From risk to readiness: why scenario testing matters more than ever

From risk to readiness: why scenario testing matters more than ever

Rehearsal is strategy: why leaders must train for turbulence

For Australian organisations, the risk landscape has fundamentally shifted. Threats are no longer isolated events, they are cascading, complex, and frequently unpredictable. This makes them inherently more difficult to respond to. 

The rise of technology in recent years has transformed business operations but also introduced a complex web of threats – this won’t relent in 2025. Artificial intelligence is now being harnessed to produce targeted, evasive malware capable of breaching systems, even those that are comprehensive and well-defended. 

Geopolitical tensions in the Indo-Pacific region are generating sustained volatility that is disrupting established trade routes and placing immense pressure on critical supply chains. As strategic rivalries intensify and diplomatic relations fluctuate, businesses are facing increased uncertainty, logistical delays, and heightened exposure to regulatory and security risks across key maritime and economic corridors.

At the same time, climate-related disasters are an escalating threat, with their frequency and severity only increasing. From floods to bushfires, climate events pose significant risks to your business. These threats continue to challenge traditional insurance solutions and expose systemic under-preparedness, potentially leading to substantial financial losses through property damage, supply chain disruptions, and operational downtime.

In this context, exercising is no longer a compliance activity. It is a leadership tool to strengthen your organisational muscle memory, stress-test decision-making frameworks, and reinforce trust, internally and externally.

Executive foresight must now include operational rehearsal. 

Exercising for emerging and high-risk threats means deliberately placing your organisation in the pressure zone by simulating realistic, high-impact scenarios to test and refine strategic responses. It is a methodical way to evaluate not only the adequacy of plans, but the cohesion of teams, the agility of systems, and the clarity of leadership under duress.

The strategic value of exercising

If your organisation regularly exercises its crisis and continuity capabilities, you will realise several tangible benefits:

• Enhanced executive decision-making under pressure and uncertainty, informed by repeated exposure to complex, ambiguous scenarios.
• Clarity of command-and-control structures, ensuring all stakeholders understand roles, authorities, and escalation pathways.
• Integrated risk response across your business functions, suppliers, and external partners, breaking down operational silos.
• Faster recovery trajectories due to rehearsed continuity plans, enabling your organisation to absorb shocks and resume operations with minimal disruption.
• Evidence-based risk maturity, which increasingly plays a role in strategic planning.

By investing in regular exercising, your organisation will significantly enhance its preparedness, flexibility, and capacity to adapt when disruption strikes. This leads to faster, more coordinated responses, minimises downtime, and reduces the financial burden associated with recovery. These capabilities not only protect critical assets and operations but also position your organisation to maintain continuity and confidence during high-impact events. 

From a risk perspective, this strengthened posture lowers exposure, an outcome that aligns with the priorities of insurers. As underwriters face growing volumes of claims linked to cyber incidents and natural catastrophes, and as insurance coverage becomes more selective and premiums rise, organisations with demonstrated readiness are better equipped to navigate these market shifts with greater resilience and control.

Beyond preparedness: building resilience as capability

True resilience is not about having a binder full of plans. It is the demonstrated ability to anticipate, absorb, adapt and recover. Exercises, particularly those that focus on complex, emerging risks - such as synthetic media attacks, prolonged geopolitical instability, or cumulative natural disasters - build the organisational agility needed to function through volatility.

The process is iterative. Each scenario uncovers new dependencies, reveals blind spots, and prompts valuable operational and strategic adjustments. Over time, this builds a risk-aware culture that is confident not just in response, but in leadership under pressure.

Some examples of recent test scenarios that should be challenged include:

• Social media campaign spreads misinformation about company culture
• Extreme weather event cripples critical logistics and transport hub
• Key strategic partner hit with cyber espionage campaign
• Critical infrastructure targeted by sophisticated cyber-attack
• E-commerce site compromised and customer data sold on dark web
• Al-generated fake video implicates CEO in corruption
• Security incident at stadium caused by far-right group 

From insight to action: making resilience routine

Organisations must shift from static risk management to dynamic readiness. The pace and nature of today’s threats demand more than reactive posture. They require simulation, rehearsal, and reflection as embedded business practices.

You do not rise to the occasion during a crisis. You fall to the level of your preparation. 

Executives who recognise this and invest in high-quality exercising, position their organisations not only to survive disruption, but to emerge stronger, faster, and more trusted.