GARY RYNHART: Why resilience is the new sustainability
The ability of a business to predict the next crisis is impossible, but the ability to prepare for it is not
In 2015, Bill Gates said: “We are not prepared for the next [viral] outbreak” and suggested creating an army of specialists from multiple disciplines to meet whatever crisis or epidemic might arise. Some 27-million people viewed his talk, but as he said in 2020, nobody in power heard the message.
Prescient warnings from the likes of Gates consistently fail to get the necessary traction with decision-makers, despite the consequences. Crises happen all the time and often when we least expect them. What is actually abnormal is to think they are not a normal part of life. Yet human nature is utterly opposed to this belief.
The problem with preparing for a hazard is that you are asking a small business in particular to prepare for “something” that they think may or may not happen. What needs to happen is to create an awareness that the “something” will actually happen, and if you have a basic plan you might be in a situation to stave off the worst of it.
Creating a set of incentives for all (but in particular small) businesses to have a realistic and practical contingency plan in the probability that they will be faced with a hazard of some sort in the foreseeable future is critical. Building resilience is in everybody’s interest.
Banks that lend want to see businesses manage a crisis, not fail. Insurance companies do not want to be swamped claims for payouts. Large companies want consistent supplies. Customers want products. The government has too many other things to do.
For companies the pressure may come increasingly from suppliers and customers. A McKinsey report issued in October 2020 highlighted the fact that large corporates need to know more beyond their tier one suppliers. The huge supply chain disruption in 2020 and continuing today is evidence that they do not. There may be an expectation a “proof of resilience” (continuity and contingency plans) will become more a requirement than an add-on for firms looking to enter global supply chains.
Here in SA, SMMEs face myriad hazards and potential hazards on an almost daily basis. Weak and failing public utilities, crime (and increasingly cybercrime), exchange rate concerns, political disruption and Covid-19 restrictions.
The UN country team in SA (which the International Labour Organisation is part of) is launching a new product labelled Sure (sustainable & resilient enterprises) to support SA SMMEs. The training aims to do one vital thing for SMMEs — provide them with a plan for when something goes wrong. Business Day readers are welcome to join at this link on October 28 at 10am.
Could we have predicted Covid-19 or the scale of looting that took place in July? Probably not, but here is one important fact: the ability of a business to predict the next crisis is impossible, but the ability to prepare for it is not. Hazards happen all the time, so prepare for them.
Fail to prepare. Prepare to fail.
• Rynhart is senior specialist in employers' activities with the International Labour Organisation, based in SA. He is author of “Colouring the Future: Why the UN plan to end poverty and wars is working”.
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