Around 70,000 years ago, a major environmental change began, spurred by an Ice Age. Temperatures dropped around the globe bringing an existential crisis to the doorstep of our African forefathers, and their numbers plunged. This was one of the earliest VUCA events recorded in our history. It was an unexpected downturn towards an extreme, humans lacked the means to understand the circumstances and their outcome, the change was complex to handle and people had no way of knowing whether the impact would be temporary or long-term. The very survival of humankind was in question. But survive we did, time and again, over the ensuing thousands of years, till populations were ensconced in nearly all parts of the globe.
Crises, whether natural or manmade, are not new to humankind. Fast forward to more recent times and we have more contemporary instances of crises that shook, and even changed, the world. The two world wars, the 1918 flu pandemic, the 2003 SARS pandemic, the 9/11 attacks and the 2008 financial crisis - all are examples of times when unforeseen or underestimated risks became reality. Humans have always been vulnerable to risk phenomena, some of them beyond their control. And yet, time after catastrophic time, they have bounced back, vigourously and tenaciously. Through ice and fire, war and disease, they have learned, adapted and prevailed. Most important of all, they have used their experiences to devise ways of assessing and surviving future risks and crises. This is the power of human capital, and this is exactly what enterprises need from their people in today's turbulent times.
Risk management has always been fundamental to human survival. In the economic and business sphere, this means that everyone across the organisation needs to understand and implement risk management. The COSO Enterprise Risk Management (ERM) Framework clearly states that ERM is effected by the entity’s board of directors, management and “other personnel”, which means that every person in the organisation should be involved. All these professionals already engage in risk learning behaviour - they evaluate the pros and cons of actions and decisions, or perform cost-benefit analyses - for the purpose of understanding and for decision-making in any future scenarios.
A person who performs a certain function is valuable, but a person who understands risk in all its forms, and can successfully apply their understanding to the function to protect the organisation will be invaluable
However, there is a need to make risk management more structured and proactive. The current pandemic has shown us the intensity of disruption that an unexpected scenario can cause, and has underscored the need for risk literacy for people in every part of a business. Every functionary in a business needs to be risk-aware - understand current and potential challenges, foresee possible errors in decision-making, and analyse the dynamic trends that affect business. Here are some of the key skills and behaviours that will be needed, going forward, for human capital to successfully overcome the dynamicity and uncertainty of our business environment.
Resilience in Adversity
Going forward, flexibility to adapt to change will be the most important ability. As the COVID-19 pandemic wrapped its tentacles around us, normal life, as we knew it, became unrecognizable. Who could have imagined a world in which planes no longer flew, where campuses and classes could fit into a screen, where there would be no going to office and no after-work drinks - where most of what we took for granted was no longer within our reach, and we could not know when, or even whether, the world would ever change back. There is a new normal, and only people who are able to adapt to it will be the ones to survive these times. Risk management has become a personal matter, even within organisations.
For us, this means being able to change the balance of work and life in a new way, and multitasking will be an important skill in this new world. People who can juggle their work and home needs successfully will be able to contribute the most to the survival of organisations and society.
From Silos to a Connected Matrix
The ability to recognize potential trends, assess the different risks, and plan ahead for successful mitigation of those risks, will be critical. With economies shrinking and revenue in short supply, polyglots will be particularly important to organisations. The literal meaning of this term is a person who can speak multiple languages, but it can mean much more. Just as human civilizations had various types of labour, organisations have different departments, roles and functions, and all these have their own set of risks. A person who performs a certain function is valuable, but a person who also understands risk in all its forms, and can successfully apply that understanding to their function to protect the organisation will be invaluable.
As the lockdown forces the separation of people from their workplaces, it has also become more important to stay connected and operate cohesively. Contributors to an organisation will need to have a coordinated approach to risk and crisis management, to collectively achieve the larger objectives.
We know that life comes with inherent risks. Organisations are no different. There will always be risk in business, just the what will keep changing. The only thing to do, is to keep evolving to foresee and surmount those risks. Today's times are hard, but no harder than the ones we have already survived. We can prevail even now, if we retain our persistence, and upgrade our ability to analyse and manage whatever risks may come our way.
