1 LA42: Resilience vs. Recovery What Does Resilience Mean for Business Continuity? Kathleen A. Lucey Tel:

2 A few definitions... From 1913 Webster’s Dictionary, resilience is: “The act of springing back, rebounding, or resiling, as the resilience of a ball or of sound.”

3 More definitions... “The power or inherent property of returning to the form from which it is bent, stretched, compressed, or twisted.” – of objects or substances “The power or ability to recover quickly from a setback, depression, illness, overwork, or other adversity.” – of people “The ability of a system to keep working with one or more of its components malfunctioning. Also called Fault Tolerance.” - of systems

4 Use by Business Continuity  Interagency White Paper on Sound Practices to Strengthen the Resilience of the U.S. Financial System, (draft: Sept 2002, Final: April 2003)  Designed to address the “systemic risk” to the U.S. Financial System in an event such as 9/11.

5 Use by Business Continuity  Interagency White Paper Objectives: Rapid recovery and timely resumption of critical operations following a widespread disruption Rapid recovery and timely resumption of critical operations following the loss or inaccessibility of staff in at least one major operating location. A high level of confidence, through ongoing use or robust testing, that critical internal and external continuity arrangements are effective and compatible. Resilience = confidence in the rapid recovery and timely resumption of critical operations.

6 From the Social Sciences Community (1)  Report: Crisis, recovery, innovation: responsive organization after September 11, John Kelly, David Stark.  Based on analysis of responses from participants in 9/11 recoveries.

7 From the Social Sciences Community (2)  Success factors: 1.Social networks: strong personal ties. 2.Sociotechnological networks. Communications interface between people and technology. 3.Preparedness and redundancy: generative vs. replicative 4.Heterarchy and interdependences: functional empowerment Resilience may dictate many of the same organizational characteristics as are used to foster innovation and prosper through uncertainty.

8 From the Social Sciences Community (3)  The organization of responsiveness: innovation and recovery in the trading rooms of Lower Manhattan. Daniel Beunza, David Stark.  Also based on analysis of responses from participants in 9/11 recoveries.

9 From the Social Sciences Community (4)  Success factors: 1.Responsiveness to a crisis is a combination of anticipation and improvisation. 2.Responsiveness is grounded in “resourceful recognition.” 3.Social relationships are a key feature of organizational response. 4.Lateral extended social ties to external partners are particularly important 5.Both generative and replicative redundancy are necessary. 6.Geographical dispersion is a necessity. Generative preparedness may also contribute to organizational efficiency.

10 From the Social Sciences Community (5)  5 Habits of Highly Reliable Organizations, Keith H. Hammonds.  References the work of Professor Karl E. Weick of University of Michigan at Ann Arbor.

11 From the Social Sciences Community (6)  Characteristics of HROs: 1.Obsess over failures and mistakes, not successes. 2.Listen to the front line. 3.Find the solution in the unexpected or crisis circumstances. 4.Embrace complexity. 5.Create resilience: actively anticipate how to avoid mistakes + see, understand, and adapt to unforeseen reality If this seems a lot like the two 9/11 response analyses, you are on the right track!

12 What does this mean for Business Continuity?  Resilience characteristics: Inherent to the organization. Related to innovation Related to heterarchy: personal and organizational  Measuring preparedness is difficult, but success may depend as much on generative, as replicative redundancy.  The most effective management style for a crisis is probably NOT the military model of a rigid hierarchy.

13 We Need to Change!  BC needs to be placed at the Board level: Organizational Resilience will NOT happen from inside of IT.  BC needs to manage heterarchically across the entire organization.  If resilient behavior emerges by responding, much more ambitious ongoing test programs are necessary: with suppliers, distributors, customers.  But most of all, we need to learn ourselves to help our organizations learn.

14 We Need to GROW!  Accept that we are not the “Masters of the Universe.”  Study new developments; stay open to new ideas.  Connect to related disciplines: emergency management, information security, facilities, infrastructure and physical security...and organizational theory!.  Learn about reliability. THE GOOD NEWS: Resilience is becoming more and more important to a firm’s success!

15 References (1)  Interagency Paper on Sound Practices to Strengthen the Resilience of the U.S. Financial System, Board of Governors of the Federal Reserve System; Office of the Comptroller of the Currency; and Securities and Exchange Commission. Draft (Sep 2002): Final (Apr 2003):  Report: Crisis, recovery, innovation: responsive organization after September 11, John Kelly, David Stark. Center on Organizational Innovation, Columbia University. New York, NY June  The organization of responsiveness: innovation and recovery in the trading rooms of Lower Manhattan, Daniel Beunza, David Stark. Socio-Economic Review (2003) 1,

16 References (2)  *The organization of responsiveness: innovation and recovery in the trading rooms of Lower Manhattan, Daniel Beunza, David Stark. Socio-Economic Review (2003) 1,  5 Habits of Highly Reliable Organizations, Keith H. Hammonds, “Fast Company Magazine, Issue 58, May 2002, Page tp//// *Note extensive bibliography.

17 Q&A??  A copy of each of the reference documents is available for your review after the session.  Thanks for learning!