Transcript

Your response to uncertainties or challenges is to either cope with the uncertainty or reduce the uncertainty.

Uncertainty coping impacts your exposure across a wide range of uncertainties. In some cases, this requires you to change your actions or strategies.

Uncertainty reduction, on the other hand, minimises your exposure to uncertainties without changing your actions or strategies. This is a natural, primary motivator and fundamental need that guides your behaviour and actions.

[Slide]

There are three ways you can reduce uncertainty – information gathering, proactive collaboration or cooperation, and networking.

Firstly, information gathering can be used to avoid risky decisions. You act when the gathered information is considered enough to become successful. It is primarily used to minimise demand, competition and cultural uncertainties.

Secondly, proactive collaboration or cooperation is the second way to increase the predictability of your success. Information sharing is an essential part of collaboration and cooperation.

Thirdly and finally, uncertainties can also be reduced through networking. It is primarily used to reduce industry uncertainties. This involves collecting data through social relationships. It also involves the reinforcement of existing networks.

[Slide]

There are five approaches for coping with uncertainty – flexibility, imitation, reactive collaboration or cooperation, control and avoidance.

Firstly, flexibility is exhibited through diversification and operational adaptation. Diversification helps organisations cope with industry uncertainties through its involvement in different markets or diversification of its products and services. Operational adaptation is sought through the adaptation of organisational structure or strategy.

Secondly, imitation involves mimicking a rival’s strategy or actions. Political, government, cultural, demand, and competition uncertainties can be managed through the imitation of competitors’ actions.

Thirdly, reactive collaboration or cooperation approach seeks to cope with environmental and industry uncertainties.

Fourthly, you may also choose to control the uncertainty rather than to passively accept it. Vertical integration with suppliers is used as an attempt to control input and demand uncertainties. Horizontal integration like mergers and acquisitions is used to control uncertainties related to competition.

Fifthly and lastly, uncertainty avoidance takes place when the level of both environmental and industry uncertainties is unacceptable. You can postpone your actions or the implementation of your strategy as a means of avoiding uncertainty.

Therefore, there are several ways you can cope with or reduce the uncertainties that may impact the achievement of your objectives. These are strategies that you can adopt to be successful.

[Slide]

Thanks for watching.

For more videos like this, go to PracticalRiskTraining.com.