17 November 2006

Enterprise Resilience: Investing in Intellectual Capital...

This weeks 21st Annual OSAC (Overseas Security Advisory Council) Briefing was entitled Global Resiliency: Operating in Challenging Environments.

The United States Department of State Bureau of Diplomatic Security sent a clear message that Enterprise Resilience is going to be a major theme moving forward as global firms experience extended supply chains. As this footprint becomes more expansive and spans multiple continents, so too are the operational risks. The conference was opened by Ms. Deborah Wince-Smith of the Council on Competitiveness who presented a case for why private sector CEO's should care about this strategic initiative:

There are at least four reasons why CEOs should care about integrating security and resilience into their business strategy.

1. Business risks are growing, irrespective of 9/11 and the threat of global terrorism.

2. Resilience, in the face of increasing risk, is a shareholder value issue.

3. New corporate governance rules may mandate more rigorous integrated management systems than are currently in place.

And for many firms, operational risk management is not a priority. According to recent surveys:

Only 36% of U.S. CEOs believe that risk management is a priority concern, versus 45% of European CEOs and 67% of Asian CEOs (Conference Board, 2006).

Only 25% of Directors of non-financial companies report that the Board considers all major risks to the company, versus 55% of financial industry directors (Conference Board 2006).

During the past 12 months, 1 in 5 companies surveyed suffered significant damage from a failure to manage risk and over half had experienced at least one near miss (Economist Intelligence Unit and Lloyds, 2006).

4. Industry continues to face a risk of reactive regulation for homeland security.

5. Empirical evidence from the case studies highlight missed opportunities to leverage security investments to increase efficiencies and revenues.

The conference also had keynotes from our own (DNI) Ambassador John D. Negroponte and the CEO of Archers Daniel Midland, Patricia Woertz who made a case for the "Chief Resiliency Officer". Yet the most compelling remarks and insight comes from someone who has lived on the front lines for decades. Someone who understands the threats corporations, NGO's and governments face on the new global battlefield. Henry (Hank) Crumpton is now the Ambassador-at-Large and Coordinator for Counterterrorism after joining the CIA in the early 80's. He led the CIA's Afghan campaign in the first critical months of this new strategy against "Non-State Actors."

These small, nimble and flexible attack units known as "Micro-Actors" can deliver "Macro-Impact" using cover of corporations, exploiting our modern transporation and communications networks and gaining new 4th generation weapons. We must realize the innovations and the technologies we create will be utilized against us.

Here are some words of wisdom from one of the most admired and fearless patriots of the United States:

1. We must begin investing more in our own Intellectual Capital and to better understand the enemy.

2. We must build interdependencies and strong interdependent networks. (People)

3. People need to demand more from government to build stronger partnerships.

4. The private sector needs to give more to the government. (Intelligence)

5. We need more leadership.

Resilient organizations learn and adapt. It changes and morphs as new risks evolve. Given the new revolution of protection converging with recovery, we can only pray that business leaders finally realize that this is not about mitigating losses. It is about putting on a new pair of glasses with a new prescription that is perfect. Clarity of the new lens allows people to see that new found investments can Enable Global Enterprise Business Resilience.

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