Module #1

Business Continuity

Introduction

Organisational Resilience (OR) is a major area of study in recent years, due to all the negative events that have occurred (pandemics, wars, and meteorological phenomena, among others).

Resilience has gained great interest among researchers and practitioners to cope with the impact and consequences of such situations.

Resilience is not about managing one-off crises but aims to create an organisational culture and strategy geared towards the efficient management of any situation that threatens the day-to-day operation of organisations, and in turn, threatens their long-term survival.

The decision making process is a complex task in these current times characterised by great instability. This is why organisations need to be agile, flexible, robust, fast, adaptive, and efficient, among other characteristics, to cope with such adverse situations. This ability has been defined as organisational resilience, understood as the capacity of organisations to anticipate and prepare for negative situations and, in the event of an imminent event, to recover efficiently in the minimum time and cost.






Resilient organisations characteristics

•The simpler and simpler the structure, organisation and configuration of organisations, the more resilient they will be to adapt to threats and tolerate unforeseen events (Gallopín, 2006).

•Organisations should have accurate and reliable information as well as to foster technological interoperability (Goble, Fields and Cocchiara, 2002).

•Aspects such as the business vision, the strategic plan and direction, market positioning, financial situation, marketing, advertising and promotion plan, information systems, machinery, equipment, and technological aspects, among others are many of the factors that contribute to OR to a greater or lesser extent (Minolli, 2007).

•The commitment and responsibility of the organisation’s top management, through constant and direct observation of the environment, is essential for the development of resilient companies.

•Encouraging collaborative work where information flows freely is also an aspect to be taken into account to reduce uncertainty and generate a sense of unity, coherence and cohesion.

Resilient organisations characteristics

• Organisations that promote, among their strategies, innovative ideas for the development of original projects are not afraid of change; on the contrary, innovation is the means to cope with new events.

• Organisations that reconcile the development and career advancement prospects of their human resources make their employees more satisfied in their work and therefore question many facts of the working environment that, if they are under a high stress load, may go unnoticed.

Based on Sanchis and Poler (2020)


Today, organisations have to deal with a number of unusual situations that have led to a great deal of uncertainty. It is not necessary to go back to 2001 to find examples of disruptions such as the attacks on the twin towers, but today’s world is full of disruptive events that are threatening the long-term survival of many organisations as well as their continuity. We focused on two disruptive events: (i) COVID-19 and (ii) Spanish volcano.

Basedon Sanchis and Poler (2020) and World Bank Group

COVID-19 pandemic

Critical Analysis

Critically, the least developed capacity to cope with the effects of COVID-19 has been the capacity to prepare and/or anticipate. Many organisations state that, had they been able to anticipate and prepare for this crisis, some of the actions they would have taken include:

•an increased supply of safety stock of raw materials and components, especially from China

•stockpiling of certain items that were not used until now, such as masks, hydroalcoholic gel, gloves, bleach;

•analysis of jobs that could be converted to teleworking,

•precise planning of work shifts while ensuring safety measures such as distancing.

With better preparation and foresight, many organisations that have had to stop production due to lack of raw materials or lack of adequate protective equipment could have continued to work and serve their customers.  

It should also be noted that when a organisation considered a critical node in the supply chain in which it operates fails, the entire chain is affected and can bring it to a standstill as a whole. Therefore, we are talking about the need for a global and integrated action by the entire business fabric to fully address the negative effects caused by the pandemic.

Based on Sanchis and Poler (2020)


COVID-19 pandemic

Actions

•Adapting your business to maintain the safety and wellbeing of customers
•Use government aid and stimulus programmes responsibly.
•Maintain a sound financial and cash position
•Strengthening supply capacity
•Develop a model to enable better pandemic preparedness, economic and competitive scenarios.
•Supporting its employees and maintaining a diverse and inclusive workforce
•Moving towards new business models to foster customer resilience and address new realities
•Generate greater resilience along the value chain and among key stakeholders
•Build on early learnings to improve the COVID-19 response strategy.
•Institutionalising new ways of working
•Develop new skills among employees and provide internal mobility and progression to ensure their success in the workspaces of the future.


Adoption of safety measures (hydroalcoholic gel, bleach, etc.).
Organisation of spaces to avoid contact between people.
Social distancing.
Creation of bubble groups.
Promotion of telework.

El Volcano de la Palma in Spain
Consequences

The eruption of the volcano caused:
•1,000 hectares of land destroyed by lava
•2,200 buildings
•70 kilometres of roads destroyed
•More than 7,000 people displaced
•4,000 children out of school for almost two months
•300 businesses disappeared under the lava flows
•10% of the total population is unemployed.
•The fishing fleet moored during two months

Much of the tourism sector, commerce, handicrafts, cultural events, catering, banana plantations, vineyards, avocados, cut flowers for export, farms, cheese dairies, honey, industrial estates, fishing, educational, health, social and sports infrastructures have been severely impacted by the volcano’s eruption.

In La Palma island, without bananas and tourism it is impossible to survive


Critical Analysis

As with COVID-19, the organisations and population of La Palma as well as the public administrations underestimated the adverse effects of the eruption.

The island of La Palma, due to its orography, has urban and industrial centres in areas where the lava flows destroyed everything.

Although the preparedness for an imminent eruption of the volcano seems to have been less than adequate, its adaptation to the new circumstances can be considered positive. The government evacuated the affected areas to ensure the safety of the population and provided shelter for these families.

Many people have been able to find their temporary home in one of the most popular housing solutions: prefabricated modular houses. In addition, a joint project has been created to increase the visibility of La Palma as a tourist destination, with the collaboration of celebrities.

Finally, with regard to the reconstruction of infrastructures, one of the recovery actions focuses on using what the volcano expelled: lapilli, pyroclastic fragments of great thickness and quality for the reconstruction of houses and roads. This material, when mixed with tar, can be used to make asphalt, while when combined with cement, it can be used to make concrete, which is ideal for construction.

El Volcano de la Palma in Spain
Actions

•Direct aid to companies with tax residence on the island
•Mortgage moratorium of up to 12 months or exemption from municipal taxes.
•Request that the IGIC (Canary Islands General Indirect Tax), the Canary Islands VAT, be zero during the last quarter of 2021 and the first half of 2022 for tourist accommodation.
•Establishment of tourist insurance to cover possible diversions or non-operation of La Palma airport.
•A programme similar to the Instituto de Mayores y Servicios Sociales (Imserso)* for La Palma
•Liberalisation of blocked tourist land.
•Revision of urban planning regulations at all levels.



*The Imserso develops its tourism programme as a complementary service to the benefits of the Spanish Social Security System, with the aim of providing the elderly with stays in coastal areas and inland tourism, thereby contributing to improving their quality of life, health and prevention of dependency. In addition, the Imserso tourism programme helps to maintain employment and economic activity, alleviating the employment consequences of seasonality in the country’s tourism sector.


Conclusions

The island’s productive sector, marked by agriculture and tourism, was severely damaged.

The future of employment will depend on the General State Budget, which includes a specific plan for the Canary Islands. In addition, an extraordinary employment and training plan has been defined for La Palma.

The drama was worse for those who were involved in agriculture: small banana production. Continuous advertising campaigns to encourage the sale of bananas in Spain were developed to help the sector.

Finally, a detailed study of the areas in which to reconstruct facilities and roads that have been destroyed by lava flows is critical to be prepared for a new eruption.

Learning Objectives

•To know the essentials of OR.
•To define OR.
•To identify the constituent capacities of OR.
•To characterize the triggers for lack of OR.
•To decompose the disruption into its elements.
•To explain the phases of a disruption.
•To describe the main characteristics of the constituent capacities of OR
•To assess and enhance the preparedness capacity of organisations
•To identify the most worrisome threats
•To define preparedness actions to enhance OR
•To learn past experiences through real business cases
•To analyze business scenarios related to the decision-making process
•Apply best practices to enhance OR


Learning Outcomes

At the end of this unit,  you will be able to…

• Know the essentials of OR
•Identify the constituent capacities of OR
•Characterize the triggers for lack of OR
•Identify the most worrisome disruptive events
•Assess the preparedness capacity
•Learn past experiences through real business cases
•Analyze business scenarios
•Apply best practices to enhance OR

Structure of the Module


Theoretical Units

•The first unit shows the basic concepts and foundations of OR
•The second unit identifies the most worrisome disruptive events impacting OR
•The third unit defines the preparedness actions for each disruptive event identified in unit 2.
•The fourth unit shows and assessment mechanism to enhance the preparedness capacity of organisations

Practical Units

•The fifth unit shows two real life business scenarios: (i) the failure on the strategy of the company Swissair and (ii) and the response of Nokia and Eriksson to a fire in the facilities of its supplier Philips.
•The sixth unit shows two business scenarios, one qualitative and the other related to the quantitative mechanism defined to enhance the preparedness capacity
•The seventh unit shows 2 best practices: (i) definition of preparedness actions and (ii) optimisation of the selection of preparedness actions to enhance OR


1. Unit 1: Essentials of OR

• Definition of OR.
• Characterization of the triggers for lack of OR
• Constituent capacities of the OR


2. Unit 2: Identification of the most worrisome disruptive events impacting OR

•Supply
•Customers
•Distribution
•Energy
•Environment
•Financial
•Inventory
•Legislation
•Production
•Social
•Technological



3. Unit 3: Definition of preparedness actions for each disruptive event


4. Unit 4: Assessment and enhancement of the preparedness capacity of organisations

• Cost of the enhacement of preparadness capacity
• Utility and complexity



5. Unit 5: Real Life business scenarios

Business scenario: SwissAir
•Internal factors.
•External environmental factors
•Final consequence
•Conclusions

Business scenario: Philips and its biggest customers, Nokia and Ericsson
•Post Fire: The Nokia Response
•Post Fire: The Ericsson Response
•Repercussions
•The Bubble Bursts
•Post Bubble: Ericsson and Nokia
•Recovery efforts
•Discussion



6. Unit 6: Two Business Scenarios

Business scenario: Qualitative –
Decision making process to face a disruptive event (recovery)
•Description
•Resilient response

Business scenario: Quantitative – Selection of the most beneficial preparedness actions to face a computer hacking event (preparedness)
•Description
•Resilient Response



7. Unit 7: Two Best Practices

Enhancement of the preparedness capacity through the optimization of the actions to be implemented

Enhancement of the recovery capacity through the knowledge registration.


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