Organizational Resilience to Disruption Risks: Developing Metrics and Testing Effectiveness of Operational Strategies

This study draws from the system resilience literature to propose three different metrics for evaluating the resilience performance of organizations against disruptions: the initial loss due to the disruption, the maximum loss, and the total loss over time. The first metric reflects the initial impact of the disruption, whereas the second metric reflects the subsequent maximum impact of the event, measured at the time when recovery begins.  The third metric then provides a combined measure of both robustness and recoverability, similar to the original measure of loss of resilience provided by Bruneau et al. (2003). 

Using the three resilience metrics, the study shows that different types of operational slack and operational scope may have different effects on these metrics and that they may benefit organizations in different ways. In particular, the study shows that inventory slack negatively moderates the relationship between the severity of disruptions and the resilience metrics—in terms of the initial loss, the maximum loss, and the total loss over time. The results also show that if the severity of a disruption is high, then firms with higher business scope are significantly more resilient to disruptions, but if the disruption’s severity is low then business scope may not be beneficial to firms. These results indicate that it may be the added complexity associated with more business diversity that leads to negative impacts on performance.

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