In recent years, more and more companies have had to deal with catastrophic events, and consequently they are changing their approach to the risk of business interruptions.
There are six main factors that have brought risk management to the fore. These factors are often summarized by the acronym DISRUPT:
Drivers:
- Interdependencies – a denser network of interdependence between companies and services, of which an interruption risks affecting the entire supply chain;
- Short-term focus – the reduction of the timing of business cycles, which leads to a mindset that is more focused on the present;
- Regulatory compliance – state risk prevention laws become increasingly specific and comprehensive;
- Urban concentration – urbanization goes hand in hand with the growth of some companies, and this increases the risks associated with their activities;
- Greater Probability of shocks – what appear to be minor risks tend to accumulate in the long run;
- Pressure for Transparency – companies are increasingly subject to scrutiny by the media and the public, and therefore interruptions also tend to play an increasingly important role in their public image.
Responsibility for a company's readiness often falls on CEOs and managers , who are increasingly required to deal with risk planning and management.
If your organization has not yet faced a serious disruption or crisis, the question to ask is not whether it will happen, but when.
Catastrophes such as the terrorist attacks of 2001, Hurricane Katrina of 2005, the financial crisis of 2008-2009, and the earthquake in Japan of 2011 have led many companies to work more on predicting catastrophic risks, and to build more robust risk management programs, ready to be implemented in case of need.
Companies must be ready to imagine the unimaginable, plan response strategies, and prepare to face the worst.
