Posted on: July 14, 2021
Jeff Mosier, TJ Kuhny
Customer trust is difficult to earn and easy to lose. Companies learned long ago that they must keep their promises to customers or risk potential disaster. Those commitments are easier to deliver on when times are stable. But what if customer and market needs shift and your business must pivot and adapt rather than stay the course?
In those circumstances, a renewed focus on resilience can provide strategic insights beyond recovery in a crisis. Operational resilience has become the new currency for building and holding customer trust in both times of calm and times of change. In a February 2021 report, Forrester risk and resilience analysts noted that resiliency practices are different from adaptive practices and that firms need to develop both. Adaptive practices address “foreseeable trends,” such as changing market dynamics, new competitors, or evolving customer needs. Robust resilience practices allow organizations to “dynamically react” to sudden events that might or might not have been foreseeable.
While separation of these practices ensures both receive proper attention, the lines are blurring between the need to respond to unexpected crises and the need to adapt to new opportunities. Crises will uncover new opportunities while pivoting to new opportunities can avoid a crisis in the making. Resilience leaders can improve the adaptability of their firms and thus make an even greater strategic impact on the organization.
The reevaluation of resilience is particularly important in the financial services sector, which is entering a new regulatory phase. Emerging international rules are forcing firms to reconsider how they analyze, test, plan, and improve their resilience practices. These regulatory requirements – for the first time – focus on assessing resilience from the customer’s perspective.
These new operational resilience regulations cover a variety of areas:
- Identifying and prioritizing customer-facing important business services
- Mapping what is involved in delivering those services
- Understanding what impact each service will have if it cannot be delivered
- Planning and testing how to recover these services from severe but plausible disruptions
These practices seem naturally targeted at the resilience practices that Forrester considered, rather than adaptability. However, organizations that commit to becoming more resilient will find that their resilience practices will also be a resource for their adaptive practices.
“Financial services firms have progressed 10 years in the past 10 months,” said Dennis Gada, Infosys senior vice president and head of financial services, North America, during the March 2021 Screaming in the Cloud podcast. He explained that those who have been most successful are the ones looking at their processes from end to end with the customer at the center.
This approach is acutely needed now as banking processes evolve at amazing speed; the U.S. Paycheck Protection Program increased loan demands 25-fold almost overnight. Customer-facing services – particularly ones with great impact – need to be examined thoroughly and not just be given a surface treatment.
Success in this type of demanding environment requires a deep understanding of end-to-end processes that are critical to customers. To support this shift, resilience leaders can use the information they are amassing to convince regulators that their company’s important business services are appropriately resilient. Operational resilience teams can help shape strategy by providing insights about where an adaptive change could make a difference. As a result, the firm can pivot its end-to-end customer journey without sacrificing resilience.
The building blocks of these new practices can help firms be more adaptive when strategic thinking is at play: the times between crises when new opportunities present themselves. The insights gained from understanding how to keep important business services resilient can drive a firm to adapt its strategy to protect and grow the business.
Forrester has described the characteristics of resilient firms that are on par, advanced, and differentiated versus their peers. Those that are differentiated can “spot where gaps exist in competitor offerings and fill them quickly, identify customers who are underserved and create new offerings, or predict how an event will unfold to respond to current and future customer needs.”
These capabilities, including filling competitive gaps and creating new offerings, start to shift resilience into the realm of adapting and pivoting business strategy. However, firms can go even further by leveraging their resilience knowledge base before there is ever a crisis. The insights that a next-generation operational resilience program can provide will allow organizations to pivot in a truly adaptive (not just resilient) manner.
As Gada mentioned in his podcast appearance, the pandemic allowed financial firms to shift from their traditionally controlled ways of operating. Previously, a bank would function much like an opera where everything is planned and carefully orchestrated. More recently, adaptive firms have resembled a flash mob with creative energy to quickly understand and tackle challenges in weeks and even days, not months and years. This shift can, and should, be a place where resilience teams directly contribute with insights that can further accelerate decision-making and transformation.
To learn more about how business continuity practices must evolve with the new regulations and market demands, download The Resilience Imperative whitepaper from Infosys and Fusion Risk Management.