Enterprise Risk: Risk Analysis
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Description
Description: This course has been designed to introduce external and internal drivers that can result in a range of operational, financial, and strategic risks manifesting in organisations. This course examines the role of corporate governance and compliance, introducing relevant standards, and suggests methods of developing and implementing appropriate risk management strategies.
This course features dynamic and engaging video with audio narration, infographics and short quizzes to test your knowledge.
Background: The notion of VUCA was introduced by the U.S. Army War College to describe the more volatile, uncertain, complex, and ambiguous, multilateral world which resulted from the end of the Cold War. The acronym itself was not created until the late 1990s, and it was not until the terrorist attacks of September 11, 2001, that notion and acronym really took hold. VUCA was subsequently adopted by strategic business leaders to describe the chaotic, turbulent, and rapidly changing business environment that has become the “new normal.”
VUCA Defined
The “V” in the VUCA acronym stands for volatility. It means the nature, speed, volume, and magnitude of change that is not in a predictable pattern. Volatility is turbulence, a phenomenon that is occurring more frequently than in the past. Other drivers of turbulence in business today include digitization, connectivity, trade liberalization, global competition, and business model innovation.
If we take volatility first, it is clear that consumer preferences and trends are ever changing and the rapid turnover in brands, products, and companies is proof that business leaders cannot take their leadership position for granted anymore. For example, the Finnish Mobile maker, Nokia that used to be the market leader a few years ago is now nowhere in the reckoning because astute and agile players like Samsung and Apple saw the emerging trend of Smartphones and quickly launched their products. As many people who watch cricket attest, one has to see the ball early and only then, one can hope to succeed. Similarly, the business landscape that is characterized by extreme volatility means that business leaders have to focus on getting there early and staying there for the future. In other words, business leaders have to channelize their energies so that they know the future to compete in the present.
The “U” in the VUCA acronym stands for uncertainty, or the lack of predictability in issues and events. These volatile times make it difficult for leaders to use past issues and events as predictors of future outcomes, making forecasting extremely difficult and decision-making challenging.
The “C” in VUCA stands for complexity. As HR thought leader John Sullivan notes (2012), there are often numerous and difficult-to-understand causes and mitigating factors (both inside and outside the organization) involved in a problem. This layer of complexity, added to the turbulence of change and the absence of past predictors, adds to the difficulty of decision making. It also leads to confusion, which can cause ambiguity, the last letter in the acronym.
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