It behooves us to begin this journey into the realm of resiliency to think about how we define resiliency. Because what it is alongside what it is not, matters for the analytical lens we put onto the world.

When many hear the word resiliency, they think about some kind of insurance product or system. This is incorrect in my view.

While insurance and resiliency are related, they are very distinct concepts.

Insuring AGAINST risks v. Resilient TO change

The biggest difference between these two can be seen in the prepositions that we use alongside the nouns. For example, we often think about insuring against risks on the one hand and being resilient to change on the other.

The hints as to the difference are in these prepositions.

Insurance is exogenous; that is to say it is external to a system. The “protection” against the risk is provided by an external party to the system in question.

On the other hand, resiliency is endogenous; that is to say it is internal to a system. The “protection” against the risk is provided internally by the system itself in its design, its capabilities, or it's capacity.

This idea that insurance is largely external to a system (exogenous) while resiliency is largely internal to a system (endogenous) underlies much of my thinking. But, more importantly, it provides a glimpse as to why we have so undervalued resiliency.

Insurance is a necessity v. resiliency is a luxury

Within much of the world we interpret insurance as a necessity. Something that individuals, businesses, and governments need to conduct their daily business. When I have to take all kinds of corporate actions, often I have to provide proof that my business is insured to certain minimum levels. When I drive down the street in most places I need to be able to show that I am insured to certain minimum levels.

Insurance plays an important role in the overall health of our systems. It gives us a certainty around how much risk protection is going to cost us. It allows external actors to more easily interact with us because they know if we misbehave that there is protection against that misbehaviour (which, to them, is a risk). The prototypical example here is driving where other drivers can be assured that there is a high likelihood that if I were to hit them and be at fault that they would be able to have their medical bills and property damage covered.

Insurance also gives us a chance to cost things. I know exactly the cost of me driving in terms of how much I pay in insurance. I know what amount of damage I could potentially do while driving without needing to pay out of my pocket. So it is a clean way for folks to budget risk protection.

Yet, when it comes to resiliency, we often view this as a luxury rather than a necessity. In contradistinction from how much insurance carry I currently maintain in various aspects of my personal or business life, I am never asked to prove how long my business could maintain itself without revenue, or how long I could survive if my ability to find food on the free markets withered.

Instead, we – for the most part – treat resiliency the same way as we treat corporate social responsibility (now called, I hear, environomental, social and governance or ESG). Namely, something that do-gooders or hippies that wear suits well think about – but not “us” hard core business people. Outside the corporate world and in the governance realm, resiliency is thought of even less. Constant is the need to fix what's broken rather than prepare us for what is to come.

In addition to the reputation of the practitioners, resiliency – as something internal – is very challenging to cost out and put a budget around. So it becomes less quantitative and more qualitative. Thereby reinforcing that it is the realm of hippies that like to wear suits and use big words.

Why this matters

It matters that we view insurance as being distinct to resiliency not because one is better than the other. As I stated above, they are both a function of attempts to protect us against the unknown by taking some responsive action. Yet, we must really understand that there is a difference here because it helps us to understand why we have so undervalued the internal realignment processes vis a vis the external insurance processes.

To quickly illustrate this, consider the phenomenon of toilet paper shortages. First, what has happened is succinctly stated in this tweet:

or, here:

or, here:

While it will undoubtedly be true that the actors in the toilet paper supply chain have business disruption insurance and other types of insurance cover, that doesn't really matter in term sof toilet paper being on shelves because the supply chain was non-resilient to the large change in demand to both commercial toilet paper to residential toilet paper.

Resiliency. It matters.

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Cover photo by Tomas Tuma on Unsplash

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