M1-S1 [L2]: Recognise and Analyse Types of Operational Disruptions

Identifying and Mitigating Operational Disruptions

Identifying and Mitigating Operational Disruptions

In today's ever-evolving business landscape, understanding and managing the various threats and crisis scenarios that can impact business services and operations is crucial. Operational resilience is not new, especially for those well-versed in Business Continuity Management (BCM).

It encompasses the ability to withstand operational disruptions and continue critical business services and operations, even in adverse events.

Operational resilience involves recognising negative impacts or consequences that can jeopardise an organisation's operational integrity.

These impacts can manifest as a series of operational issues defined in the BCM Institute's terminology. While this may sound familiar to those with a BCM background, it's essential to delve deeper into operational disruptions or, in simple form, disruptive events and their potential effects on operational matters.

Operational disruptions, by definition, are any disruptive events that can impact an organisation's risk, manifesting in a host of operational issues.

They are scenarios that can threaten an organisation's ability to function smoothly. Recognising and assessing these disruptive events, irrespective of how they are identified, is imperative as long as a thoughtful and systematic approach is employed.

Fortunately, a wealth of resources is available, including horizon scanning reports from various institutes and independent sources, that shed light on organisations' threats.

Threats

One valuable resource is the BCM Institute, which offers a comprehensive list of threats, both natural and man-made, in its reports.

These threats range from natural disasters like earthquakes to recent events like wildfires in regions like Canada, Spain and the US. Even events that may not seem directly related, like poor air quality due to haze, can significantly impact an organisation's operations, as seen in the Southeast Asia example.

Moreover, with the rise of remote work, organisations must consider the well-being of their employees, even in remote locations. Ensuring their safety and providing support during disruptive events is essential, as seen in employees requesting to return to the office during poor air quality.

While natural disasters are significant concerns, man-made threats, particularly cyberattacks, are among the most prevalent disruptions organisations face. Cyberattacks can paralyse operations, making proactive measures to bolster cybersecurity a top priority.

Crisis Scenario

Beyond these well-recognized threats, organisations must also consider scenarios that might not be covered by traditional Business Continuity (BC) Plans.  It is usually covered by the Crisis Management (CM) plans.

These include organisational mistakes and leadership misconduct, which can have far-reaching consequences on operations and reputation. Moreover, a lack of liquidity, as evidenced in recent cases, can quickly become a crisis.

Being vigilant about the various threats and crisis scenarios affecting our operations is crucial in the modern business landscape. Operational resilience is pivotal in our ability to withstand and adapt to these challenges. During a recent discussion, several key factors emerged as potential disruptors to our operations.

First and foremost, our risk management function within the organisation has been diligently tracking various factors. While we hope they never materialise into serious issues, it's essential to acknowledge their existence. These factors include:

• Political tensions
• Climate change
• Energy instability
• Supply chain disruptions
• Financial challenges
• Social erosion

To gain a comprehensive perspective, we employ heat maps to assess the potential impact of these elements on our company. This collaborative approach helps us achieve consensus on how a wide range of issues might affect our operations.

Third-Party Risk Management

One significant trend we've observed over the past few years is our increasing dependence on third-party providers. This heightened dependency ranks among our top operational risks.

Monitoring third-party performance and compliance is crucial to the evolving global regulatory landscape. New requirements regarding third-party dependencies and material outsourcing have been cropping up worldwide, demanding that organisations put adequate controls in place.

We've experienced incidents where third-party providers faced cyber events that disrupted their ability to deliver our services. Although we were fortunate not to suffer data breaches, we did encounter challenges, such as a payroll provider's inability to process payroll due to a cyber event. Such incidents highlight the importance of robust mitigation plans and resilience strategies.

Another emerging concern is our reliance on cloud providers and software-as-a-service (SaaS) applications. While these technologies offer efficiency and flexibility, they also introduce new layers of dependency, increasing our risk profile.

Fourth-Party Risk

Additionally, we are beginning to consider "fourth-party" risks, which involve the dependencies of our third-party providers. While this area is still evolving, operational resilience strategies will be crucial in addressing these complex interdependencies.

We discussed the recent cyberattack that impacted various organisations, including renowned firms like ICBC and Optus. Such attacks often target third-party service providers, underscoring the need for vigilant monitoring and mitigation efforts.

Operational resilience is not a novel concept for your organisation. Still, it is reassuring that the ongoing discussions align with industry trends and best practices. By continuously evaluating and adapting to emerging threats, we can fortify our operational resilience and ensure the uninterrupted flow of our core and critical business services.

As we progress, technology will be a critical ally in protecting against and innovating within the ever-evolving threat landscape. It's essential to embrace technology not just as a defence but also as an inspiration for transformative solutions.

Conclusion

The key to operational resilience is leveraging existing knowledge and resources to identify and mitigate operational disruptions effectively.

By adopting a systematic approach and staying informed about emerging risks, organisations can build resilience and ensure the continuity of their operations. Sharing insights and experiences among peers can further enhance the collective understanding of operational resilience, fostering a culture of preparedness and adaptability.

Operational resilience is about being ahead of the curve, protecting your operations, innovating to improve efficiency, and inspiring your team to embrace these principles. It's not a reaction to events but a proactive strategy guided by a clear goal—eliminating vulnerabilities and ensuring the uninterrupted flow of your core business processes.

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