how they carry out their business objectives depending on their size, service and/or product type, industry sector, and capital available, the report also identified five paths to resilience that the surveyed companies have taken. The foundation of these paths is based on how decision-makers perceive their companies. The five groups are:

  • Employee-led
  • Agile and cost-efficient
  • Automation-first
  • Sustainability pays off
  • Innovation through digitalization

The report urged organizations to rethink resilience, saying that moving forward, it will be even more important for enterprises to have the tools to proactively innovate and adapt their business models to handle disruptive events better.

From the report:

“By having the required innovation capabilities and financial muscles, enterprises will be able to do so before the crisis occurs. Being data-driven and agile will enable companies to adjust their offerings quickly, shift to new target groups or change how their offerings are being brought to market.”

At the same time, the researchers cautioned that, “while digitalization aids in building enterprise resiliency, it may also introduce new risks and vulnerabilities. Centralization and being cloud-based could lead to further exposure to cyberattacks and blackouts, which further emphasizes the importance of having resilience-hardened connectivity and power supply.”

To help prepare your business to withstand various disruptions, these TechRepublic Premium resources can help:  Disaster recovery and business continuity plan and business continuity policy.

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