Digital operational resilience: What it is and why it matters now
Disruptions in life are inevitable. Digital operational resilience (OR) ensures your business can prepare for, respond to, and quickly recover from critical IT operations disruptions. With the rise in multi-cloud, edge, and AI adoption, data and applications are dispersed across environments. Now, more than ever, resilience strategies must cover the entire IT estate. Staying current on cybersecurity trends and best practices is critical for cybersecurity leaders to manage the fast-evolving daily threats and overall exposure enterprises now face.1 Even something as benign as a software update can wreak havoc, as demonstrated by the CrowdStrike event in July 2024. The incident spotlighted how even the most sophisticated cybersecurity companies can be vulnerable to massive disruption, demonstrating the importance of being ready for the unexpected.
Digital OR is a moving target, with new threats and regulations continually coming down the pipe. It transcends traditional risk management and business continuity. It requires a proactive, agile approach to ensure a business can adjust and survive in unexpected, adverse circumstances such as cyber-attacks, system crashes, natural disasters, and shifts in market forces.
Why Digital OR needs your immediate attention
Due to the increasingly volatile nature of global business environments, geopolitical unrest, and the dramatic increase in cyber-attacks, operational resilience has become a top concern at the board level. To put this into perspective, the global average cost of a data breach now sits at $4.88 million as attacks grow more disruptive and put growing pressure on cyber teams.2 In addition, the cyber ecosystem is becoming more problematic. 41% of organizations that have suffered an incident attribute it to a third party, such as a vendor, supplier, or contractor.3
At the same time, digital transformation has increased risk. This is primarily down to the rapid adoption of digital technologies, the complexity of interconnected systems, and the continuously expanding threat landscape. Digital transformation comes with significant business benefits, but it requires a holistic approach to managing risks, or it can hamper change initiatives. Unfortunately, 70% of transformation initiatives are still failing4. This is often down to poor execution and strategies. Robust Digital OR is fundamental to a successful transformation as it provides the guiderails, adaptability, and security to deal with the complex changes that are required.
Digital transformation has introduced more risks - Operations are vulnerable to internal and external risks and threats
Identifying the risk areas is vital in strengthening an organization’s defences in the digital landscape. Digital OR is critical to safeguarding an organization’s assets, reputation, and long-term growth by proactively anticipating risks and creating robust mitigation strategies encompassing people, processes, and technology.
Digital OR is imperative today to address the following:
- Increasing cyber threats
- Tightening regulatory pressures
- Market volatility and supply chain disruption
- Risk to operations through digital transformation
- Inconsistent customer experiences due to disruptions
As you can see from this extensive but by no means exhaustive list, Digital OR is non-negotiable. It is crucial for organizations to not only survive but thrive by rapidly adjusting after disruptions and adapting operations to the potential of disruptions. This demands flexible, scalable strategies that can handle the knock-on effect of globally interconnected interruptions that can impact the wider business.
The inclusion of Alfabet in a Digital OR toolkit as part of this strategy is essential in building a robust foundation for adaptability, visibility, and informed decision-making. Alfabet provides a comprehensive framework for enterprise architecture and strategic portfolio management. This framework ensures that all digital assets are aligned with business objectives and resilience strategies, which will be discussed fully later in this whitepaper.
Unlocking the power of Digital OR for sustainable business performance
Resilient organizations thrive in the face of unexpected disruptions, handling even full-blown crises with decisiveness and agility. According to the BCI 5, most organizations have an operational resilience program in place or are building one. Yet resilience strategies often stall after two years unless there are regulatory reasons to continue, according to analyst firm Gartner. 6
Resilience projects find it difficult to get executive buy-in as strategies are not adequately aligned with business goals, are siloed, and are usually based on rigid traditional frameworks that are not flexible enough to accommodate the requirements of the modern enterprise. This provides little improvement to overall organizational resilience.
Pain points organizations experience include:
- Regulatory complexity and regional specifications
- Difficulty in identifying critical IT assets, processes and third-party dependencies
- Rapidly increasing and more sophisticated cyber threats
- Lack of in-house expertise and resource constraints
- Complex, fragmented IT infrastructures
- Poor cross-department collaboration and siloed data
- Difficulty in justifying investment and measuring ROI
If these pain points resonate, it’s time to reassess your Digital OR strategy. Building resilience requires cross-department collaboration, leadership buy-in, and investment in technology and training. These requirements may seem considerable, and not all will be relevant to every industry. Banking and financial services are examples that are unlikely to be severely impacted by supply chain issues. However, it is essential that each organization determines what applies to it and ensures that it is fully prepared for the unforeseen. It is paramount that the Digital OR strategy is powerful yet flexible enough to deal with the totally unexpected, such as the supply chain disruptions linked to the pandemic.
"By 2026, 80% of the resilience planning introduced under COVID-19 will have failed, been forgotten about, or shelved."
While related, Digital OR goes beyond business continuity and risk management. It is the overarching concept that ensures that an organization can continue to operate and recover in the face of any type of disruption.
- Business continuity management is a component of operational resilience but tends to be reactive. It centers on planning and processes to ensure an enterprise continues to function during and after a disruption. It involves creating specific continuity plans and processes to resume normal business operations in predefined situations.
- Operational risk management is a strategy that concentrates on identifying, assessing, and managing risks that can impact day-to-day business operations. It is primarily risk-focused, targeting risk identification, mitigation, and control.
- Digital OR, however, integrates both these elements into a unified strategy to withstand any type of disruption, securing ongoing operations across all fronts.
Harvesting the benefits of Digital OR
A robust Digital OR strategy provides significant benefits for organizations in an increasingly complex and interconnected business environment. It enables greater agility and adaptability when responding to unexpected events, such as natural disasters, pandemics, and cyber-attacks, while dealing with everyday disruptions. Digital OR is not just about surviving disruptions. It is also about advancing and thriving through them.
"Enterprises deal with an average of 1,636 cyber-attacks per week"
Core benefits of Digital OR
Enhanced cybersecurity
Shoring up security has never been more critical as the threat landscape grows and bad actors become more sophisticated in their attacks. Digital OR includes strong cybersecurity measures that protect against data breaches, malware, ransomware, and other cyber threats, ensuring data integrity and business continuity. This includes addressing current issues and preparing for potential future challenges to ensure the business stays as secure as possible. A resilient infrastructure allows for quicker identification, containment, and recovery from a breach in the event of a cyber-attack.
"95% of enterprises will have failed to enable end-to-end resilience in their supply chains by 2026"
Strengthening supply chain resilience
The pandemic highlighted vulnerabilities in supply chains, emphasizing the need to manage third-party risks and ensure critical supplier continuity. According to Gartner, however, enterprises are still finding it difficult to move from being forecast-driven and focused on accuracy to managing uncertainty in their supply chains. Leveraging technologies such as AI and digital twins can help organizations with decision-making and forecasting models.
Regulatory compliance
Many industries, such as financial services, healthcare, and critical infrastructures, are subject to strict regulatory requirements. Penalties for lack of compliance are high. The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) fined TSB Bank plc in the UK £48.6 million for operational risk management and governance failures, including poor management of outsourcing risks, relating to the bank’s IT upgrade program. 7 A comprehensive Digital OR strategy helps ensure compliance at all levels, mitigating the risk of penalties and legal action.
Protecting brand and reputation
A proactive resilience strategy helps maintain customer retention, trust, and stakeholder confidence. Shareholders, for example, take operational risk events seriously in the aftermath of an event. Financial services firms, for example see a decline of nearly 4% of their share price 120 days after an event, equivalent to 14 times the associated loss.8
Reduce long-term costs
Investing in a resilience strategy does demand upfront costs and commitment, but it significantly reduces the impact of potential disruptions, which reduces long-term costs. For example, resilient businesses are less likely to experience severe operational losses due to downtime or regulatory penalties.
Competitive advantage
Businesses that can deal with disruption and continue to deliver their services have a clear competitive advantage over their competition, attracting investors, partners, and customers who see them as lower risk. It is little surprise, therefore, that Gartner 9 found that 73% of enterprises have made risk-related supply chain network changes in the past two years, for example, as improving resilience has displaced cost efficiency as one of the top drivers of network change.
Minimizing financial losses
Initial investments in resilience pay off by reducing disruption-related costs—from business recovery expenses to revenue loss and reputational damage. It speeds up recovery time by proactively preparing enterprises to absorb shock rapidly, restore critical services, and reduce overall downtime.
Resilience and business sustainability
Aligning resilience with long-term business strategy ensures enterprises are prepared for unforeseen challenges, such as economic change, political instability, health crises, and environmental issues.
Crisis preparedness for enhanced decision-making
A strong resilience plan enables business leaders to anticipate risks and make informed decisions when dealing with disruption. This valuable insight allows them to act quickly in critical situations and avoid any errors that could make the situation worse.
Stable workplace environment
Employees are more likely to trust and engage with an enterprise that can demonstrate it is prepared for disruption and can manage a crisis. A transparent resilience plan reduces the impact of disruption on employee productivity and helps maintain worker loyalty and retain talent.
Digital OR is not new. So why the urgency?
Traditionally, organizations have approached Digital OR through a combination of risk management, business continuity planning (BCP), disaster recovery (DR), and crisis management. These efforts have been somewhat siloed, focusing on specific aspects of resilience rather than taking a comprehensive, integrated approach.
In modern businesses, risks and disruptions affect multiple areas simultaneously, so siloed actions can miss critical interdependencies and lead to holes and, therefore, vulnerabilities in resilience planning. This is where Alfabet comes in - helping bridge these silos by providing a unified platform that integrates BCP, disaster recovery (DR), and crisis management into a cohesive framework with enterprise architecture as the fundament for visibility, targeting of hotspots and understanding what needs to change in the make-up of the IT.
The dynamic enterprise demands a holistic resilience strategy
The pandemic was a global wake-up call that spotlighted the importance of operational resilience. Enterprises that lacked robust resilience strategies were caught asleep at the wheel when it came to lockdowns, work-from-home initiatives, supply chain problems, and changing customer behaviors. While some had some resilience strategies—often found to be inadequate—many were caught completely off guard.
This unprecedented breakdown in the order of everyday business operations made enterprises realize the urgency of developing resilience strategies to deal with the totally unexpected.
With Alfabet, organizations can centralize data and insights on digital assets, interdependencies, and risk factors, which allows them to see how specific risks impact business capabilities and continuity. Alfabet also supports scenario planning and impact analysis, which enables proactive preparation for various disruptions rather than reactive crisis management.
Why Alfabet is invaluable in your Digital OR toolkit
Resilience depends on capable tools. Alfabet offers unique features that support an integrated operational resilience strategy aligned with modern business demands. Digital OR today demands an integrated, holistic approach to managing risks, ensuring business continuity, and aligning IT with organizational goals. Alfabet provides the components to achieve this effectively.
An integrated approach to both business and IT resilience
As a comprehensive Enterprise Architecture Management (EAM) and Strategic Portfolio Management (SPM) tool, Alfabet is designed to help organizations manage their IT landscapes, align technology with business strategy, and enhance decision-making when it comes to IT investments, risks, and resilience.
The solution supports businesses by providing a structured way to analyze, plan, and control IT assets, processes, and capabilities in a way that aligns with broader business objectives. This is achieved by enabling enterprises to map out their entire IT landscape and understand how different systems, applications, and services connect to critical business operations.
Visualization tools present the IT landscape and join the dots between dependencies, risks, and resilience. This insight is displayed on customizable dashboards, allowing decision-makers to focus on the most critical components of their resilience strategy.
What sets Alfabet apart
There are many tools on the market that claim to help with operational resilience. Still, they focus on either IT asset management or risk management and fail to create holistic, integrated visibility. Alfabet’s unique combination of EA and SPM capabilities enables enterprises to assess the impact of disruptions across the entire organization. This allows preventative measures to be taken by identifying vulnerabilities across both business and IT environments.
Alfabet’s core strengths
1. Alignment of IT and business strategy
One of Alfabet’s biggest advantages is its ability to align IT strategy with business objectives by providing a top-down view of the organization. This ensures that the enterprise’s technology framework is robust, secure, and responsive to internal and external business demands, ensuring smooth day-to-day operations. To achieve this, it is essential to assess the criticality of business capabilities and the IT systems that are relied upon so that resources can be effectively provided during a disruption.
By visualizing how IT investments and systems support business processes, capabilities, initiatives, and strategies, enterprises can make sure resilience strategies are in tune with broader business objectives. This allows for smarter decision-making when it comes to prioritizing investments in resilience, such as cybersecurity initiatives and disaster recovery, for example.
2. Risk and impact analysis across complex IT vistas
Alfabet includes impact risk analysis tools that enable organizations to simulate and gain insight into how different risks, disruptions, or system failures from cyber-attacks, for example, affect both upstream and downstream processing activities. An example is tracking third-party services to implement risk mitigation against potential outsourcing vulnerabilities.
Insights highlight the impact such issues can make on the broader IT and business landscape, from internal departments and processes to external partners and suppliers. Such an approach is critical to operational resilience as it allows proactive management, preparing for disruption before it actually occurs.
3. End-to-end risk management and resilience planning
Unlike many resilience or risk management tools that hone in on a single aspect of risk, such as business continuity, Alfabet provides an overarching integrated view from risk identification through to mitigation strategies. It allows organizations to understand the implications of change and plan accordingly.
Alfabet supports resilience planning by enabling enterprises to prioritize risks based on their potential impact on critical operations - ensuring that digital operational resilience is grounded in both the business and IT framework and ensures continuity for business-critical applications and systems.
4. Visibility through real-time monitoring and reporting
While many tools on the market provide real-time monitoring capabilities, they lack any integration with strategic and operational frameworks. Alfabet comes into its own here: its monitoring and reporting features are directly aligned with IT and risk management strategies. This makes it invaluable for smart, strategic decision-making by allowing enterprises to act quickly on real-time data.
Alfabet enables enterprises to track their IT assets, processes, and performance in real-time. Such visibility is pivotal to rapidly identifying potential issues affecting operational resilience. In addition, detailed reporting features are paramount to tracking the progress of resilience initiatives, carrying out regulatory audits, and demonstrating compliance to stakeholders.
5. Linking investments to resilience objectives
With Alfabet, enterprises can examine how technology impacts resilience. Connecting IT management with enterprise architecture can help ensure that investments in IT infrastructure, applications, and resilience solutions, such as backup systems and cybersecurity, are matched with business and risk management objectives. Enterprises can thus allocate resources to the most critical areas of operational resilience and minimize the number of incidents and costs associated with disruption. It also enables them to integrate new technologies and services into operations while mitigating risk.
Compliance is critical to the success of Digital OR
Regulatory compliance is critical to Digital OR because it ensures that enterprises are prepared to withstand, respond to, and recover from disruptions while adhering to legal, industry, and governmental standards. And these regulations are growing in both size and stature.
Many industries, such as finance, healthcare, and energy, are heavily regulated to ensure business continuity and the protection of critical services. Compliance with regulations such as the GDPR (General Data Protection Regulation) or DORA (Digital Operational Resilience Act) is not only a legal requirement but also a framework that helps organizations prepare for and recover from operational disruptions.
And these regulations usually come with teeth. DORA - which is designed to ensure operational resilience across the European financial sector in the event of severe operational disruption - could see organizations rack up substantial daily fines for non-compliance. Companies that can demonstrate resilience through compliance are better able to avoid the costs of fines, lawsuits, or operational downtime.
Standardizing processes
Compliance provides a standardized approach to resilience by ensuring that all organizations within an industry adhere to baseline requirements. Through mandatory audits, reporting, and assessments, compliance frameworks establish consistency in identifying vulnerabilities and implementing controls to mitigate operational risks. By complying with established frameworks and industry standards, organizations establish consistent procedures for managing issues and disaster recovery while ensuring business continuity. Many compliance frameworks, like the European Central Bank’s TIBER-EU, guide financial institutions to meet cyber resilience testing requirements, providing a clear path to compliance under DORA.
Aligning with risk management
Enterprises often align compliance frameworks with risk management best practices, which are central to operational resilience. These frameworks guide enterprises in identifying, assessing, and mitigating risks that could impact operations during a crisis. By complying with standards such as ISO 22301 (Business Continuity Management) or ISO 27001 (Information Security Management), enterprises can make sure they have the right systems, processes, and people in place to reduce the repercussions of any operational disruptions.
Compliance: the cornerstone of Digital OR
Compliance is the foundation for Digital OR. It ensures that organizations are prepared and protected and can rapidly recover from disruptions in a structured, systematic way. It coordinates resilience practices with regulatory requirements, risk management, and business continuity. Without compliance, organizations expose themselves to multiple significant risk factors, including financial, operational, and legal risks.
Alfabet: a centralized way to manage IT assets, risks, and compliance
Many organizations find regulatory compliance in digital operational resilience challenging due to the complexity and volume of regulations being introduced, the need for continuous monitoring and adaptation, resource constraints, and increasingly fragmented infrastructures. A lack of visibility into infrastructures, for example, makes it difficult for organizations to single out critical processes and maintain a consistent standard of compliance across operations. Regulatory compliance in operational resilience requires a coordinated, well-resourced, and agile approach – and this is where Alfabet comes in. It provides a centralized, structured way to manage technology assets, risk, and compliance, strengthening overall operational resilience and preparing organizations to meet regulatory requirements effectively.
Alfabet achieves this by providing the following:
- Enhanced visibility into technology and business processes so that organizations can understand compliance-related risks and address them appropriately
- The ability to track compliance requirements, assign accountability, and assess compliance status. The tool’s framework supports a host of regulatory standards, including GDPR and the National Institute of Standards and Technology (NIST), developed to reduce cybersecurity risk.
- OR planning and testing, enabling organizations to plan and implement resilience measures and show compliance with regulatory expectations for operational continuity
- Documentation and reporting capabilities to maintain a record of changes in technology and business processes, allowing organizations to quickly and efficiently respond to audit requests
- Architecture and portfolio management capabilities allow organizations to systematically deploy specific best practices, such as business continuity and disaster recovery. Change management capabilities enable a flexible and agile framework to manage resilience continuously and always be compliant.
Digital OR – are you ready?
Building resilience provides benefits that go well beyond simply preparing for crises. These include streamlining IT operations, optimizing processes, strengthening compliance and governance, boosting customer trust, and supporting long-term financial health.
Why now is the moment to strengthen and reassess resilience strategies
In an increasingly precarious world, businesses must fully own their risk profiles as managers of their operations. This is not just about acknowledging risk; it is about managing risk and resilience across supply chains, markets, and customer ecosystems. 10 It’s not a tick-box exercise to meet a regulatory deadline. Digital OR is a continuous process requiring commitment and resources to succeed. A strong resilience strategy is critical for businesses to adapt quickly to technological advances and new threats, safeguarding business operations and digital transformation efforts from unforeseen. It isn’t too late. By implementing robust digital OR now, organizations can protect their operations, stakeholders, and future growth, ensuring they can navigate and thrive regardless of the world’s challenges.
To learn how Alfabet can take your OR to the next level—standardizing practices, removing bottlenecks, and improving coordination across the business—please contact us.
References:
- Gartner 2024 cybersecurity trends www.gartner.com/en/cybersecurity/topics/cybersecurity-trends
- IBM cost of a data breach report 2024 https://www.ibm.com/reports/data-breach
- World Economic Forum Global cybersecurity outlook 2024 WEF_Global_Cybersecurity_Outlook_2024.pdf
- McKinsey Common pitfalls in transformation https://www.mckinsey.com/capabilities/transformation/our-insights/common-pitfalls-in-transformations-a-conversation-with-jon-garcia
- BCI operational resilience 2023 file:///C:/Users/User/Downloads/BCI-Operational-Resilience-Report-2023.pdf
- Gartner two focus areas on improving operational resilience 2024 https://www.gartner.com/doc/reprints?id=1-2HE7J9NT&ct=240425&st=sb
- Bank of England TSB fined £48.65m for operational resilience failings | Bank of England
- McKinsey and Co response and resilience in operational risk events 2023 Operational-risk events: Response and resilience | McKinsey
- Gartner reglobalization to drive supply chain performance 2024 https://www.gartner.com/en/newsroom/press-releases/2024-08-14-gartner-survey-shows-73-percent-of-companies-have-made-supply-chain-network-changes-in-the-past-two-years
- GFMI Operational resilience in financial institutions conference https://www.marcusevans.com/conferences/gfmiopsresilience
