In recent years, business resilience has taken on a prominent significance for many companies. As part of my series on the trend map of business transformation and operational excellence, I take a closer look at the relationship of business resilience, regulatory compliance and process excellence.
Trend map for process excellence, regulatory compliance and business resilience – (Source: Software AG)
In the last two years, it has become obvious how vulnerable the business models and processes of many, even established companies are:
- The Covid-19 pandemic has led to a high-level volatility in customer demand in many industries due to lockdowns and travel restrictions.
- Production, distribution and supplier networks are no longer functioning as usual and supply bottlenecks have been the result in many sectors. The closure of the Suez Canal alone meant losses of $6 to 10 bn per week for world trade and the effects are still being felt.
- The reality of climate change is becoming increasingly evident and poses major challenges for many companies to adapt their production methods and often their entire business model.
- Hacker attacks and cyber extortion are no longer isolated incidents. Multinational corporations are also becoming victims and have to go to great lengths to ensure the protection of customer data and the continuity of their business operations.
For this reason, the topic of business resilience has become of paramount importance for many industries. Resilience goes beyond pure business continuity, which refers to the capability of an organization to continue the delivery of products or services at acceptable predefined levels following a disruption, and means the ability to react agilely and flexibly to a changed situation.
The ISO 22316:2017 standard defines organizational resilience as "the ability of an organization to absorb and adapt in a changing environment to enable it to deliver its objectives and to survive and prosper”. Resilient companies very often emerge stronger from crises, as they manage to increase their market share or even define new markets.
Regulatory compliance and process excellence initiatives can make a significant contribution to resilience. In an increasingly complex world, guidelines, laws, regulations and standards are intended to provide stability. The regulatory pressure on companies to know and comply with all relevant laws, policies and regulations is increasing. Well-known compliance frameworks include:
- Quality management (ISO 9001)
- Business continuity management (ISO 22301)
- Information security, data protection (ISO/IEC 2700x, GDPR)
- Environmental management/ESG (ISO 14001)
In many sectors, including finance, energy, telecommunications, pharmaceuticals, life sciences and more, there are also a lot of industry-specific quality and compliance challenges. And the next regulations are just around the corner, such as the supply chain act (Lieferkettengesetz) in Germany, to ensure human rights protection across all levels of your supply chain.
It is not helpful to see the growing number of legal and compliance obligations just as a burden and cost factor. It makes much more sense to identify what benefits can arise in terms of business resilience and competitiveness. Some examples include:
- Operational risk management is becoming increasingly important. By certifying your business continuity processes as per ISO 22301 you align your business processes with your operational risk management and ensure that you are properly prepared for worst case scenarios.
- Managing quality according to ISO 9000 ensures that you consistently meet your customers' requirements and that quality is consistently improved. Well-managed quality is a prerequisite for expanding business into new and global markets.
- Differentiation through sustainability holds enormous market potential for future generations. An environmental management system increases your legal certainty and reduces your liability risk. Many organizations also see this as a prerequisite for cooperation and partnerships.
Process excellence plays a major role in almost all aspects of regulatory compliance. A good understanding of your corporate structures and assets, such as processes, IT systems, responsibilities or data, is a basic prerequisite for the majority of compliance aspects.
The following recommendations help you to meet the increasing regulatory pressure and to take advantage of the benefits in terms of business resilience:
- Group organizational responsibility at one point to have an overall view of all relevant requirements and compliance frameworks.
- Understand the link between the compliance requirements and the core processes of your company and use your process map as a GPS system for navigating through all compliance aspects.
- Know your processes beyond the company's boundaries. Understand your complete ecosystem including suppliers and distribution networks.
- Do not build a separate management system for each compliance framework, but one integrated management system that contains the essential company assets, such as processes, data or responsibilities and is reusable.
- Use monitoring and mining functionalities to detect deviations from the target state promptly and automatically to derive countermeasures.
- Make all policies and compliance-relevant information easily accessible in the organization with a digital handbook or process portal and actively involve all relevant stakeholders.
- Understand the management system as a living system.