If there’s anything that the pandemic has taught us, it’s that businesses need to be prepared for the worse and have a risk management plan in place for operational and financial risk. However, many businesses today tend to focus on setting up safeguards of risk mitigation rather than embracing the unexpected. Leaders that embrace these uncertainties to create meaningful results prove to innovate more proactively and give rise to high-performing cultures. The ability to navigate through this uncertainty is a distinctive advantage for any business. And businesses that work on a ‘wait and watch’ strategy or those that fail to address uncertainty often face difficulties.
In today’s business world, the uncertainty index is on the rise. Moreover, the shifting attitudes in the workplace and the volatile, uncertain, complex, and ambiguous (VUCA) marketplace leave the leaders of today with uncertainty at multiple levels. Today, no matter which business or trade you’re in, you’re no stranger to uncertainty and operational risk.
But with an effective risk management plan, you can recognize and transform this uncertainty into an advantage for yourself and all your stakeholders. Many business leaders today recognize that valuable opportunities lie in the vagueness of uncertainty. But again, these opportunities need to be grasped in good time and an effective enterprise risk management plan should be in place.
Here we talk about three fields that can help you recognize advantages in uncertainty and work out an enterprise risk management plan.
This field of uncertainty lies within the boundaries of your business or alliance partners. This field is more often than not triggered by business transformation decisions. These could include factors like introducing new SBUs into the organization or tapping into more advanced matrix structures. The thing with these operational changes is that it takes a significant amount of time for their impact to become visible. This could be because the major focus lies on organizational clarity, leaving little time and energy to invest on developing new competencies and fresh mindsets. Here the operational risk, financial risk and uncertainty prevents people from directly capitalizing on the matrix and the advantages it brings with itself. Optimal enterprise risk management process and risk mitigation strategies can help to deal with these uncertainties.
This field of uncertainty can be witnessed in intangible (but apparent) negative energy in the business. A good example to understand this is during a business merger. When a company is being acquired by another company, there is a clear sense of uncertainty that can arise due to unaddressed emotional needs. In the case of non-material uncertainty tensions, concealed agendas and emotional unsatisfaction can cause people to feel less energetic or driven to put their best foot forward.
This is a kind of uncertainty that occurs when an unanticipated external occurrence disrupts the functioning of the ecosystem in which a business exists. While operational risk and uncertainty can cause major disruptions for any business. Not foreseeing structural uncertainty and not preparing to function in changed conditions can have devastating effects and also lead to major financial risk. With mindful enterprise risk management, these uncertainties can be tuned into advantages.
Successful business leaders of today know that it is in their best interest to cater to these uncertainties and find ways to leverage them to their advantage. Here are five examples in which business leaders find advantages in uncertainty.
We at TRC Corporate Consulting understand the importance of financial and operational risk and offer risk management plans and related services to help your business leverage the advantages of uncertainty while keeping principal values like integrity and transparency intact. We extend a wide range of services in Governance, Risk Management and Compliance. These are related facets that ensure your business achieves its objectives, correspondingly addressing the uncertainty and associated actions with ease and integrity.
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