Address Risk with VUCA-Prime

Known globally as The Risk Doctor, David has been working in risk management for about 30 years. He has worked in 48 countries on every continent except the Antarctic (too cold!), with clients in most industries.

Many risk practitioners have heard of VUCA as a way of describing an environment which gives rise to risk. VUCA stands for Volatility, Uncertainty, Complexity and Ambiguity. It was first developed in the 1990s by the U.S. Army War College, but it has become widely used in business as a way of characterizing the risky environment in which organizations operate.

  • Volatility occurs when the nature, speed and size of change are unpredictable.
  • Uncertainty arises from lack of knowledge or an inability to determine the course of future events.
  • Complexity is present when the outcome of an action cannot be predicted by simple analysis.
  • Ambiguity means that key characteristics of a situation are not clear, or they can be interpreted in different ways.

Each of the VUCA perspectives has clear parallels in the way risk is understood and managed, and it is possible to structure the identification of risks around these four dimensions. But although VUCA is useful in identifying risks, it does not help us to decide how to respond to them.

Fortunately, a complementary framework has recently been developed which we can use to shape our responses to VUCA risks. This framework was proposed by Bob Johansen* in 2007, and it is known as VUCA-Prime. It has four elements, and each one describes a leadership behaviour that addresses one of the VUCA dimensions. Risk practitioners can …

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