Throughout this article, “we”, “KPMG”, “us” and “our” refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity.
A new approach to resilience
In today's rapidly evolving and interconnected business landscape, organizations face unprecedented challenges and an increasingly complex and volatile risk landscape that can threaten their competitiveness and future survival.
The World Economic Forum’s Global Risks Report 2024 notes that amid rapidly accelerating technological change, economic uncertainty and geopolitical tensions, global sentiment for short-term growth is low, with the potential for further deterioration over the next decade.
Resilience has emerged as a critical factor — and a significant differentiator — for businesses looking to navigate today’s challenges, drive strategic agility and achieve sustainable growth. By developing the ability to anticipate, respond to and adapt to disruptive events, while embracing a forward-thinking, flexible and adaptive mindset, organizations can not only survive but also thrive in the face of adversity.
Future-focused companies are embracing the power of data and artificial intelligence (AI) to help build and strengthen enterprise resilience. This article illustrates how agile decision-making, empowered employees and a willingness to experiment and learn from failures are among the keys to resilience in a bold new era of rapid change.
We share revealing real-world examples of how companies have overcome their challenges and emerged stronger as the rapid pace of change accelerates. And look at the key components of KPMG’s enterprise resilience framework and how it is helping these businesses build resilience and achieve their strategic objectives in an increasingly uncertain world.
Resilience amid complexity is now a key differentiator
While resilience is often associated with the ability to respond to and recover from disruptive events, it is equally important to recognize its strategic significance. Resilience is not just about bouncing back from adversity. It is about developing and sustaining the agility, adaptability, foresight and competitive advantages that have become critical to thriving in the face of today’s adversity.
The accelerating pace of change — driven by geopolitical tensions, climate change, technological advancements and shifting consumer preferences — has created an environment where traditional sources of competitive advantage are no longer sufficient. Economies of scale, vertical integration and even cohesive cultures have given way to time-to-market economies, flexible structures and organizations with fluid cultures that embrace experimentation and innovation.
In the current landscape, enterprise resilience emerges as a key differentiator between organizations that simply react to change versus those that proactively anticipate and strategically shape their future. Resilient organizations can not only recover from disruptions but also use these challenges as opportunities for growth and transformation. They are characterized by their ability to continuously create new competitive advantages that can help keep them one critical step ahead of rivals. This can require shifting from a problem-solving mindset to an opportunity-seeking orientation, where challenges are viewed as catalysts for innovation and growth.
Moreover, enterprise resilience is not a one-time achievement but an ongoing process that demands constant attention and nurturing. In our view, it requires visionary leadership that fosters a culture of innovation, anticipation, experimentation and continuous learning. By embedding innovation into their organizational culture and putting it at the core of their growth strategies, resilient organizations can be positioned to continuously create new sources of competitive advantage.
Resilience in today’s reality is data-driven and AI-based
Traditionally, resilience has been viewed as a qualitative attribute, often discussed in abstract terms such as adaptability, robustness and flexibility. However, to truly understand and enhance the resilience of an organization, we believe it’s essential to take a quantitative approach to resilience management — one that’s data-driven and AI-enabled.
Quantitative enterprise resilience frameworks offer businesses a powerful tool to navigate today’s unprecedented challenges. By leveraging advanced computational techniques, businesses can integrate various factors associated with resilience principles into a comprehensive model that supports decision-making in a very complex and fast-changing world.
By modeling the dynamic interactions of human and organizational factors, the quantitative framework provides a holistic view of resilience to identify potential vulnerabilities, help optimize mitigating strategies and identify growth opportunities. By integrating resilience assessment and optimization into their strategic planning processes, organizations can gain a deeper understanding of their resilience profile and make data-driven decisions to enhance the management of risks and opportunities.
The following compelling case studies reveal how a data-driven and AI-enabled approach helped two leading organizations overcome adversity and uncertainty to achieve impressive results.
A Fortune 500 company in the energy sector was determined to navigate the complexities of the modern business landscape. The complex business faced a formidable challenge: establishing and achieving its financial goals in an increasingly uncertain world. The stakes were high, and the path forward was unclear.
Specialists from KPMG China, armed with the power of data analytics and AI algorithms, set out to assess the resilience level of the company’s annual financial outlook and identify strategic initiatives that could enhance their prospects for success.
Our innovative approach helped predict the probability of attaining the planned financial key performance indicators (KPIs) and discover that the initial probability stood at a mere 48 percent. Undeterred, KPMG professionals collaborated closely with the company to reprioritize their strategic initiatives, carefully analyzing each option's potential impact and return on investment (ROI).
As a result of collaborative efforts, the probability of achieving the desired financial ambition increased to 62 percent — a significant improvement. To help ensure continued success, a monitoring dashboard was created that allowed the company to track and visualize the efficiency and effectiveness of their financial resilience in real time.
With this powerful tool, the company could make informed decisions, adapt to changing circumstances and confidently navigate the path to financial success. KPMG’s guidance gave them greater control over their financial destiny — ready to tackle new challenges.
A Fortune 500 consumer health company found itself grappling with the complexities of channel management. They faced numerous challenges, including channel risks, resource allocation inefficiencies and the need to strengthen sales capabilities among more than 20,000 retail stores. The road ahead appeared daunting, but they were determined to overcome these obstacles and emerge victorious.
KPMG China helped the company enhance their channel resilience and, together, embarked on a transformative journey by leveraging the power of data analytics and AI algorithms to help identify key risk points, optimize resource allocation and boost sales efficiency. Through meticulous analysis and the application of advanced techniques, such as hierarchical clustering and optimization models, KPMG professionals identified opportunities for improvement and developed targeted digital solutions.
The results proved significant. Transit time was reduced by 15 percent, redundant scheduled visits were eliminated and work efficiency improved for 95 percent of sales representatives. Most impressively, 13 percent of the company’s stores experienced a significant increase in sales volume.
To help ensure the company could sustain these gains, a comprehensive dashboard was developed to monitor channel resilience and provide monthly in-store execution recommendations through a cutting-edge mobile application. Armed with these tools and insights, the company was empowered to make data-driven decisions, adapt to evolving market dynamics and consistently outperform competitors.
The path to enterprise resilience for a new era begins here
Data-driven and AI-enabled decision-making is positioning more organizations to make the timely and informed decisions needed to make a difference in today’s environment. Increasing business complexity has, in most cases, rendered the traditional approach obsolete for informed decision-making.
KPMG’s enterprise resilience framework helps organizations anticipate and flexibly adapt as they navigate the complexities of today’s business environment with foresight, predictive capabilities and informed decision-making. The key components of enterprise resilience include strategic, operational, reputational, financial, technological, and organizational resilience.
By leveraging vast amounts of data from various sources, companies can gain a comprehensive understanding of their risk landscape and identify potential vulnerabilities. Using advanced AI algorithms and machine learning, organizations can analyze data to help uncover hidden patterns, predict potential disruptions and simulate various scenarios. They can make informed, proactive decisions and develop robust enhancement plans. The framework also emphasizes the importance of continuous monitoring and improvement, allowing companies to adapt and refine their resilience strategies as new challenges emerge.
Ultimately, enterprise resilience has become a defining characteristic of successful organizations that embrace continuous innovation to remain competitive and drive growth. In our experience, forward-thinking organizations are embracing resilience as a strategic imperative.
KPMG firms take pride in being a trusted collaborator for companies seeking to build and strengthen their enterprise resilience. Our proven framework and real-world case studies demonstrate the value and effectiveness of leveraging data and AI in helping to navigate uncertainty and achieve long-term success. If you're ready to fortify your organization's resilience and emerge stronger in the face of adversity, we're here to help you every step of the way.
