McKinsey Quarterly 2023 Number 1

The next frontier of resilience Faced with overlapping disruptions and a complex European situation, executives need to decide where to concentrate their forces now, over the next six months, and beyond. The key questions to answer are about response, foresight, and adaptation:

• Response. Do I have the right capabilities, and am I acting on all resilience levers to respond adequately to the current situation?

• Foresight. Can I anticipate what is going to happen next?

• Adaptation. Am I able to adapt fast to a new situation?

To answer these questions, leaders must take a step back and apply a comprehensive resilience lens. Forward-looking companies have begun to structure their resilience agenda across the three activities—response, foresight, and adaptation. They are further differ entiating their response, targeting actions in the six dimensions of the enterprise. Whether - moving to defend or advance, companies may pull from a large range of resilience levers that are tailored to their specific profile, industry, and starting position. With fast adaptation, companies can meet their longer-term goals of sustainable and inclusive growth for customers, employees, investors, and the larger community. Response First things first. With severe challenges pressing, companies may have to address immediate gaps in their resilience profiles. They may face financial challenges such as liquidity con straints, or they may have to resolve disruptions in their supply chain, such as missing key - inputs for their products. Before jumping into action mode, companies may take a step back and consider an initial resilience assessment to gain the needed perspectives on the six dimensions of institutional resilience (Exhibit 3). How prepared is the company to withstand repeated shocks and disruptions? What short term growth opportunities are within reach, and what will it take to capture them? What changes will enable the company to make that crucial pivot to accelerate into new realities? In domain after domain, and capability by capability, the assessment will discover where investment in resilience is needed and identify the actions that will close the gaps, defend value, and advance to new growth. As illustrated in the exhibit, each of the six resilience dimensions will have its own specific set of levers that allow a company to play offense or defense. For example, in digital resilience, a robust digital, analytics, and cyber risk framework may, on the defense, help safeguard the company against digital failures or cyberattacks, while on the offense, it may pay dividends in at-scale digital transformation by ensuring robust and scalable busi ness application of data and analytics. - Let’s take a closer look at response, foresight, and adaptation.

It is essential that companies understand the levers available to them across the dimensions, the offensive and defensive capabilities, and the time horizon for creating impact. The

McKinsey Quarterly 2023 Number 1

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