COVID-19 is a rare bird – in many ways a black swan. Researcher Nassim Nicholas Taleb in his book The black swan described these types of unpredictable global events that crush and then transform society. When we review these events in retrospect, we try to rationalize and claim that the pandemic was completely predictable – if we only had the relevant data, we tell ourselves.
We do not want to believe in the unpredictability of these events. But they happen regularly and we are almost always caught off guard. As we have been in this pandemic. But there is something we can do and that is build resilience.
Resistance is about being prepared for the future in whatever form it may take. Organizations, public and private, routinely do this by creating business continuity and disaster recovery plans. These plans may vary in scope and complexity, but their primary goal is to keep the organization functioning (at some level) until the crisis passes. Hopefully the current crisis passes quickly, although it may take weeks or months for surgeries to return to normal.
And sometimes, your resilience will not be tested by a black swan event, but by things like economic downturns, technological disruptions, or societal upheavals that happen more regularly. Maintaining situational awareness is an important way in which organizations can become more attuned to the precursor to this type of event. But this is just one way organizations can build resilience.
What is elastic means
To be truly resilient, an organization must have the ability and capacity to continue in spite of unpredictable events. Bad things will happen, but that’s how we react to those who make the difference.
Resilience requires the ability to move with speed and agility and to marshal resources including people, operational processes and your organizational infrastructure.
An important way to resist a crisis is to embed data and analytics in your decision-making processes so that they become a natural part of your flexibility building efforts. Analytics can be used in a variety of ways from predicting demand for goods, materials and services to quickly assessing several risk factors for maintaining financial solvency to keep your supply chain moving.
Most organizations have an abundance of data that can help shape and target their crisis preparedness. Your data plays a big role in enabling you to resume operations as soon as possible. Without data you can not determine what is neededWhere should you focus your efforts or be aware of the indicators that a crisis is subsiding.
The decisions you make during a crisis event help or harm your organization. Using your analytical resources to make quick, insightful decisions gives you confidence that you are making the right ones. Strengthening your stress hardness with analysis just makes good sense.
Build resilience based on experience
Your range of historical data can be retrieved from insights into your recovery speed from various events. These insights can help identify weak points in processes, teams that need additional resources, lack strategy, and the list goes on.
Resistance at the moment
An important characteristic of a resilient organization is understanding the normal ebb and flow, growth and shrinkage or requirements of your organization, whether you are an authority, a healthcare provider, a retailer or a manufacturer.AI models built with machine learning algorithms can be your canary in the coal mine, the early warning system to identify impending crises or at least their early stages. You can build and maintain machine learning models that can look for signals of interference in your data, can trigger warnings that a situation needs to be monitored more closely.
The potential of using analytics to help build flexibility in the organization is enormous. For example, a bank may use an AI model to monitor current data and continuously compare it with historical data and automatically send an alert when conditions mimic a past crisis.
Another important measure of resilience is how quickly an organization can recover after a significant event. The rate at which you can bounce back from disruption, large and small, is an important measure for your organization because the duration correlates with the magnitude of the negative impact.
Analytics can guide you to a more resilient future
Deciding how to better prepare for the next crisis is probably at the very top for leaders in all organizations right now. Some of the most important answers are found in your data because data is what all digital processes produce. And with solutions in place to cleanse, manage, and protect your data for analytical processes, any strategic or tactical decision made in your organization can be made with the kind of confidence that creates resilience.
Scenario analysis is just one way organizations can begin to create flexible, anticipatory strategies for dealing with upheaval. There are many types of scenario analyzes, but the most effective are based on analytics, because analytics and AI models give you more accurate foresight in your crisis strategy planning and the evaluation speed you also need in moments after landing the next black Swan.
This article originally appeared on Global business barometer, published by The Economist Group.