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Volume 5 | Issue 5 | Page 38-47 | Oct 2014
Resilience: Navigating toward a Sustainable Future
Ida Kubiszewski
As global systems become more tightly coupled and volatile, unexpected “black swan” events are appearing more frequently.
Twenty-first century pressures such as climate change and global urbanization are intensifying the potential for unexpected disruptions, ranging from natural catastrophes to terrorist attacks. Even minor disruptions may have cascading effects, with severe consequences for both communities and business enterprises. Traditional risk management methods are helpful for routine events, but are inadequate for dealing with rapidly changing threats and opportunities. Instead, managers need to strive for resilience, defined as "the capacity to survive, adapt, and flourish in the face of turbulent change." This article describes how we can anticipate potential vulnerabilities and deliberately design for resilience by improving the diversity, adaptability, and cohesion of critical urban and industrial systems. Strengthening resilience today is a prerequisite for achieving long-term sustainability in the future.
  • As the world grows hyper-connected and the rate of change accelerates, decision-makers are faced with increasing complexity and uncertainty. To ensure a sustainable future, we must adopt a systems approach for anticipating change and avoiding unintended consequences.
  • While resilience and sustainability tend to be synergistic, there can be trade-offs. For example, lean production tends to reduce waste, but may increase the risk of supply chain disruptions. In such cases, companies must improve their agility and reserve capacity.
  • Systems thinking offers greater insight into external forces and hidden feedback loops that can threaten the stability of existing communities, infrastructures, and business enterprises. This enables the application of basic design principles to improve the resilience of these assets.
  • Leading government and business organizations are beginning to adopt resilience strategies; for example, the U.S. EPA is addressing climate adaptation on a watershed scale, while major companies are systematically strengthening the resilience of their global supply chains.

Whenever a disaster strikes, such as the 2011 Fukushima meltdown or the 2013 Boston Marathon bombing, our instinctive response is to overcome the shock, assist the victims, and return to normal as quickly as possible. But perhaps returning to normal is the wrong strategy. Perhaps, instead, we should try to understand the changing conditions that triggered the disaster, and adapt to the new normal.

In today’s tightly connected global economy, a business-as-usual mindset will be challenged by chaotic external pressures and turbulent change. There has been a sharp increase in the number of natural catastrophes during the past 32 years—a trend that has been linked to climate change.1 Other destabilizing pressures include rapid urbanization, resource depletion, and political conflicts. As planetary systems become more tightly coupled and volatile, the incidence of 'black swan' events seems to be increasing.2

Given these challenges, we need to expand our notion of 'resilience'. Resilience is not just the ability to bounce back quickly from a disruption. Rather, we define resilience as the capacity for a system to survive, adapt, and flourish in the face of turbulent change and uncertainty.3 Consider the example of ecosystems such as forests and wetlands, which can recover from severe damage and evolve in response to changing conditions. In contrast, systems designed by humans are more 'brittle', and subject to catastrophic failures. We can learn a lot about resilience by studying natural systems.

The National Academy of Sciences has underscored the need to build resilience in U.S. communities, including flexibility, adaptive capacity, and infrastructure redundancy. One recent study4 recommends that the Federal government "incorporate national resilience as a guiding principle," while a second study5 identifies community resilience as one of four priority areas for interagency collaboration to improve sustainability.

This article describes a variety of solutions for strengthening both resilience and sustainability in urban communities and industrial enterprises. Understanding the dynamic relationships among human and natural systems will help planners to develop more resilient strategies that reduce vulnerability to unforeseen catastrophes, enable continued growth and prosperity, and respect ecological resource capacity. In short, we can design for resilience.

Sustainability: A Hopeful yet Distant Vision

The need for a transition to a sustainable economy is becoming ever more urgent. The productive capacity of the planet is already stressed in meeting current demand for energy, goods and services, while billions of people remain mired in poverty, lacking even basic hygiene. According to the Millennium Ecosystem Assessment, global ecosystems are severely degraded,6 and many believe that we have already overshot the Earth’s ecological capacity.7 Responding to these warning signals, various sustainability principles have been proposed by organizations such as CERES,8 UNEP9, and the Natural Step.10 These principles share many common elements, including waste elimination, natural resource protection, and equity assurance for present and future generations.

rsz_fea_fiksel_figure2_0.jpg
World Economic Forum (www.weforum.org) / CC BY-NC-SA 2.0
An annual report on global risk factors published by the World Economic Forum has shifted in recent years to focus on the importance of addressing systemic risks with resiliency approaches.

Some futurists paint optimistic scenarios of a cooperative, harmonious global economy, with advanced technologies enabling efficient utilization of resources.11 The Rocky Mountain Institute claims that investing in energy efficiency and renewable sources can eliminate fossil-fuel use for electricity, vastly reduce demand for liquid fuels, generate $5 trillion of economic value, and enhance U.S. competitiveness, resilience, and security.12 Similarly, McKinsey has projected that improvements in resource productivity can lead to a more prosperous and sustainable economy.13

However, human foresight is imperfect, and unforeseen circumstances could invalidate these projections. As the world grows hyper-connected and the rate of change accelerates, it becomes increasingly difficult to predict the future with confidence. To anticipate disruptions and ensure a sustainable future, we and others have argued for purposeful collaboration between business and government:

"…it is essential to anticipate change, understand early warning signals, and take steps to avoid, reduce, and mitigate future problems. A new, more systemic approach to problem solving is needed to avoid unintended consequences, anticipate alternative future scenarios, and strengthen resilience in the face of uncertainty."14

Limitations of Risk Management

Risk is a powerful concept for dealing with uncertainty, and has proven useful in many fields such as insurance and geological exploration. For the U.S. EPA and other agencies, risk assessment has become the cornerstone of regulatory decision-making.15 In the business world, it is standard practice to appoint a Chief Risk Officer and establish an ‘enterprise risk management’ process that involves risk identification, risk assessment, and risk mitigation.16 Unfortunately, the most damaging disruptions tend to result from low-probability, high consequence events that are difficult or impossible to anticipate, let alone quantify.

In the face of complexity and turbulence, disruptions are often unforeseen and traditional risk-based practices may be inadequate. The World Economic Forum publishes an annual report on risk factors that may hinder global economic development, ranging from climate change to technological failures to political unrest.17 In recent years, the report has shifted humbly from quantifying specific risk factors to portraying the interdependencies among these factors. The 2013 report acknowledges the importance of resilience for addressing systemic risks that are difficult to predict or to manage effectively.

According to the National Academy of Sciences, risk-based methods are not adequate to address complex problems such as climate change and loss of biodiversity, and more sophisticated tools are available that go beyond risk management.18 Nevertheless, risk management remains an important methodology for dealing with familiar issues such as fires, accidents, diseases, and currency fluctuations. To address less tractable uncertainties, risk management must be supplemented with new methods for building systemic resilience.

Taking a Systems Approach

A systems approach is essential for understanding resilience and sustainability in complex systems. Resilience can be seen as the capacity of a system to absorb disturbances and reorganize, retaining essentially the same function, structure, identity, and feedbacks.19 Table 1 illustrates structure and function in different systems whose feedback loops reinforce their resilience. For example, by pollinating flowers, bee colonies create a positive feedback loop that reinforces the production of nectar. Similarly, by supporting social and philanthropic activities, corporations strengthen the vitality of the communities to which their employees belong. Companies like Wal-Mart and Microsoft have been compared to an ecological keystone species, improving the overall health and robustness of their business network.20

Table 1. Examples of structure and function in living systems

Table 1_4.png

The U.S. EPA has begun to use a systems approach called the Triple Value (3V) Model,21 depicted in Figure 1. This model shows how industrial supply chains and human communities utilize ecosystem services to create value, while generating waste and emissions that flow back into the environment. The yellow lines indicate critical linkages among the economic, environmental and social spheres, including shared value between communities and enterprises.22 To achieve sustainability, we must protect critical natural capital, improve resource productivity, and avoid environmental pollution. However, unexpected disruptions can impair our ability to pursue this vision. To achieve resilience, we must encourage diversity, robustness, and adaptability in both natural and human resources, as well as in governing institutions and supporting infrastructures.

This paper illustrates the practical application of a systems approach to resilience in both communities and supply chains. Table 2 lists typical resilience indicators applicable to real world systems. There are many quantitative metrics corresponding to these indicators; for example, recoverability can be measured in terms of the time required to recover, the cost of recovery, or the maximum tolerable degree of disruption. Also, these indicators may be correlated; for example, stability, vulnerability, and recoverability are all dependent upon the fundamental attribute of precariousness,23 which indicates how close the system is to a critical threshold.

Figure 1. Interdependencies among resilient systems

Table 2_2.png

Table 2. Examples of resilience indicators in human systems

Table 3_1.png

Generally speaking, sustainability and resilience are mutually reinforcing. However, there can be trade-offs, as illustrated in Figure 2. Some technologies and business practices are neither sustainable nor resilient; for example, corn ethanol provides an inferior return on energy and competes for agricultural resources that are critical to food security.24 Other energy technologies, such as 'smart grid', hold the promise of both increased efficiency and improved recoverability through distributed generation.25 Rainwater harvesting is an appealing sustainability practice, but is vulnerable to droughts. Likewise, leaner production methods may reduce waste, but achieving resilience typically requires investment in reserve capacity.

Figure 2. Examples of synergies and trade-offs between sustainability and resilience

Table 4.png

Resilient Solutions in Urban Systems

Cities are perhaps the most complex and turbulent of all human systems, yet they remain extraordinarily resilient. Like living organisms, cities have survived, adapted, and flourished through the centuries, overlaying different cultures, lifestyles and technologies in a rich and evolving mosaic. Today, cities are a crucible of change, where social, economic, and environmental pressures are intensified and sustainability challenges converge.

More than 50 percent of the planet’s inhabitants now live in cities, due to steady migration away from rural areas and traditional lifestyles. Dozens of megacities support over 20 million inhabitants, where wealth flourishes alongside poverty, crime, and despair, and infrastructure systems are severely stressed. In the U.S., some cities have achieved revitalization, while others are plagued by urban decay and a flight to the suburbs. What all cities share are two basic challenges: balancing economic prosperity with quality of life (i.e., sustainability), and overcoming disruptions that threaten human safety and/or business continuity (i.e., resilience).

Many promising urban initiatives have emerged, including smart growth, waste-to-energy conversion, greener buildings, and vertical farming.26 Innovative companies are entering this space and discovering new markets; for example, IBM has launched a worldwide 'smarter cities' campaign using information technology to provide real-time intelligence. 'Smarter cities' can serve as 'living laboratories' to test innovative technologies or policies aimed at improving health, education, neighborhood stability, economic vitality, security, and safety.

Federal agencies, including Housing and Urban Development and Homeland Security, are also investigating community vulnerabilities and resilience improvement strategies. They recognize that national security is no longer merely concerned with defense of U.S. interests against hostile attacks, but also includes protection of our sources of food, energy, water, and materials, which are the foundation of community prosperity.27

In particular, many cities are concerned about the 'stress nexus' that connects water, energy and food. Dwindling water resources threaten to disrupt energy and food production, while rising energy prices threaten to increase the costs of supplying both food and water. Moreover, all three of these critical resources depend on the availability of land, materials, and infrastructures. There are also hidden feedback loops; for example, few people foresaw that corn ethanol use might drive up food prices in Mexico, or that floods in the Mississippi basin might cause biofuel shortages.

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Stefano Corso, Forum PA / CC BY-NC 2.0
Companies including IBM have taken advantage of markets for resilient urban systems. IBM’s worldwide “smarter cities” campaign uses information technology to provide real-time intelligence that can be used to test innovative technologies and policies.

These examples illustrate how short-sighted decisions can lead to unexpected consequences and destabilization of existing systems. One recent report has proposed that governments can take a more adaptive approach called 'anticipatory governance.’28 This will require improving foresight in the face of uncertainty, coordination of governance bodies to develop cohesive policies, and monitoring of consequences for purposes of adaptive management.

The U.S. EPA is exploring how a systems approach can help to anticipate change and solve complex problems. For example, a Triple Value Simulation (3VS) model was developed for the Narragansett Bay watershed in New England to evaluate alternative strategies for coastal sustainability and resilience.29 Excessive releases of nitrogen and phosphorus from wastewater, agriculture, and stormwater runoff can cause algae blooms that degrade aquatic ecosystems and interfere with fishing, recreation and tourism. The 3VS model is designed to help policy makers and stakeholders develop robust solutions, taking into account urban development and climate change. By evaluating key indicators such as nutrient concentrations, beach visits, and tourism revenue, the model has shown that traditional point source controls (e.g., wastewater treatment) can be supplemented with alternative technologies (e.g., green infrastructure).

Resilient Solutions in Enterprise Systems

Most leading corporations have adopted corporate social responsibility and sustainability principles, helping to protect their reputation and license to operate. Nevertheless, many have found it difficult to translate broad goals and policies into day-to-day decision-making. The barriers to progress include perceptions that sustainability conflicts with growth or that sustainability investment will diminish profits. Another important barrier is turbulence—the inevitable short-term crises that distract businesses from their long-term goals. Companies are increasingly expected to disclose 'material risks' that could affect their operations, but many firms are slow to respond until they reach a state of urgency.

In the wake of disruptions such as natural disasters and power failures, a resilient enterprise can recover quickly and sometimes gain a lasting advantage over less agile competitors. A classic example is Nokia’s success in overcoming a March 2000 supply interruption that crippled its competitor, Ericsson, enabling Nokia to increase its market share in cellular phones. Business scholars have defined strategic resilience as the ability to dynamically re-invent business models and strategies as circumstances change.30 Others define resilience in terms of business continuity: "the ability to recover from unexpected disruptions" including chemical spills, information technology failures, natural disasters, or terrorist attacks.31

The 2013 World Economic Forum in Davos was marked by a new emphasis on 'resilient dynamism' as a business imperative. Evidently, multi-national corporations have recognized the need for resilience in a world of ever-increasing complexity, connectivity, and turbulence. The trends toward globalization and outsourcing have created complex supply networks that are vulnerable to many types of disruptions.32 Economic volatility and international security concerns have only increased the likelihood of such disruptions. Automotive firms, for example, have discovered that the adoption of lean production systems, which are highly efficient in a stable environment, has increased susceptibility to schedule delays (see Figure 2). The solution is to design supply chains that are both lean and agile, with reserve capacity at strategic locations.

Major disruptions are not always triggered by catastrophic events. In a complex supply network, small disturbances can cascade into massive discontinuities with lasting impacts. For example, a 2002 labor dispute in California shut down West Coast ports for several weeks, costing U.S. companies roughly $1 billion per day. Unfortunately, the complexity that causes these disturbances makes it virtually impossible to predict their nature or timing. Smooth changes can usually be handled by mid-course adjustments, but real systems do not have smooth curves—sudden shifts may occur when a tipping point is reached. The real challenge is for companies to design their products, processes, and operating practices to be inherently resilient, as discussed in Box 1 below.

Box 1. Supply Chain Resilience in a Global Enterprise

The weakest link can disrupt an entire supply chain. Such disruptions can cause an immediate sharp decline in shareholder value, and some companies never fully recover. The Ohio State University (OSU) has developed a framework for supply chain resilience based on a 'business fitness' index that compares vulnerabilities to capabilities.33 Vulnerability factors include turbulence, deliberate threats, external pressures, resource limits, sensitivity, and connectivity. Capability factors include flexibility, capacity, efficiency, visibility, adaptability, anticipation, recovery, dispersion, and collaboration. OSU’s research suggests that supply chain performance can be improved when the portfolio of capabilities is correctly balanced to match the pattern of vulnerabilities. As shown in Figure 3, highly vulnerable companies with inadequate capabilities may be at risk. Conversely, companies with unnecessarily high investment in capabilities may erode their profitability. This approach has been successfully adopted by Dow Chemical and others.34 Systems thinking helps these companies go beyond traditional risk management and consider how investing in key capabilities will create inherent resilience to hitherto unknown threats.

Figure 3. Supply chain resilience framework

Table 5.png

Design for Resilience

Improving resilience in both communities and enterprises will depend upon innovation in the design of products, processes, and infrastructure systems. Over the last several decades, the scope of design has broadened from a focus on the artifact (building or product) to an integrated view of the system in which it operates, including broader concerns about unintended environmental and social consequences. Design for resilience (DFR) is a further step in that evolution, concerned with the fitness of products, processes, buildings and infrastructure for a changing environment.35

There are many possible approaches for companies and communities to pursue DFR innovations. For example, a collection of distributed electric generators (e.g., fuel cells) connected to a power grid provides structural resilience, since it can compensate for disruptions to a central power station. Similarly, a geographically dispersed workforce is less vulnerable to catastrophic events that might disable a centralized facility. Flexibility of operating facilities and versatility of employee skills are examples of functional resilience, strengthening the ability of an organization to overcome interruptions in critical resource flows.

Box 2. Principles of Design for Resilience
  1. The resilience of human systems, including communities, infrastructures, and enterprises, may be jeopardized by biophysical and socio-economic constraints and/or disruptions.
  2. Human interventions, including new policies and technologies, can improve the ability of a system to remain in a desired state or enable the system to shift to a preferred state.
  3. Indicators of relative resilience can be defined for specific categories of similar systems, thus enabling system comparison, monitoring, and adaptive management.
  4. Human foresight about potential future disruptions can guide the selection of a portfolio of interventions that maintain and/or strengthen the resilience of managed systems.
  5. Even in the absence of foresight, it is possible to increase the inherent resilience of a system by improving characteristics such as diversity, dispersion, flexibility, redundancy, and buffering.
  6. Additional information about the probabilities and/or consequences of specific perturbation scenarios can support the application of risk assessment and management methods.
  7. Resilience is a necessary, but not sufficient condition for achieving sustainability; in particular, there may be trade-offs between short-term resilience and long-term sustainability.

DFR will help an enterprise or a community to strengthen its position with respect to the network of interdependent systems in which it operates. As observed by strategy expert Michael Porter, growth and prosperity are linked to the health of the competitive context, the social and environmental assets that provide employee talent, market demand, and a reliable supply of materials and energy.36 Any type of product, process, or service innovation can influence these linkages in numerous ways. Thus, design is more than just creating an artifact; it is a deliberate intervention within a complex set of relationships.

One important design principle for DFR is 'inherency'—making resilience a natural property of the design rather than an added feature. For example, in emergency operations, a decentralized, multi-agent communications system is inherently less vulnerable to disruption than a centralized system, even though the latter may incorporate costly fail-safe technologies.

Possible targets for DFR interventions include the following:

  • Improving the foresight, productivity, agility, and effectiveness of business processes, from order fulfillment to knowledge management. An example is demand forecasting using data analytics to interpret early warning signals.
  • Improving the quality, reliability, productivity, capacity, and adaptability of enterprise assets, including human, ecological, structural, and technological capabilities. An example is closed-loop production processes that recycle waste, thus conserving resources while reducing dependence on external supplies.
  • Improving creativity, credibility, and collaboration in the context of stakeholder relations, including employees, suppliers, contractors, customers, investors, regulators, communities, and advocacy groups. An example is public-private partnerships to foster climate resilience and adaptation strategies.

Above all, DFR requires systems thinking , since the health and vitality of a community or enterprise depends on the three types of capital identified in the Triple Value Model—human, natural, and economic capital. Companies and communities that wish to ensure their resilience must reach beyond their own boundaries, develop an understanding of the intricate systems in which they participate, and strive for continuous innovation and renewal.

Conclusion: Toward a Sustainable Future

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Mirko Ries, World Economic Forum / CC BY-NC-SA 2.0
Managing Director of the IMF Christine Lagarde and Executive Chairman of the World Economic Forum Klaus Schwab deliver a special address titled “Resilient Dynamism” at the Annual Meeting 2013 of the World Economic Forum in Davos, Switzerland.

Sustainability is often misinterpreted as a goal to which we should collectively aspire. In fact, sustainability is not a reachable end-state, rather, it is a characteristic of a dynamic, evolving system. Long-term sustainability will result not from movement along a smooth trajectory, but rather from continuous adaptation to changing conditions. Therefore, a sustainable society must be based on a dynamic world-view in which growth and transformation are inevitable.

Resilience is a fundamental attribute of living systems, enabling them to resist disorder and thrive in an ever-changing world. As systems grow larger and more structured, their resilience can wane, making them vulnerable to external disruptions and internal decay. A resilience mindset involves embracing variability rather than struggling to maintain constancy. Instead of resisting deviations from a 'normal' state, resilient organizations recognize early signals of change and respond swiftly to maintain their performance and continuity. At the same time, their planning horizon must be long enough to consider the trade-offs between short-term gains and long-term outcomes.

A systems approach reveals how enterprises and communities are linked to the environment, and how they can flourish in harmony with natural systems. We are beginning to understand the resilience of these systems, and to study their cyclical patterns of growth, collapse, and renewal, but traditional modeling and forecasting tools are only valid in small regions of time and space where conditions remain relatively constant. Research is needed to develop more robust, dynamic models of resilient systems, enabling us to better prepare for extreme disruptions.

Finally, it is important to understand the limitations of resilience thinking:

  • Resilience is essentially an amoral concept; it is entirely possible for highly resilient systems (e.g., dictatorships) to violate core human values. The primary motivation for survival and growth must be supplemented by a commitment to justice and human rights.
  • Resilience is typically utilitarian in the pursuit of persistence and performance. It preserves the system function and identity but does not necessarily consider whether the system has a transcendent purpose such as creating value for society.

The world will face daunting challenges in the decades ahead: population will grow to nine billion people, with the majority living in cities, and the pressures on natural resources will continue to mount. To sustain a growing, vibrant economy will require transformative innovations in urban planning, industrial technology, and environmental policy. Business and government must partner to develop solutions, and must communicate effectively to help citizens understand these complex challenges. In the 'new normal' of turbulent change, we must design for resilience in order to ensure a safe, secure, and prosperous future for ourselves and for future generations.

Joseph Fiksel is corresponding author from the Center for Resilience, The Ohio State University (fiksel.2@osu.edu, 614-226-5678); Iris Goodman is with the U.S. Environmental Protection Agency (EPA), Office of the Administrator; Alan Hecht is with the U.S. EPA, Office of Research and Development.

Acknowledgements

The authors wish to acknowledge the contributions of Gary Foley of the U.S. EPA and Keely Croxton, Tim Pettit, and Mikaella Polyviou of The Ohio State University. In addition, we thank the U.S. EPA Office of Research and Development, the National Science Foundation, the Dow Chemical Company, and the National Council for Science and the Environment for their support of an expert workshop on Sustainability and Resilience, held in January 2013 in Washington, DC. This article and many of the other articles in this issue of Solutions were authored by participants in that workshop.

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Joseph Fiksel Executive Director of the Center for Resilience at The Ohio State University
Iris Goodman U.S. EPA
Alan Hecht U.S. EPA
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