Forecast Says Operational Risk To Increase In 2009

  • Feb 18, 2009

iJET Intelligent Risk Systems, a provider of global intelligence and business resiliency services, is advising organizations of a coming increase in operational, facility and supply chain disruptions due to the current state of the global economy. The intelligence firm is also offering recommendations for businesses to prepare for and mitigate increasing risk, as well as uncover potential opportunities during the current economic recession.

iJET's intelligence analysts advise that a weakening global economy can pose a myriad of operational threats to multinational organizations. Civil unrest, labor disputes, crime and deterioration in health services often increase in occurrence and severity during recessions, frequently after cutbacks in government and municipal spending.

Demonstrations across Europe, including economically linked worker protests and strikes in Britain, France, Germany, Greece, Russia and other nations, are recent examples of heightened risks to business operations. iJET is advising organizations to consider these trends as they seek to reduce their expenditures -- without subsequently increasing vulnerability to disruptions that could have far-reaching effects across the entire operational chain.


"The effects of a struggling economy are felt well beyond Wall Street and other financial centers -- they have derivative impact on the 'Main Streets' across the world and can increase vulnerability at a time when organizations are least able to withstand operating disruptions," said Marty Pfinsgraff, CEO at iJET. "We are advising clients to be cognizant of these trends as they reconsider their budget allocations. Mitigating risk in this environment need not mean an increase in spending, but may mean allocating current spending more judiciously -- on early warning indicators, monitoring of threats to key operating units and suppliers, and reviewing of continuity plans to ensure appropriate escalation and communication protocols are in place."

A business that has invested in a solid resiliency plan is less vulnerable when a crisis occurs, furthering its ability to not only survive but to prosper when more normal conditions return. The capacity to maintain operations during today's global economic crisis can provide a longer-term competitive advantage.

To help organizations avoid disruptions and maintain productivity in 2009, despite a tough economy, iJET recommends the following:

  • Re-visit Current Resiliency Plans. Make sure your emergency response, business continuity and resiliency plans, processes and systems are poised to work when a disruption occurs. Review escalation and communication protocols.
  • Be More Productive with Current Spending. Benchmarking against industry peers may provide insight into alternative ways to achieve best practices without significantly increasing budgets. Outsourcing and effective use of technology may provide cost-effective ways to get more productivity out of your current budget.
  • Monitor Early Warning Indicators. Ensure that you are monitoring the broadest set of operational threats possible: safety and security, geopolitical, health, transportation, environmental, and technology. Review escalation procedures so that those who need to know and take action are informed in a timely and reliable manner.
  • Assess Threats to the Extended Enterprise. Today, the greatest threat to your operations may be the disruption of a key supplier upon which operations and revenues depend. Assessing threats to the extended key suppliers, partners and customers becomes critical during an economic recession.
  • Ensure You Have Objective, Appropriate Response Solutions in Place. Over-reacting to a potential threat can be just as damaging as under-reacting. Loss of confidence with key clients and vendors can result from pulling out of markets pre-maturely. Organizations can earn substantial goodwill now by demonstrating resiliency and commitment during a downturn -- actions that will ultimately pay dividends once the economy recovers. Make certain you are receiving objective advice and that your response vendors and resources are aligned with your business objectives, not theirs.