The importance of resilience in an increasingly uncertain world

I did some work last year with the wonderful Rahul Nair, Keira Tan, James Tandy and Yi Zhe trying to quantify the concept of 'resilience' and its importance to both individuals and businesses seeking to survive and thrive.

Volatility and uncertainty are now consistent themes across our politics, financial markets, social constructs and environment. The fact that all of these components of our lives are seemingly experiencing volatility at the same time makes this quite a unique period for the human race and challenges the very foundations of the world we have created. The frequency of crises events has accelerated, in the last 15 years we've seen global financial crises, climate crises events erupting across the developed and developing world and now a global pandemic that has shaken us yet again. In-between all of this we have seen a significant shift in global politics reflecting increased polarisation and social unrest. Various institutions and icons across geographies we have trusted for generations have fallen to scandal decaying our willingness to believe, and our confidence in, the 'truths' we are served up on a daily basis.

What I find fascinating is that the two emerging risks we face, health and climate, are great equalisers. The natural world and a virus do not differentiate. These are risks that nobody has been able to hide from due to social status, location or wealth. Now that the 'haves' as well as the 'have nots' are being directly impacted, it will be interesting to see the changing nature of how these global issues are addressed and the priority and speed of action allocated to them by those in power.

Watching David Attenborough's Breaking Boundaries documentary recently was a shocking moment for my daughters. They were visibly scared by how far we have pushed our environment and the implications that they are already living with. At the same time, seeing Jeff Bezos and Richard Branson blasting off into 'space' reminds us of the continued powerful force of human endeavour. These two contrasting images are tough to reconcile, should we be celebrating these new achievements that demonstrate yet again our astonishing capabilities, or see them as superficial escapism for the wealthy and ultimately futile acts that further demonstrate our application of great minds and funds to the wrong causes.

The question my daughters asked - is it too late?

My hope and belief is that every day is an opportunity to turn things around. However, in order to navigate the complexities and uncertainties that exist our resilience to adapt, respond and bounce back from adversity will be critical.

Sustainability, in my view, is at the centre of the answer to how we can create resilience.

1. Sustainable finances: Many of us live beyond our means, increased access to borrowing has enabled progress but it has also created an ability to become over leveraged. Do we truly understand the value of our liquid and illiquid wealth well enough to be able to assess whether we are truly financially secure or not. Sufficient income in retirement is a global issue yet to be effectively tackled and the increasing levels of debt being accumulated by younger segments of society (driven a lot by education, housing costs as well as easy access to credit) together with lifestyle pressures and a difficult job market makes it hard to think beyond the next pay check. To create resilience protection, investments (traditional and non-traditional) and educated use and management of debt will be critical. Entrepreneurship and the ability to create a variety of income sources will become increasingly important in helping individuals achieve financial independence and create value for themselves and the societies they operate in. As average life expectancy continues to increase we'll also need to effectively manage the conflict between living for today and securing our futures.
2. Sustainable skills: The myth of a secure job has been burst. As crises have come and go, it has become clear that no-one is completely safe from losing their job. Technology will also disrupt a large number of job segments which will simply cease to exist. To create resilience we will need to concentrate on the continuous acquisition of skills aligned to changing demand, increase our ability to learn new skills quickly and transform our education system to ensure we are adapting what we teach our children to the world they will enter, not the one that exists today. It will also be important that we teach our children the art of resilience, the mind-set and skills required to navigate difficult moments: defeat, failure, unplanned events, bad-luck, ambiguity and the stamina and will to see out a crises. Some of these learnings will come from the 'school of hard knocks', however, we may also need to adapt formal education in order to arm our youth with the right tools to succeed.
3. Sustainable lifestyle: Our environment, health and wellbeing can no longer be taken for granted. A survey I was involved in recently demonstrated the majority of people, across gender, geography and wealth segments, are concerned about the environment, however, the majority also felt powerless and allocated responsibility and influence to other stakeholders - e.g governments, NGOs and corporations. What we consume, how much we sleep, the hours we work, the amount we use technology, and the resulting reduction in human connection and physical activity that has, and our direct impact on our environment we live in are all elements of our lives that require our attention. In order to be resilient we will need to actively manage and invest in our mental, physical, digital, financial and social wellbeing. There will also be a need for each one of us to take personal responsibility for the environmental impact we can have - positive and negative - through our daily decisions. Small ripples can travel a long way.
4. Sustainable business: For businesses, resilience will again be determined by financial strength, however, there are other important factors. What is the resilience of the sector within which the business operates. During the pandemic we have seen certain industries thrive - e.g big tech and platform businesses and others suffer e.g retail and travel. How agile is the business and those that work within it, it can be argued that although large businesses have capital strength to tide them over a crises, smaller businesses have agility on their sides with the ability to adapt and pivot, make quicker decisions and reduce fixed costs at pace. The ability for a business to identify changing dynamics, mobilise their teams behind a shared purpose and maintain morale through adversity requires a strong Culture. The resilience of the customer base is also important, there is no value in having a resilient business if it is serving and therefore reliant on a segment that lacks resilience. In order to be resilient businesses need to consider sector, agility, fixed/varied cost base, culture and customer base as well as ensuring responsible financial management and capital strength.

The other important factor will be agility. Our ability to flex, adapt and pivot as individuals and businesses quickly becomes critical when the world around us is so unpredictable. We need to be nimble, set ourselves up in a way that allows for high degrees of change and disruption. For businesses this can equate to shifting to more variable cost models, leverage agile talent solutions and partnerships as opposed to building and hiring and creating a culture where people are comfortable with uncertainty. For individuals this can mean thinking differently about ownership (the more we own, the less fleet of foot we become), education and skills (are we acquiring the right knowledge and skills) and location (Covid apart, re-thinking the concept of where home is and could be especially with the breakdown of needing to live where you work).

Human beings and our planet have shown great resilience through the ages, however, it does feel like we're at an important inflection point where the decisions we make today will directly impact the future prospects of both.

Something to ponder on!