Growth must go hand-in-hand with resilience
To build a dynamic economy with thriving businesses, we must lay the groundwork and put resilience planning at the heart of business thinking, says Jordan Cummins
If there is any certainty in business, it is the certainty of change. And the speed of that change in the last decade has been relentless. From geopolitical tensions and a global pandemic, to technological and supply chain disruption, firms both large and small have withstood unprecedented threats and national crises, reacting and responding with adaptive systems and solutions.
The lesson learned by business and governments across the globe is that to build a dynamic economy with thriving businesses, we must lay the groundwork and put resilience planning at the heart of business thinking . Without firm foundations, economic growth is fragile and unsustainable. And while globalisation has brought significant benefits, the nature of that interconnectedness increases our vulnerability to external shocks.
As we turn the page on 2024, we will continue to see this play out. Conflict in the Middle East may affect volatile commodity prices or add delays and costs to shipping. There is the potential for trade landscape changes with an incoming Trump Presidency and a promised reset by the UK government in our relationship with the EU. And these are layered on top of the existing challenges of climate change, food and energy security.
Preparing for risks
Yet the CBI’s latest report ’Strengthening the UK’s Economic Resilience’ reveals that just 29 per cent of businesses feel they have sufficiently invested in building their resilience to economic shocks. Half of firms identified financial risks as a key concern for operational and supply chain disruption as well as cyber security threats. And while boardrooms and politicians are broadly aligned on the necessity of this resilience, the primary focus has been around lacklustre investment and growth. But growth and resilience are two sides of the same coin, equally necessary for businesses to endure shocks and stand the test of time – so how do we forge them both together?
Just 29 per cent of businesses feel they have sufficiently invested in building their resilience to economic shocks
As we saw during the pandemic, regular engagement, sharing of challenges, and co-designed policy, has to be step one. Remarkable examples of business agility emerged as companies moved at speed to transform ways of working and business models to protect jobs and bottom lines. Together, with government, the private sector navigated the most unclear of landscapes and demonstrated the power of partnership to tackle threats. Yes, this was extraordinary, but the threats our economy faces today are far from ordinary.
This is where governance and architecture matters and the state can act to ramp things up a gear: our recommendation is to scope the remit of a bolstered risk committee, convening resilience leads from all different government departments alongside both industry and academia. An accountable overarching body like this, would effectively monitor and develop mitigation strategies for current and emerging risks – crowding in business expertise.
But we know this is not just about what more government can do. Businesses should proactively seek to embed resilience at the core of their operations by taking the appropriate steps which help them respond to, and adapt through, external shocks.
Governments past and present have taken welcome steps to develop safeguards. The government’s early review of National Resilience, and its place within Industrial Strategy Green Paper, are both big ticks in the box. The proposed trade and national infrastructure strategies in 2025 are the next test for connected policy thinking.
Today, 58 per cent of firms feel that the risks to their operations and supply chains have increased compared to two years ago – a figure which feels unlikely to drop substantially anytime soon. So, as the Chancellor reiterates, if it’s genuinely time for growth and the tough decisions that need to be made, let’s make sure resilience and adaptability gets the same attention as investment. If one overtakes the other, that growth can’t be sustainable.
Jordan Cummins is interim chief policy and campaigns officer at the CBI