Economic resilience, a key lever for growth - Mazars Group

Interview with Professor Wilson from Warwick University on economic resilience.

How do you see the role of a service-minded firm such as Mazars in advising its customers to put in place the right strategy and organisation to be resilient?

"Absolutely central. The majority of firms have very little expertise in building in resilience. There are a number of reasons for this: It is new; building in resilience for something that either has not happened yet, or seems a long way into the future, rarely gets given priority treatment by the Board and Policy Committees; resilience is difficult to define and, therefore, many firms consider resilience does not pass the cost-benefit test. The role of Mazars is to help define resilience for firms, and what it means for them, and then to offer practical guides and suggestions for building in resilience."

Is there a “recipe” for resilience? Does resilience derive from a specific strategy or from the business model / foundations or from the values of a company? Or maybe from the combination of the 3?

"It is a combination of all 3. The longer an organization has been in business, the more influential history and institutional pressures will be on shaping how resilience is managed and perceived. There are many firms which argue: « We never needed resilience in the past and we have survived and thrived – why do we need it now?”.

This will vary greatly, however. Organizations which are in the ‘front line’ are affected immediately by recessions, pandemics, disasters, and perhaps, terrorism and will nearly always have a degree of resilience built into their strategies and will put resources into planning and contingencies. Other organizations in sectors less directly affected will rarely want to invest and their business strategies are unlikely to include resilience planning. It is extremely unlikely that resilience will have been built into business planning as part of the strategy making process. Even when disasters occur, such as those in Bhopal, India, or floods and the recent trapped miners, organizations rarely learn and build in knowledge gained for any further exogenous ‘jolts’."

Back to Mazars: which kind of concrete inputs can it bring to its customers to make them resilient?

"I think you have to be clear in defining and communicating to senior policy makers exactly what resilience is – and how it might be built in to their strategic processes. My own work in this field suggests that there are two key factors measuring resilience. The first is prepared-ness and the second is adaptability. Preparedness examines the extent to which individuals, organizations and systems, societies, eco-systems or bio-social systems, can prepare for threats and extreme events, which may be known but which are also, perhaps, poorly understood. Preparedness involves effective risk management, but also requires organizational agility.

Key measure of this agility are: technical: the extent to which organizational systems perform to high levels when subject to extreme stress; organizational: the preparedness of people to make decisions, however counter-intuitive these might sound initially, and to take actions to reduce disaster vulnerability and its impact; resourcefulness: the capacity of people to identify potential problems, establish priorities and mobilize resources to avoid damage or disruption and rapidity: the capacity of people to make decisions on threats without undue delay.

Adaptability examines to what extent systems, organizations and individuals can recover following the occurrence of extreme events and what forms they take after recovery. How do organizations reduce their exposure to subsequent risk once an extreme event has occurred? How do they learn? Mazars could have a huge input to both factors."

Do you think that auditors and consultants are committed to this responsibility towards their customers as far as resilience is concerned?

"Difficult for me to answer since I don’t have comparative data across a range of auditors and consultants. There are some big names involved but my impression is that only a minority are committed to resilience vis a vis their customers."

What would you expect from Mazars or any audit and consulting firm to do from this perspective (question 4), what is your advice for them to achieve this goal, that is to say to successfully contribute to their customers' resilience?

"This is a tricky question to try and answer. Most of the auditing / consulting firms are busy trying to define resilience in their own ways and, hence, are not really contributing directly to customer value yet. In my view, some are becoming specialists and therefore, providing a generalists service to a range of organizations might be a worthwhile strategy to pursue. Resilience for a small retail outlet is very different to resilience for an airline or a bank, for example, but both need aspects of preparedness and adaptability."