How prepared are companies to respond to significant disruptions? Perhaps not as prepared as they think they are, a new study suggests.
Virtually all (95%) of 1,137 functional leaders surveyed between Aug. 27 and Sept. 1 by professional services firm Highspring said their organization was disrupted by something outside their control within the past 12 months. Two-thirds were disrupted more than once, with twice being the most common frequency.
Most of the disruptions involved common scenarios such as systems that couldn’t scale, tariffs, new competitors and critical roles they couldn’t fill, according to Highspring’s report.
Among each of the 10 functions led by the survey participants, 80% to 82% rated theirs as being “prepared” to respond to disruption.
Asked further to rate the level of confidence that their companies could handle a major disruption today, the most confident respondents were unsurprisingly those at the largest companies. Among those at companies with annual revenue of $2 billion or more, 61% reported they were “very confident,” compared with 36% of those with revenue of $250 million to $500 million.
However, in a counterintuitive finding, the study also found that the largest companies were the least likely to specifically plan for unknown risks. In fact, more than half (53%) of the $2 billion-plus companies said they rarely or never do so.
To be sure, that largest group of companies reviews their known risks more often — 37% of them do it at least weekly — than any of the other size categories. “But reviewing the risks you’ve already identified can’t create the same readiness as planning for the ones you haven’t,” Highspring opined. “The companies most sure they could handle a disruption plan for one the least.”
CFOs, for their part, saw more risk in every part of the business than CEOs do. For example, where 10% of finance chiefs saw operations as “exposed to disruption,” just 4% of their bosses felt the same. Just 8% of finance chiefs believed the finance department itself was exposed to disruption, compared to 3% of CEOs.
The pattern was consistent across all 10 of the studied functions, which also included leadership, sales, IT, cybersecurity, supply chain, customer service, compliance/legal and workforce.
CFOs pointed to outdated technology as their biggest operational issue. Perhaps displaying some turf defensiveness, it ranked near the bottom of the list for surveyed CIOs.
Each C-suite member, Highspring wrote, has a different perspective on risk: “The CEO believes each function is ready. The CFO identifies more exposure across the organization. The CIO views individual functions as prepared but has less confidence in the company as a whole. The real risk emerges when those perspectives aren’t brought together.”
