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Global disruptions are increasing operational risks, pushing COOs to strengthen supply chains and protect business continuity.
Supplier diversification, selective stockpiling and faster decision-making help businesses reduce disruption costs.
Recovery time, supplier dependence and decision speed help COOs measure operational resilience and improve preparedness.
In a late-2025 Gallagher survey of 1,200 business leaders, 86% reported a supply chain loss in the past year. Tariff changes, conflicts, storms, and cyberattacks now overlap. One shock rarely stays in one place. Chief Operating Officers (COOs) run daily operations. Each shock reaches them first. Their response now affects revenue, not just logistics.
For years, operations ran on efficiency. Stock stayed low. One trusted supplier served each need. That worked well when little went wrong. Gallagher now describes a shift from ordering parts at the last moment to keeping spares on hand.
In a Sphera survey of 200 senior operations and finance leaders, 44.5% of organizations reported losing 3% to 4% of their annual revenue to disruption over three years. The average annual loss was 2.4%. Resilience has become a finance topic as well as an operations topic.
Dependency mapping comes first. McKinsey found that 95% of companies can see risks at direct suppliers. Only 42% can see beyond them. A COO may discover that three separate vendors rely on the same factory. If it stops operating, all three vendors could be affected. Of firms that have mapped second-tier suppliers, fewer than half keep regular contact with them.
Flexibility comes next. A car without a spare tire is lighter and cheaper. A flat tire then ends the trip. Spares work the same way in a plant. A second supplier, extra stock of one key part or a partner with free capacity can keep output moving. Each costs money. Stock ties up cash.
Gallagher reports that nine in ten businesses are stockpiling or considering it. Storing more goods in one place raises exposure to storms and theft. Safety gained in one area can add risk in another. The task is choosing which items deserve protection.
Speed completes the picture. Sphera found that detection takes about 8.7 hours. Understanding the impact takes more than 40 hours. That is roughly two days. During that delay, a business may struggle to switch suppliers, move production, or warn customers. Information often sits in separate departments.
Each team sees only part. Connected systems show what a late shipment means for orders. Leaders then act while options remain. Gallagher found that 22% of companies act only after a disruption has occurred.
Spending on resilience needs proof. COOs track a few simple measures. The table shows five.
A longer stock cover looks safer. It also costs cash and adds storage risk. Each measure should be read next to its cost.
People decide how a plan performs. Staff trained for more than one role keep a team running when someone is absent. Shared forecasts and prompt payment keep supplier relations strong.
Good relations make it easier to find alternatives when materials run short. Companies are also shortening supply lines. Gallagher found a move toward sourcing nearer to home or from neighboring partners.
Speed of decision matters as much. Approval chains built for normal weeks cost hours in a crisis. Clear rules help. A plant manager may be allowed to approve a backup supplier up to a set limit. Everyone knows who decides before trouble starts.
The same approach applies to IT outages, staff shortages, and site problems. Supplier risk is one part of a wider set of operating risks.
Also Read: COO AI Operations Framework: How AI Agents Can Redesign Business Workflows
Disruption will keep arriving. The next gains will come from speed. Firms that shorten the gap between a warning and a decision will recover first. Not every threat can be controlled. Gallagher found that only one in four businesses rate their defenses against geopolitical threats as very effective. Regular drills are one answer.
A COO may ask, 'Our main port closes for a month.' Who decides? Who calls the backup supplier? What do customers hear? Teams that have answered these questions in advance will act faster when the real event comes. No one can forecast the next shock. Readiness for many kinds of surprise is the realistic goal.
Also Read: How COOs are Balancing Store Expansion with Operational Profitability
Resilience may soon sit beside revenue and margin in routine company reports. Once recovery time is reported each quarter, every choice about stock, suppliers, and staffing will carry a visible price. Firms that start recording these numbers now will establish a baseline against which they can measure future progress.
1. What is operational resilience in business?
Operational resilience is a company's ability to maintain essential operations, manage unexpected disruptions, and recover quickly without major financial or service losses.
2. Why is operational resilience important for COOs?
It helps COOs protect business continuity, control operating costs, reduce supply chain risks and maintain customer commitments during unexpected disruptions.
3. How can COOs reduce supply chain disruptions?
COOs can diversify suppliers, maintain critical inventory, map supplier dependencies, monitor delivery risks, and develop alternative sourcing arrangements.
4. How does technology improve operational resilience?
Integrated business systems help COOs connect supplier, inventory, production, and financial information, identify potential problems, and make faster operational decisions.
5. How can businesses measure operational resilience?
Businesses can track supplier dependence, recovery time, inventory coverage, backup supplier readiness, and decision-making speed to assess their resilience.