Resilience is the latest buzzword in financial circles – espoused by regulators as a vital component in the fight for customer protections. But resilience is not new. In its various guises it suggests an ability to withstand undue pressure or a capacity to recover from a setback or the flexibility to quickly spring back into shape.
In the financial world, the term resilience is focused on banks, insurers and investment firms having sufficient safeguards in place (including monetary reserves) to help them fend off shocks to their business models. The emphasis is in preserving the integrity of the financial system so that it operates effectively at all times to the betterment of consumers and investors (including shareholders).
Heretofore, other means were used to tackle the required robustness and resourcefulness of institutions by insisting on ever-higher capital requirements; tighter regulatory rules and more demanding adherence to procedural controls. It is now recognised that this rigidity of thought flies in the face of what is required; namely flexibility/agility to respond to consumer demands.
Highlighting the corporate entity as the primary and sole target for resilient behaviour is an unfortunate mistake. Resilience has a much wider remit and it deserves to be treated with rightful reverence. At its most fundamental level, resilience is an aptitude that ensures individuals (not large institutions) remain happy, contented, confident, etc. despite tough times or a sudden mishap. There seems little point in demanding resilience of inanimate corporate entities, whilst ignoring the features of how exactly directors, management and staff might respond.
The greatest display of resilient behaviour is achieved where the collective responses of individuals pull together in a shared, concerted reaction. That’s true resilience and that’s what will help any company recover from a systemic shock. The underlying collectiveness of effort is colloquially termed a common corporate culture. It is as indescribable as the vastness of the solar system – and yet we recognise it instinctively when we see it in action.
Individual resilience is very personal and stems from good mental health and positive interactions with family, friends and colleagues. The collegiate effect can be very reinforcing and the team effort and success can be inspirational. It is this spirit of togetherness that leads to dynamic achievements and job satisfaction. It cultivates motivated staff and supports the handling of change. When trying to develop a responsible culture within any organisation, management might be better advised to concentrate more on supporting personal resilience.
While much of this sounds highly aspirational, it is desirable and it is achievable. Greater personal resilience leads naturally to improved communication and workplace relations. It engenders a productive and competitive business environment. It stimulates the attainment of business targets and a drive towards meeting higher expectations. Without doubt, it arouses a united and coherent approach to ethical behaviour. Behaviour that is in the common good and supports customer demands.
Regulators may not be bothered how financial participants achieve resilience; but companies themselves should concentrate on promoting and encouraging personal resilience above all else.