Transformative Risk Management in a VUCA Environment

Many businesses today face risk management challenges, amidst a VUCA business landscape. VUCA stands for volatility, uncertainty, complexity, and ambiguity. A collapse in oil and commodity prices, natural disasters, or big tech changes are some VUCA examples that cause business disruption.

If you find your company facing business challenges, due to VUCA manifestation, here’s what you can do.?

How to navigate VUCA environment risks

● Company boundaries & resilience: Companies should not take on more risk than they can handle for capital returns that compromise ethics and brand values, and disrupt regulatory non-compliance policies.?

● Risk hindsight, insight & foresight: Analyze the current and past risk landscape, and make risk predictions that move with the pace of the VUCA landscape. The use of data and predictive analytics can assist businesses to see what can potentially go wrong and how to create sound response strategies.?

● Collaborative risk management response: Risk responses need contingency planning, collaboration, and critical thinking with external stakeholders. Companies can use efficient GRC risk management policies to work collaboratively towards a purposeful strategy. The constant application of these policies and principles creates a healthy, compliant, transparent, and accountable corporate culture, which will align stakeholders with the values of the organization.

The risk management transformation approach: Transforming risk management and compliance

If we look at companies facing VUCA risks, a well-executed end-to-end risk transformation can be the risk strategy and solution used to decrease costs by up to 20 percent, mitigate risks and improve company operations.

Here are four reinforcing areas a business can focus on, which all work together to achieve transformational success:

1. Optimizing the organization

Clarify roles and responsibilities, and match talent to jobs to increase accountability amongst staff members and productivity. Roles should be defined and allocated, so there is no duplication in tasks and the core structure is set.

2. Rationalizing governance?

Management can eliminate unnecessary activities and pay attention to what matters, freeing up time to build the business and remove company pain points. For example, they can spend more time rationalizing and implementing GRC policies.?

3. Streamline and strengthen policies?

Creates more efficiency and control over the business which will establish better employee and customer experiences. Such as customer onboarding and payment processes, which will also be easier to digitize if they are streamlined.

4. Digitizing and deploying advanced analytics

This directly impacts risk-management effectiveness. Automated processes are also less error-prone and costly. For example, companies can get automated real-time (or near-real-time) alerts that regulate risk controls within core processes. In the banking industry for instance, many processes cannot be monitored manually especially when it comes to high-risk behavioural patterns in user experiences.

Article written by The CURA Content Team