One thing economists are particularly bad at is predicting what the future holds for the economy or specific market trends. Still, economists find gainful employment making predictions. The reason comes down to economic resiliency.
Everyone is hoping to obtain a bit of information that will help them make better decisions and maintain profitability even when times get tough. Knowing if prices will be up or down would certainly be a tremendous advantage, but the real secret to economic resiliency lies much closer to home than we might realize.
WHAT IS ECONOMIC RESILIENCE?
Before we proceed, let’s clear up the term economic resilience. In general, resilience is the ability of a system to continue operating after sustaining a shock. In economic terms there are two aspects, static and dynamic resiliency, each describing a different response to sustaining a shock.
Static resiliency is the ability of a system to continue to use resources efficiently after a shock, and dynamic resiliency is the speed with which a system can return to maximum output after the shock. In simple terms, static resilience is how well your business can take a hit, and dynamic resilience is how quickly your business gets back to normal after the hit.
PREPARE FOR PROFITABILITY SHOCKS
With this definition in mind, we can see how economic resiliency does not lie in better knowledge of future events but rather in preparedness for the arrival of shocks to profitability. One of the best examples is found in your farm’s disease management practices. Disease has a significant influence on long-term profitability. Disease management is one of the most important tactics to improve and protect profits. Keeping disease out falls under static economic resilience, while effective treatment, stabilization and recovery falls under dynamic economic resilience.
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