Fiona Watson
Vice President, Corporate Performance and Accountability, WBCSD
For the past three decades, most global organisations have been built for efficiency. That model is now under strain as the nature of risk itself is changing.
Geopolitical disruption, economic fragmentation and rising physical risks due to the changing environment are no longer sporadic or isolated. Local shocks, such as extreme weather or infrastructure issues, spread through supply chains, increasing costs, causing delays and reducing revenue unpredictably.
Factors that drive operational disruption and their impact
Operational disruption is being driven less by rare catastrophic events and more by frequent secondary perils, increasing the impact of business interruption. These impacts show up as persistent pressure on margins through supply chain breakdowns, productivity loss, asset damage and rising insurance premiums. They are increasingly felt by customers and monitored by investors.
Resilience is shifting from an operational compliance issue
to a strategic source of competitive advantage
Financial models are struggling to keep up. Traditional one-year insurance cycles are increasingly misaligned with long-term risk exposure and opaque forward pricing. Leading organisations are starting to treat insurance and risk financing as strategic planning inputs by integrating multi-year premium forecasts and alternative risk transfer mechanisms into capital allocation decisions. Insurance is no longer simply a hedge against loss; it has become a forward signal of operating viability in exposed markets.
How technology is helping firms build resilience
Technology is helping firms respond, but it is also forcing harder choices. Detailed mapping of supplier networks, logistics hubs and infrastructure dependencies enables organisations to model disruption across multiple tiers of their value chains and quantify the financial impact of operational shocks before they occur. This insight is informing decisions about where to source, where to produce and how much redundancy to build into global operations. The result is a notable shift from optimising globalisation to building resilience. Resilience is shifting from an operational compliance issue to a strategic source of competitive advantage. Organisations that have visibility on material risks and opportunities in their value chains are redesigning their operating models and value chains for long-term stability, resource security and sustained growth in a more fragmented world.
