Organizational resilience as a key property of enterprise risk management in response to novel and severe crisis events

Abstract

AbstractThe COVID‐19 pandemic represented a novel risk event. Research on similar past crises identified risk culture and leadership as properties of effective enterprise risk management to enable companies to respond “like a rubber ball” to such events. The focus of this paper is on the question of how enterprise risk management (ERM) can develop such resilience. A comprehensive literature review was undertaken to enrich the ERM framework with insights from organizational resilience theory, resource and dynamic capability theory and system psychodynamic thinking, addressing the human dynamics at play when coping with such a crisis. It was complemented by a global empirical study among C‐level executives in insurance on the management of the COVID‐19 pandemic. Some key insights were identified: a learning culture, a strong system permeability, a clear purpose, strong leadership to ensure alignment and autonomy of teams and a culture of trust, where employees feel safe, but also dare to take courageous steps to benefit from the crisis. While the newly developed organizational resilience framework identifies the key themes, the organizational resilience map provides guidance on how to develop organizational resilience. This paper enables researchers and practitioners to identify key themes to render a company more resilient to unforeseen risk events.