Business Resiliency in Unpredictable Business Climate – Converting One Dimensional BCM Practice to Multiple Dimensions Tony Yen Deputy Head of Corporate Risk and Broking, Willis (Taiwan) Limited
Abstract • Global risk dynamics from natural catastrophe to man made disaster has made business challenge even more volatile these days. • From the history of BCP, how can hi-tech companies & industry leaders think off better continuity objectives in achieving greater, smarter enterprise sustainability. • Just early this year, 0206 Meinong earthquake had strike southern Taiwan hi-tech manufacturing cluster with hard lessons learned. • How do we know if next disaster come with same magnitude hit us again, business leaders with different discipline from hi-tech will do the recovery differently • From our Semicon experience, the BCP practices always be an unique single dimension movement. Can we change to other dimensions from planning angle to testing angle to justify our BCP readiness • Also, are we really giving BCP activities a measurable ROI index as another new dimension to measure its readiness and effectiveness • When we are measuring BCP as individual company KPI, what is the common recovery objectives the industrial cluster should be clearly defined before company start up their BCP/BCMS exercise
Global risk landscape in changing days
Global Risk Landscape • According to WEF published Global Risk Report 2016 11 Edition • Climate change mitigation & adaptation failure has been identified as one of the top 10 global risk concerns with increasing likelihood and impact by global leaders.
Global Risk Landscape – Macro Trend in terms of Likelihood
Global Risk Interconnection Map 2016
Global Risk Concerns by Region
Technology sector 2016 risk score in 5 megatrends
Willis Towers Watson Technology, Media & Telecom Risk Index – 2016 Megatrend Business Digitalization Operational Regulation Global Talent Model & & Megatrends are Complexity & &Legal Risk & Skills Race Strategy Technological Vulnerability defined as global, Pressures Advances macro forces that impact business and the marketplaces that they operate in. Regulatory Lengthening A growing The pressure to Irresistible uncertainty supply chains shortage of skills stay relevant in technological arising from the and precipitating and talent across the TMT sector progress and explosion of the greater the TMT sector demands a escalating data economy, operational is making continuous consumer active antitrust complexity turn attraction and output of expectations are law and TMT companies retention of key innovation and forcing heavy IT unpredictable vulnerable. people a critical diversification. investment in. political cycles Exposure to success factor. The threat from This expenditure affects TMT global and Simultaneously, nimble market is felt no more organizations. regional events, the pressures entrants and an acutely than in Business both natural and created by evolving demand the management strategies, sociopolitical, employment profile is driving and protection of commercial threaten regulation and firms to innovate data, which is arrangements infrastructure, demographic and reassess simultaneously and day-to-day human change are their structures becoming TMT firms’ greatest operational resources and reshaping talent and business decisions are all operational management. models. asset and impacted. security. vulnerability.
The 50 Risks in 5 Megatrends
The 50 Risks in 5 Megatrends
The 50 Risks in 5 Megatrends
The History of Continuity & Sustainability Thinking
A Brief History – Initiation of Business Continuity 544 – 496 BC BCMS – 1940s WW II ISO 22301 1950 – 1960 Cold War 1970s Royal Dutch Shell
Strategic Planning of Resilience • The initiation of Resilience Concept – Mulberry Harbor A & B A Mulberry harbor was a portable temporary harbor developed by the British in WW II to facilitate rapid offloading of cargo onto the beaches during the Allied invasion of Normandy.
The BCM Development Roadmap in Taiwan Semiconductor Manufacturing Community • Insurance Companies Concerning Business Interruption Exposure in Semiconductor Fab Since 1990s • Post Experiences due to Major Semiconductor Fire Losses in 1990s • Client Awareness in Supply Chain Resiliency Since 2000s • Catastrophic Events Awake Semiconductor Companies After Major Earthquakes in 2000s • Shareholder/Senior Executive Awareness Since 2006 • CSR Promotion & Sustainability Awareness in Late 2008 • Best Practice & International Standard Releasing in 2010~
Beyond One Dimensional BCM Practice
The Concept of Dimensions in BCMS Topology : • a magnitude that, independently or in conjunction with other such magnitudes, serves to define the location of an element within a given set, as of a point on a line, an object in a space, or an event in space- time Plan Who When What Whom What How
The Difference of Dimensions in BCMS Dimensions in BCMS: Risk Culture A. Risk Cultural, B. Continuity Objective, C. Organizational Competence, D. BC Plan Maturity & E. Response Simulation & Validation. -Readiness / -Maturity +Readiness / +Maturity
A. Risk Culture – What Characterises a Good Risk Culture? • According to a recent report from the Institute of International Finance (IIF), a positive risk culture includes: – Committed leadership – Horizontal information sharing – Vertical escalation of threats or fears – Continuous and constructive challenging of the organization’s actions and preconceptions – Active learning from mistakes – Incentives that reward thinking about the whole organization – An effective governance structure • Access to authority • A Chief Risk Officer (CRO) with extensive influence • Communication of risk tolerance to the organization and external parties – Evidence of management objectives linked to risk management objectives
A. Risk Culture – Critical Components The values and norms of behaviour within the organisation generally support Organisational Culture effective management of risk Risk, Appetite, Strategy The company’s attitude towards risk is clear and appropriate & Policies Leadership throughout the organisation have a focus on risk appropriate Leadership Commitment decision-making communication and behaviour Roles and Organisational Roles, responsibilities and rewards are determined in keeping with effective risk management Structure Process & Risk controls and process are appropriate, clear, timely and effective Controls Reporting & Management There is effective reporting and documentation of risk activity Information Technology & Infrastructure IT systems are designed in a way that supports effective risk management The approaches to manage risk are clearly understood and appropriate to the Tools & Methodology need
B. Continuity Objectives – Your Return-On- Investment • Cost versus RTO & Impact Extreme High Cost Acceptable Busin Business Imp mpact downtime Curv Curve Impact Worst Case Impact Cost Max. cost of control Cost Co t of of Rec ecovery Curve Curv Time to Recover One week
C. Organizational Competence Crisis Normal Competence Mode Mode
D. Plan Maturity – 100 Times EQ Results 100 Scenarios 100% 100% Project Expectation Based on BCM Controlling Capability Loss of Confidence Scenario Independent Based on personal Based on historic Misinterpret past experience losses & lesson Probability Strong Commitment learned Measurable Performance 0% 0% Catastrophic Insignificant Size/Scale of Incident
E. Response Simulation & Validation Learning Changing Impact Mind-set State-of-the- art Risk Real Experience Management Simulation Establishing Practice & Method for Risk Based Case Studies Operational Excellence Group Exercises Building & Implementing Conferences Property Conservation Practice & Lectures Awareness Reading Improvement
Conclusion • Business resilience is an art to strengthen Risk Culture corporate readiness facing unpredictable challenges. • Strategic thinking with out of box innovation is crucial element helping semiconductor industry leaders shaping business position more sustainable. • The strong will and ambition to keep business sustain is the corner stone for -Readiness / -Maturity +Readiness / +Maturity immediate actions.
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