Resilience management - readiness and response

Resilience management is an approach that seeks to build and enhance an organization's ability to withstand and adapt to disruptions, whether they be internal or external. The big idea behind resilience management is to create an environment that enables organizations to quickly recover from unexpected events and continue to operate effectively, even in the face of adversity.

To achieve this goal, resilience management involves a wide range of strategies and practices, including risk assessment, contingency planning, crisis communication, and staff training. By implementing these measures, organizations can identify potential threats and develop the capacity to respond to them in a timely and effective manner.

While resilience management has many benefits, it also has its limitations. One of the main challenges is that it can be difficult to anticipate every possible threat or disruption that an organization may face, making it hard to prepare for all eventualities. Additionally, resilience management can be resource-intensive, requiring significant investments in training, technology, and personnel. Despite these challenges, the importance of resilience management cannot be overstated. In today's fast-paced and unpredictable business environment, organizations that are able to quickly adapt and recover from disruptions are much more likely to succeed. By adopting a resilience management approach, organizations can create a culture of preparedness that enables them to respond to unexpected events with confidence and agility, ultimately enhancing their ability to thrive in an increasingly complex and competitive marketplace.

Big idea

State of the art

What is meant by resilience?

The current understanding of managing resilience within organizations emphasizes the importance of taking a holistic and proactive approach to build resilience at individual, team, and organizational levels. This includes creating a culture that supports resilience, investing in training and development programs, developing contingency plans and risk management strategies, and using data and feedback to continuously improve resilience management practices.

Several studies have shown that organizations that prioritize resilience management are more likely to be successful in adapting to change, achieving their goals, and maintaining high levels of employee engagement and well-being. However, implementing resilience management requires a long-term commitment and a willingness to adapt to changing circumstances.

What are the key elements of resilience management?

Resilience management is an approach that helps organizations prepare for and adapt to disruptions, whether they are caused by internal or external factors. This approach applies to project, program, and portfolio management in order to mitigate risks and ensure successful delivery. The main aspects of resilience management include:

1. Risk identification and analysis: This involves identifying potential risks that could impact the project, program, or portfolio, and analyzing their potential impact on the organization.

2. Risk mitigation and management: After identifying the risks, mitigation strategies should be developed and implemented to minimize the impact of the identified risks. This includes contingency planning, crisis management, and business continuity planning.

3. Stakeholder engagement and communication: Effective communication is essential for building resilience. Stakeholders should be kept informed of potential risks and the organization's plans for mitigation.

4. Organizational culture and leadership: The organization's culture and leadership play a critical role in building resilience. Leaders should prioritize resilience management and create a culture that encourages employees to think proactively about identifying and mitigating risks.

What is difference between risk and resilience?

Risk and resilience are related concepts but have distinct meanings in the context of program and portfolio management. Risk refers to the likelihood and impact of potential future events that may affect the success of a program or portfolio. Risks can be identified, assessed, and managed through risk management processes and techniques. On the other hand, resilience refers to the ability of a program or portfolio to adapt and recover from unexpected challenges or disruptions. Resilience involves building the capacity to absorb and respond to shocks and stresses, while continuing to deliver expected outcomes. In other words, risk management is focused on mitigating the likelihood and impact of potential future events, while resilience is focused on building the ability to respond to events that have already occurred or could not be predicted. Both risk management and resilience are important components of effective program and portfolio management.

Historical perspective

Resilience management has its origins in the field of disaster management, where it was developed as a way to help communities and organizations prepare for and recover from natural disasters and other crises. Over time, the concept of resilience has been applied to other domains, including business, finance, and cybersecurity, to help organizations better manage risks and disruptions. The increasing importance of resilience management in recent decades can be attributed to several underlying causes, including:

Increasing Frequency and Impact of Disasters: The frequency and impact of natural disasters, such as hurricanes, floods, and wildfires, have increased over time, leading to greater awareness of the need for resilience management.

Globalization and Interconnectedness: The increasing interconnectedness of the global economy and the rise of complex supply chains have increased the potential for disruptions to affect multiple organizations and stakeholders.

Technological Change and Cybersecurity Risks: The rapid pace of technological change has created new risks and vulnerabilities, such as cyber-attacks and data breaches, that require organizations to be more resilient.

Changing Regulatory and Legal Requirements: The changing regulatory and legal environment, including increased requirements for risk management and contingency planning, has made resilience management an essential aspect of compliance for many organizations. Recognition of the Benefits of Resilience: The growing recognition of the benefits of resilience, including increased innovation, agility, and long-term sustainability, has led many organizations to prioritize resilience management as a strategic priority.

Application

Case analysis: BP and Deepwater Horizon

Main Causes

The Deepwater Horizon oil spill was a catastrophic oil spill that occurred on April 20, 2010, in the Gulf of Mexico. The spill was caused by an explosion and fire on the Deepwater Horizon oil rig, which was owned by Transocean and leased by BP. The explosion killed 11 people and injured 17 others, and it resulted in the largest marine oil spill in history. The main causes of the Deepwater Horizon oil spill were a combination of human error, technical failures, and organizational problems. BP had been drilling for oil in deepwater, which created new risks that were not entirely understood. The platform had not been in dry dock for repairs since 2001, and urgent repairs identified in a 2009 safety audit had not been completed. The drilling activity was complicated and challenging, and technicians often had to modify their plans because of the geological conditions thousands of meters below sea level. BP used less cement than was originally estimated and a cheaper grade of cement mixture than was normally used to avoid cost overruns. This caused huge complications in the work and contributed significantly to the accident. Furthermore, only six centralizers were used instead of the recommended twenty to increase the stability of the well casing. A negative pressure test was conducted to check for leaks in the drilling pipe, and signs of hydrocarbon gas were observed. However, the results were not entirely clear, and the decision was made to continue with the work. The combination of these factors led to the explosion and subsequent oil spill.

Analysis from a resilience management perspective

Several factors contributed to the Deepwater Horizon oil spill disaster. Firstly, BP had an inadequate safety culture and risk consciousness, and there was a lack of cooperation among the various actors. Organizational learning was also slow. These factors meant that warning signals were ignored, decision-makers lacked clarity on how to handle the complexity of the safety systems, and workers were not well-educated or trained. Secondly, BP and other actors did not follow the guiding principles of highly reliable organizations. The use of untested and cheaper technology to seal the well when they knew of the high gas pressure and the geological instability of the bedrock showed a lack of attention to technical and operational expertise. BP's top managers also lacked sufficient knowledge of the events/conditions on the platform and their associated risks. Thirdly, the fragmented offshore industry with its many service providers and independent agents contributed to the problem. These groups often had different goals, safety practices, experience levels, and training. Finally, BP prioritized short-term economic gains over high reliability and safety, which is common in the oil drilling industry with its strong R&D focus on exploration, drilling, and production technology that is often at the expense of safety. A more balanced approach was needed, where reliability and change capacity take relative precedence over efficiency. Overall, the BP disaster highlights the need for companies involved in such risky and complex operations to prioritize resilience management, develop a safety culture, and be organised as HROs where reliability and change capacity take precedence over efficiency.

Essential parameters for resilient project management

The essential themes of resilient project management are mentioned in this paragraph to highlight the interdependencies between each of them.

Limitations

Measurements of resilience

Are there indices which enable the measurement of resilience and therefore, ensure an assessment whether a project is able to recover from arising uncertainties in the environment.

Limiting factors

What are the limiting parameters of implementing resilient management structure within an organization?

References

1.Blay, Karen B. (2017): Resilience in projects: definition, dimensions, antecedents and consequences. Loughborough University. Thesis. https://hdl.handle.net/2134/27531

2.Frigotto, M.L., Young, M., Pinheiro, R. (2022). Resilience in Organizations and Societies: The State of the Art and Three Organizing Principles for Moving Forward. In: Pinheiro, R., Frigotto, M.L., Young, M. (eds) Towards Resilient Organizations and Societies. Public Sector Organizations. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-82072-5_1

3.Stefan Tengblad, Margareta Oudhuis (2017). The Resilience Framework: Organizing for Sustained Viability. https://doi-org.proxy.findit.cvt.dk/10.1007/978-981-10-5314-6

4.Leichenko, Robin & Mcdermott, Melanie & Bezborodko, Ekaterina. (2015). Barriers, Limits and Limitations to Resilience. Journal of Extreme Events. 2.

5.Alfonso Natale, Thomas Poppensieker, and Michael Thun 2022, From risk management to strategic resilience, McKinsey & Company, accessed 19. February 2023, <https://www.mckinsey.com/capabilities/risk-and-resilience/our-insights/from-risk-management-to-strategic-resilience>