What are the key metrics and indicators for measuring business resilience?

In my experience of running Managed service globally, resilience and reliability are vital facets that revolve around how efficiently you deliver Managed service and recover from failures. The emphasis here is reducing mitigation time through a robust disaster recovery plan and minimising exposure to risks. An example would be measuring application recovery time or having well-planned failover procedures; in my experience, this gets premium. Other measures to focus on could be: 1. Failed Requests/Total Requests: This ratio can help you understand the reliability of your application and underlying infrastructure. or 2. Latency: This measures the delay in data transmission or the wait time for the customer to take the following action.

In addition to what has been said, one more KPI that can provide a proactive measure of a company's operational or technology resilience is 'Systems Redundancy': Percentage of critical systems with redundancies in place. Additionally Supply Chain Resiliency should be considered as well to measure the ability of the supply chain to maintain operations and fulfill orders during disruptions.

Operational resilience is the backbone of any organization, ensuring that core functions continue despite adversity. Key metrics in this domain include: Recovery Time Objectives (RTO): Measure the time it takes to restore critical functions after a disruption. Lower RTOs indicate a higher level of operational resilience. Incident Response Effectiveness: Evaluate how well your team responds to incidents. A high level of effectiveness in containment and mitigation showcases a robust operational resilience framework. Dependency Mapping: Understand the interdependencies within your operations. A comprehensive map helps identify critical points of failure and strengthens the organization's ability to withstand disruptions.

dditional metrics to consider include Mean Time Between Failures (MTBF), which assesses the average time between system failures, and Service Level Agreements (SLAs) compliance, which measures adherence to agreed-upon service performance standards. Business Continuity Plan (BCP) testing and review frequency, which evaluates the regularity and thoroughness of business continuity drills and assessments, is also crucial for ensuring robust operational resilience.

Operational Resilience: Ensuring your business can withstand and quickly recover from disruptions. Recovery Time Objective (RTO): Max acceptable time to restore a function after disruption. Recovery Point Objective (RPO): Max acceptable data loss after disruption. Mean Time To Recover (MTTR): Average time to restore a function to normal. Availability: Percentage of time a function/service is usable. Incident Frequency and Severity: Number and impact of disruptions.

Financial Resilience Financial resilience is crucial for sustained business viability, especially during economic downturns or unexpected financial shocks. Key metrics include: Cash Flow Adequacy: Measure the ability to generate and maintain sufficient cash flow during disruptions. A healthy cash reserve enhances financial resilience. Cost of Downtime: Quantify the financial impact of downtime on critical business functions. This metric aids in optimizing investments in BCP measures. Financial Stress Testing: Simulate financial scenarios to evaluate the organization's ability to weather economic uncertainties. Stress testing helps identify vulnerabilities and plan accordingly.

Liquidity ratios, such as the current ratio and quick ratio, measure a company's ability to meet short-term obligations. Leverage ratios, including the debt-to-asset ratio and interest coverage ratio, assess the degree of financial leverage and the ability to meet long-term obligations. Efficiency ratios, like the inventory turnover ratio and accounts receivable turnover ratio, evaluate how effectively a company uses its assets and manages its operations. Additionally, considering the company's ability to generate and sustain earnings, such as through earnings growth and stability, and maintaining adequate reserves and contingency plans, are crucial for understanding its overall financial resilience.

Cash Flow: Tracks real-time liquidity to ensure smooth operations and adaptability. Working Capital: Measures your ability to handle short-term liabilities and seize growth opportunities. Debt-to-Equity Ratio: Assesses leverage and financial risk, balancing growth with stability. Profit Margin: Reveals how effectively you turn revenue into profit. Return on Assets (ROA): Indicates how efficiently your assets are driving profitability.

1. Employee Engagement: Gauge how connected and motivated your team feels. High engagement signals adaptability and innovation potential. 2. Turnover Rate: Monitor staff retention. High turnover may indicate instability or lack of organizational support. 3. Customer Satisfaction & Loyalty: Track feedback and repeat business. Satisfied, loyal customers reflect resilience to market changes. 4. Innovation Index: Evaluate new ideas and improvements. A strong index shows an organization's ability to adapt and evolve. 5. Agility Metrics: Measure how quickly your organization can respond to change. High agility indicates robust resilience.

Organizational resilience encompasses the culture, leadership, and adaptability that enable a company to endure and thrive. Key metrics include: Employee Morale and Engagement: Gauge employee satisfaction and engagement levels. A resilient organization has a workforce that is adaptable, motivated, and committed. Leadership Response Time: Evaluate the speed and effectiveness of leadership responses during crises. Swift, well-informed decisions enhance organizational resilience.

I would recommend following ISO 22316:2017 for Organisational Resilience. One would realise that there are 20 components (while creating a tool for maturity assessment on Organisational Resilience, I ended up adding a few more to the list) - these are: Asset Management, BCM, Crisis Management, Cybersecurity Management, Communications Management, Emergency Management, Environmental Management, Facilities Management, Financial Control Management, Fraud Control Management, Governance, Health and SafetyManagement, HR Management, Information Security Management, ICT Management, Physical Security Management, Quality Management, Risk Management, Supply Chain Management, and Strategic Planning Management. continued in next question.

Through this analysis, businesses can identify gaps and opportunities for improvement, enabling targeted actions to enhance resilience. It's important to note that organizational resilience is not a static state but a dynamic process that requires constant monitoring and adaptation. Regular reviews of these metrics, combined with a proactive approach to change management and strategic planning, help ensure that the organization remains robust and adaptable in the face of evolving challenges.

Think of business resilience like a game of Jenga. While traditional metrics focus on stability and growth, resilience metrics should gauge how well a company adapts when pieces are pulled out unexpectedly. Instead of just revenue and profit margins, key indicators might include the speed of decision-making during crises, employee morale during turbulent times, and the organization's ability to pivot its strategies in response to changing market conditions. In essence, it's not just about how high the tower stands, but how well it withstands the unexpected tremors.

In continuation to my previous question... For each of these 20 areas, there should be metrics for Intention (e.g. the relevant Policy), Implementation (e.g. relevant Plan), and Effectiveness (e.g. a third party certification). Based on such maturity assessment, an organisation should then draw up a roadmap of Organisational Resilience, set priorities and act. No organisation will ever be 100% Resilient as Organisational Resilience is a journey of transformation through continual improvement.