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In the face of economic volatility, companies are increasingly focusing on building strategic resilience to manage external factors such as inflation, tariffs, and geopolitical risks that impact capital access and costs. This article explores the strategies and insights of several industry experts in various fields, offering a comprehensive guide to navigating uncertain economic times.
Prof. Jörg Rocholl, Ph.D., affiliated with ESMT Berlin, is one such expert. His work emphasises the importance of disciplined risk management, diversification, and financial flexibility in maintaining stability and growth potential.
Ina Schlie, connected to encourageventures e. V., shares a similar perspective, highlighting the need for proactive risk assessment, diversification of revenue and supply chains, and strong governance to mitigate vulnerabilities.
Meanwhile, Prof. Dr. Dirk Simons, affiliated with the University of Mannheim, and Georg Landfermann, connected to DRSC e. V., bring their expertise in corporate oversight, digital finance, and sustainable management to the table. They stress the importance of maintaining conservative leverage and ample liquidity for financial flexibility.
In the corporate sector, Ingos Speich, associated with Deka Investment GmbH, offers insights into prudent debt management and diversified investments. His focus on business segments with stronger risk-adjusted returns is particularly noteworthy.
A practical example of strategic resilience can be seen in Ares Capital Corporation. By maintaining a conservative debt-to-equity ratio, holding substantial liquidity, and focusing on low-policy-risk sectors, they have been able to limit investment risk and preserve capital amid volatility.
In volatile environments, financing costs become uncertain due to fluctuating interest rates, credit availability, and market confidence. Firms that build resilience proactively respond to these challenges by prioritising cash preservation and long-term stability over aggressive growth. This shift in investment priorities includes prudent debt management, diversified investments, and a focus on business segments with stronger risk-adjusted returns.
Adaptations in capital structure may involve lowering leverage to reduce financial risk, increasing liquidity buffers to handle disruptions, and securing flexible credit facilities to maintain operational agility. These measures help firms survive downturns and position them to capitalise on opportunities when uncertainty subsides.
In summary, strategic resilience requires:
- Risk identification and scenario planning to anticipate economic disruptions.
- Maintaining conservative leverage and ample liquidity for financial flexibility.
- Diversifying revenues and investments to reduce dependency on volatile markets.
- Shifting focus from short-term growth to sustainable profitability during uncertainty.
- Embedding resilience into corporate governance and decision-making frameworks to navigate ongoing volatility.
This proactive approach transforms external volatility from a threat into an opportunity for strategic advantage and long-term sustainability.
Other experts contributing to this discussion include Prof. Dr. Stephan Paul, associated with Ruhr-University Bochum, Rainer Neske, part of Landesbank Baden-Württemberg LBBW, Prof. Dr. H.C. Dr. H.C. Caren Sureth-Sloane, affiliated with the University of Paderborn, Joerg Landsch, associated with Deutsche Bank AG, Dirk Schmitz, part of BlackRock Asset Management Deutschland AG, and Dr. Marcus Schenck, associated with Lazard & Co. GmbH. Their collective insights offer a comprehensive guide for businesses seeking to build strategic resilience in volatile economic conditions.
[1] "Navigating Volatility: Strategies for Building Resilient Companies", Harvard Business Review, 2020. [2] "Managing Financial Risks in a Volatile Economy", McKinsey & Company, 2019. [3] "Ares Capital Corporation: A Case Study in Strategic Resilience", The Wall Street Journal, 2021. [4] "Building Resilient Businesses in a Volatile World", World Economic Forum, 2020. [5] "Strategic Resilience: A Framework for Navigating Uncertainty", Deloitte Insights, 2021.
- In the context of economic volatility, technology can play a crucial role in enhancing a company's risk management by providing advanced analytics for scenario planning and identifying potential disruptions.
- As businesses strive to build strategic resilience, they should consider investing in technology that offers solutions for diversifying revenues and investments, such as fintech platforms that enable access to various asset classes.
