Rosenthal & Kouzmin

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Institutional resilience, Crises and Vulnerability Management

The number of “normal accidents, soft-core disasters and creeping crises” has increased in the last 15 years. “CNN-crises” (those big and dramatic enough to appear on the US news channel, CNN) are on the up, including Chernobyl, the Gulf Wars and 9/11. They are large-scale crises, which seem to have the potential for disaster literally built into them (Perrow, 1984)

Institutionally resilient companies (crisis-prepared companies, Mitroff and Alpaslan, 2003) need to continuously search for vulnerabilities and not ignore any abnormal signal (this would make them a crisis-prone firm).

Many “lean”, re-engineered firms may be in more danger of collapsing in a crisis, due to their “optimising minimal-cost parameters for ongoing performance”, doing away with redundancy and back-up facilities.

Lean organisations are a paradox, as they are built for strength and survival, but their institutional resilience is decreased, meaning that in a crisis they will be the first to go.

Firms need to be aware of history and encourage deep thinking, rather than focussing on short-term economic and political requirements. They need organisational vulnerability audits to understand their businesses better with regards to how to cope in a crisis.

Institutional resilience is related to High Reliability Theory (HRT)