Resilience And Risk Management in Customer Service

Risk management meeting

The recent events involving the global pandemic took risk management and resilience to a whole new plateau for the business world.

The unforeseen circumstance that changed the financial landscape took many by surprise and only those who managed to capitalize on change survived and grew. Indeed, only in the US, more than 340 companies  declared to have gone bankrupt citing COVID-19 as one of the causes of their demise. This number includes companies the size of Guitar Center, Hertz, and Ruby Tuesday among others.

How can flexibility and risk management work as a competitive advantage and make your company grow through resilience in turbulent times? Customer service is crucial in this equation.

If It’s Not Measured, It’s Not Managed

First of all, what every company needs to have is full visibility over the operational structure. This does not only refer to the actual operations floor but all it needs to work daily. Thus, it is essential to have a complete blueprint of what needs to happen to conduct successful business. In that regard, Will Grannis, Managing Director, founder, and leader of Google’s CTO Office told Forbes  that the first step towards becoming a resilient organization is to have “maximum observability of the overall system”. In other words, to conduct a thorough assessment to see where you stand, what are your strengths, and which are your growth opportunities. If something is not measured, you can’t see it, and hence, can’t correct it.

Let’s Talk About the Domino Effect

Once you’ve mapped out the operation, you need to understand the domino effect inside the organization to conduct a successful risk assessment. In a recent article by the MIT Sloan Management Review, the case of the tsunami that hit Japan ten years ago is addressed as an unforeseeable disaster that had consequences much beyond the island. For example, in the article, the authors cited the case of General Motors Corp. closing three manufacturing plants in the US due to the lack of components they were sourcing from Japan. Because the company didn’t do a proper risk assessment and created a contingency plan, it lost millions.

This domino effect is of paramount importance in customer care because it is the fuse of any organization where angry customers will direct their complaints. Thus, for example, if General Motors didn’t plan on that either, the number of unanswered complaints could have created an even bigger loss.

Risk Management: Understanding Weaknesses & Challenges

How can you prepare to cope with unforeseen circumstances? Well, first of all, you need to understand the gaps and weaknesses your customer service department faces. In some cases, it might be a lack of personnel, a bottleneck in phone lines, possible internet outages, among many others. A good risk management policy is to address weaknesses with robust contingency plans and put them into practice before you need them to work. This is what McKinsey & Company in a recent article called “Proactive Risk Management”. In their statement, redundant systems need to be seen as an asset directed to long-term success. In other words, aiming all cannons towards reducing costs and maximizing profit is great when everything is calm but can lead to a disaster (or even bankruptcy) if no redundancy is left to cope with during disrupting moments. For example, overstaffing for moments of critical need is a good measure. Perhaps, your operator’s idle time is financially less significant than losing customers because you weren’t there for them when they needed you. If you want to understand third party risk management, click here.

Learning and Growing: Finding Resilience

A good explanation about the true nature of resilience is given by inspirational speaker and author Simon Sinek, in which he explains that there is no such thing as “back to normal” because “normal” is always changing, and thus, we need to constantly adapt. He explains the impact of the internet, streaming services, Starbucks, and COVID-19 among other major changes in the world, and how those who were able to adapt were the ones who could absorb change and make it a competitive advantage and those that couldn’t, just didn’t make it.

Finally, in an article by Servicenow, the authors name four steps to operational resilience: anticipate, prevent, respond and recover, and adapt. This approach is crucial to understanding that there is no such thing as responding and recovering without adapting to the new normal if you want to successfully conduct business; especially in customer service. The article states that if all our focus is on survival, we can’t make the most of the unique learning experiences that turbulent times provide. Hence, finding true resilience is capitalizing on change to grow instead of desperately going back to a version of the status quo that, probably, no longer exists.

Customer service is, often, the fuse of the company. It is the department in charge of communicating with customers during turbulent times and cascading information that can explain outages, disruptions, and disasters. In that sense, it needs to be flexible enough to absorb change and adapt. Learning through resilience is a crucial asset in every organization.

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