Strategies for Financial Risk and Resilience in a Challenging Economy (Part 2)

"Implementing resilient strategies is a challenge for many businesses who lack the expertise and cashflow required to withstand a volatile economy, mitigate risks and survive in a crisis. Looking ahead to February 2023, one in five (19%) businesses reported energy prices were their main concern, followed by the inflation of goods and services prices (16%) and the falling demand of goods and services (13%)."

WHAT IS A RESILIENT BUSINESS PLAN?

Resilient Business Plan

Anticipating disruption is important for resilience, however, to prepare for a disruptive occurrence, businesses must be forward-thinking. This is where a business resilience plan is fundamental. A resilient business plan is designed to help businesses navigate disruptions and return to a state of profitability and growth. It outlines the key steps businesses need to mitigate and survive a crisis.

Steps for Business Resilience

• Mitigate weaknesses in the business operating model ahead of any event
• Identify the likelihood or impact of risks and actively mitigates these
• Develop a target operating model, strategic business and financial plan
• Determine a vision, culture and people strategy to propel business recovery

Benefits of Resilient Business Plans

• Enabling businesses to identify mitigate and respond to risks effectively
• Allow businesses to withstand risks and rebound from unexpected disruption
• Allows businesses to thrive due to their ability to withstand a crisis
• Enables businesses to pivot to a new business model and grow

MINIMISING GLOBAL SUPPLY CHAIN DISRUPTIONS

• Businesses that had not permanently ceased operations were questioned in August 2022 about disruptions to their global supply chain. Nearly (18%) of businesses with 10 or more employees that had not permanently ceased operations reported disruptions to their supply chain . This was at the end of September 2022 and since the question was first asked in December 2021, this is the lowest percentage that has been reported.
• The construction industry reported the biggest drop in businesses declaring that there had been a disruption and 12% reported an 8-point decline from July 2022. The main impact was from 33% of businesses with 10 or more employees, who reported that they were suffering global supply chain disruptions and a shortage of materials.

"For many businesses financial difficulties from the economic slowdown are likely to continue. As evidenced by indicators such as rising energy prices, increased inflation and market volatility, businesses must remain cautious without stifling innovation from developments in digital adoption, technology and sustainable practices."

WHY IS BUSINESS RESILIENCE FUNDAMENTAL?

• Financial resilience: Businesses frequently lose sight of long-term financial risks in favour of short-term financial pressures and gains. The key to minimising fluctuations in revenue, cost and profitability is striking a balance between the two by maintaining a strong capital and liquidity position.
• Technological Resilience: Businesses that are able to undertake investments in safe, adaptable digital technology and utilise high-quality data to make strategic and operating decisions are better able to compete and deliver projects safely on time, and within budget.
• Organisational Resilience: Employee recruitment, retention, and satisfaction are crucial components of mastering business resilience. Companies that promote diversity and inclusion, create a culture of agile learning, and hire top talent are better prepared to adapt.
• Operational resilience: Without alternative plans in place, supply chain disruptions can erode productivity and cause business operations to fall apart. To be able to adapt to rapid changes in supply and demand, resilient businesses must evolve redundant operations to mitigate supply chain risks.
• Business-model resilience: When the pandemic forced businesses to switch to remote working, conventional business models became redundant. Businesses that had adaptable models were able to quickly pivot as necessary, ensuring business continuity during an uncertain period.

"In 2021, the number of governments and large business setting goals to achieve net zero emissions target by 2050 grew rapidly. These reduction targets lacked plans to reduce indirect emissions occurring along the supply chain. As at 2022, rising pressure from shareholders and stakeholders will increase to develop concrete, medium to long-term plans to address carbon emissions across entire value chains."

PRACTICAL STEPS TO IMPLEMENT RESILIENCE IN BUSINESS

• Businesses have developed methods to address the aftermath of the COVID-19 pandemic's issues, but the need for continued resilience must be reinforced.
• Businesses must acquire the expertise to prepare for both the primary impact of future disruptions as well as their secondary and tertiary impacts.
• Recognising that future disruptions may be different and the impact may take a while to manifest as the knock-on effect can build gradually to a tipping point.
• The need to build a resilient business can occasionally conflict with the immediate goal of profits and few have developed strategic resilience
• Managing the risk of redundancy can promote resilience in supply chains, but it impacts costs , investment returns and the resilience business case.
• Resilience can best be achieved with strategic business planning as isolated resilience initiatives are unable to accomplish a sustainable growth

"Financial resilience can be defined as the ability for a business to withstand and thrive amidst economic challenges. The benefits include strengthening financial stability, attaining sustainable growth and mitigating financial risks from inaction. Implementing a culture of business resilience across the business will require resources, time and expertise."

STEPS FOR BUILDING LONG-TERM RESILIENCE

Business leaders can apply the following steps and best practices to build strategic resilience

• Obtain management buy-in into strategies to improve risk and resilience
• Developing and tracking resilience KPIs and reporting on them internally.
• Lessen reliance on extrapolations from historical budgeting and planning.
• Risk assessment , control, and governance need not only be a risk function
• Determine the business's inherent strengths, and weaknesses. opportunities and threats
• Develop resilience skills, and build a strong team for operational resilience
• Establish an early warning mechanism for identifying and mitigating risks
• Proactively tracking current and internal and external risks and opportunities
• Integrating risk at the enterprise level, into all aspects of the business model.
• Discuss resilience in practical terms stakeholders and investors understand.

FREQUENTLY ASKED QUESTIONS (FAQs)

• How can resilience help with a more successful business? ?Resilience is best described as a business's ability to generate value sustainably, maintain operational efficiency, and be able to succeed sustainably under challenging economic conditions.
• How do you achieve resilient growth throughout the business cycle? ?To establish resilience, businesses must concentrate on developing a healthy balanced portfolio and strategies to compete in the market for long-term value creation.
• What is business resilience risk ?Business resilience is the ability to respond immediately to risks and new opportunities while maintaining essential business activities, and protecting employees, assets, and the reputation of the business.
• What are the four components that comprise business resiliency? ?These include 1. Risk assessment and business impact analysis 2. Risk mitigation plan development 3. Testing and analysis; and 4. Risk monitoring and program sustainability.
• What are the most critical issues facing global businesses? ?Rising energy prices, market volatility and inflation rate increases are presently critical risks for many businesses.
• Why is it important for businesses to aim for a global market presence? ?Entering international markets enables businesses to expand into new geographical markets, attain a wider customer base and increase profits.
• What suggestions would you provide for achieving global business resilience? ?Decide on your target geographical markets, and assess barriers to entry, risks and feasibility of obtaining revenue from these new sources.
• How do small businesses contribute to the global economy? ?Small businesses also contribute to global economic growth by providing around 66% of global employment opportunities.
• Is Business Resilience key to success? ?The ability to "bounce back" from challenges may not be mentioned as frequently as the other qualities, but resilience is a quality that distinguishes successful businesses from others.
• Why resilience and sustainability are important in business? ?Resilient businesses can innovate and adapt, integrate data and processes, leverage technology, and are adaptable enough to overcome economic challenges
• How can resilience help a business distinguish itself from the competition? ?Resilient qualities assist businesses in differentiating themselves from competitors via a long-lasting competitive advantage.

THE PROBLEM

I know that 85% of project cost overruns are due to a breakdown of controls while most businesses fail due to poor strategic planning, financial controls and lack of resilience. This is from my experience as an independent cost auditor and consultant backed up by data and evidence from several major infrastructure projects and business case studies.

Several innovative business owners are looking for strategy and financial expertise to scale up or transform their businesses and seek grant funding and investors. Many SME businesses also experience challenges with strategic business planning and long-term financial plans to grow their operations.

THE SOLUTION

My proven methodology, cuts across people, processes, control systems and contract and is a personalised approach that helps project and business leaders achieve their strategic commercial and financial goals for the long term.

"I support leaders of innovative businesses and infrastructure projects with their cost assurance strategy. This leverages 25 years of experience as an auditor, and consultant with experience across commercial, finance and project control functions to deliver the services below that help increase revenue/value, optimise cost and minimise risks."

OUR SERVICES

Infrastructure Project Services

• Pre-audit review and diagnostics
• Deep dive forensic cost audits
• Project audit team & programme of audits
• Protocols implementation and training
• Multi-disciplinary Steering Group (a CSR initiative)

Other Services

• ESG Finance, carbon cost audits and sustainability Strategy and Advisory
• Strategic business planning, accounting and x5-year financial statements
• SME strategy including fintech and transformation Advisory

HOW CAN CFBL CONSULTING HELP?

CFBL consulting supports leaders on major infrastructure projects with their cost assurance strategy. We help implement a cost-assurance and sustainable strategic business plan. Our?infrastructure project services ?involve independent pre-audit diagnostic and forensic deep-dive final account audits. This includes delivering a rolling programme of audits, a project audit team and cost assurance protocols training internally and for the supply chain.

Our added value?involves an initial ESG diagnostic assessment, carbon cost, payroll and ESG audit to prevent or evidence greenwashing, strategic business planning and transformation advisory. This includes practical ESG finance training and decarbonisation investment modelling and business case. We govern and assure ESG and sustainable data and provide sustainable strategy advisory. Our?multi-disciplinary steering group ?for cost assurance and audit comprises experts that are driving industry change and transformation.

CONTACT DETAILS

You can contact me via the phone numbers or email below to find out how I can help your projects teams, businesses or supply chain. Alternatively, you can schedule a proposal or walk-through meeting with me in two easy steps via?https://calendly.com/cecelia-fadipe

T: +44 1737452323

M: +44 7951722554

E:?[email protected]

W: www.cfbusinesslinks.com/services