More risk related acronyms ... let's consider PLUTO

How do you deal with the unexpected?

Acronyms in risk can be useful … probably. A couple of months ago, I wrote an article (https://lnkd.in/e62qk5fB) on how considering the acronym VUCA (Volatile, Uncertain, Complex, and Ambiguous) might be useful in context of your approach to risk. It turns out, there are many other risk-related acronyms that provide a simple framework for areas to consider, whether that focuses on how people 'feel' in situations (BANI), more of a view on the situations themselves (PLUTO), or thinking about the internal (PESTLE) and external (MORTAR) influences and factors you should review and assess. As always, I write this in context to risk management technologies.

You can never have too many acronyms (!?) … so next let's tackle PLUTO …

PLUTO

While the VUCA (Volatile, Uncertain, Complex, and Ambiguous) and BANI (Brittle, Anxious, Non-Linear and Incomprehensible) models provide a framework in considering the chaotic and fluid environment around us, there is still more room to describe how situations themselves affect us and the world we operate in. So, we next look at the acronym PLUTO (Polarised, Liquid, Unilateral, Tense and Omni-Relational) to provide a another potentially useful model for this. Let's take a deeper dive …

Polarised

Polarisation is an increasingly significant risk where an organisation's internal and external environments are split into opposing views. It is where those risks are no longer simply a symptom of the broader social landscape, but a direct threat to an organisation's purpose and being. This division can create invisible walls within a team, where communication breaks down over deeply held, often ethical, disagreements. The solution isn't to take a side in every debate but rather to stay true to purpose. Organisations with a clear, long-term purpose and a commitment to their core values are better equipped to navigate these tensions. This may require an organisation to adapt communications, for example, where a company continues its sustainability efforts, but avoids publicising them in politically sensitive markets. Ultimately, communicating the organisation's strategic long-term purpose, may avoid a destructive tug-of-war and allows it to maintain focus amidst a polarised world. In context to polarisation, AI can be both a tool and a handicap … train, be cynical and correct any intelligence and advice gained from AI solutions.

Some considerations

• Broaden the information you and your organisation consume to ensure any bias or extremes are identified and tackled … keep both eyes open and remember the quote 'In the land of the blind, the one eyed man is king'.

• Look at way to monitor and respond to polarising threats to your organisation through internal and external technologies and expertise. Engage with products and services that can help detect, curate and clarify events and their potential impact … AI solutions can provide focus and clarity.

• Whilst opposing opinions may lead to some conflict, aim to keep an open mind and realise that everyone does not have to agree. Be careful to avoid group-think where stale viewpoints and dogma become the norm.

Liquid

In the context of organisational risk, a liquid environment is one where strategic plans and policies are in a constant state of flux, with nothing being set in concrete for very long at all. This fluidity means that the traditional approach of creating static, long-term plans is no longer viable … often falling under the banner of being 'agile'. Instead, organisations must embrace a new way of thinking, where they need to prepare more tactically to adapt. Being able to align strategic and tactical plans may require a scenario based approach, based off both best and worst cases … which requires thinking on what things might look like in one, three, five and ten years. Being ready to pivot, may be a key strategy. Some care needs to be taken when AI is core to how you identify and manage risk scenarios, is the AI swayed by historic or out of date information?

Some Considerations

• You plan for frequent review of your risk strategy against the objectives of your organisation, adjust as necessary, maintain a log of measures, results and learnings so that you can track change, trends and anomalies

• Maintain a keen eye on threats that will create significant change. There is a world of technology and intelligence feeds that can provide a mix of advisory and event driven data for you to analyse and monitor … an are increasingly enhanced with AI solutions.

• Build scenarios for threats identified and test against both tactical and strategic policies. As soon as new situations arise or alter, look at how you can add or adapt those tests and simulations to look at your processes and outcomes.

• Change can equally be an opportunity not just a threat. This may be true as a mechanism to improve your overall resilience and culture to handle change with more energy and optimism (or at least less pessimism).

Unilateral

This represents the shift away from a global or collective order based on multilateral cooperation toward one dominated by the self-interest of individual nations or alliances. This makes those long standing agreements and international policies less reliable. In this context, geopolitics are no longer just a concern for diplomats, it has become a key skill for business leaders and policy within your safety and security procedures. Organisations must develop a deeper understanding of how policy changes in major powers can impact global operations, even when operating in seemingly stable markets. While this environment creates challenges, it also presents opportunities for businesses to stand apart and innovate. For example, some regions might seize the chance to address internal issues, accelerate technological adoption, and create new competitive advantages in a less predictable world.

Some considerations

• Collaboration between nations, orgs, regions … continually changes … old ways are changing

• What we are increasingly seeing is that it is not just geopolitics being a factor of change, major technologies are creating shift in how business, data and security are being managed, especially in a world of AI enablement … whether that is working for or against you.

• In a world of major change, it is inevitable that regulation lags far behind innovation/progress. However, compliance is an important part of trust, whether that is in your customers, your internal governance, user base or business partnerships.

Tense

In context to organisational risk, a tense environment refers to the constant state of geopolitical and geo-economic friction that challenges established norms. This is a world where trade conflicts can arise unexpectedly, fundamentally altering costs, impacting people and disrupting global supply chains. To navigate this, organisations will need to invest in and prioritise resilience. This means actively diversifying locations, policy and supply chains to eliminate single points of failure, moving beyond a reactive stance to a proactive one. Companies may need to consider how nearshoring or friend-shoring can help mitigate risks associated with distant or politically volatile regions. Strengthening resilience within the organisation to absorb sudden shocks and getting senior leadership more aligned on a clear, long-term strategy whilst managing liquid situations will be key. Ultimately, surviving in a tense global landscape requires organisations to grow up fast, measure risk throughout affecting people, operations, finances, technology and supply chains. AI can be both a warden and an amplifier of news and situations, be sure to monitor how use of advice, analysis and agency could be distorted within your organisation.

Some considerations

• A phrase that is commonly used but hard to implement is to create a deep, meaningful culture and activity around resilience and reduce potential tensions. It takes an investment, time and collective belief to ensure flexibility to change is managed and optimal … but it will be a worthwhile venture.

• During tense times, trust is going to be ever more importance as you balance your risks. Internal communications within your organisation to highlight that threats are being monitored for and managed can start to help diminish these fears.

• Your organisation probably has no external control on the geopolitics and environment … it is vital to get a grip, grow up, plan for both best and worst outcomes and put policy and processes in place to handle tense situations with confidence.

Omni-relational

Being omni-relational, is the realisation that an organisation's global ecosystem of operations, policies, opportunities and risk are interconnected, not a series of isolated situations, departments, markets or partnerships. The traditional narrow focus on a few locations or sectors, is a significant risk as it overlooks emerging threats, opportunities and innovations from new and unexpected areas. A mitigation may be to look beyond a purely competitive mindset and adopt a strategy of innovation and discovering new collaborations outside of typical comfort zones. This involves proactively seeking out new opportunities and relationships, sourcing ideas from diverse regions and understanding that geopolitical events are not isolated to a few nations but are a multi-faceted, interconnected systems that impacts everyone.

Some considerations

• Understand where risks are connected, complex and inherent. Events are often not singular or isolated, there are usually knock on residual effects that may continue for much longer than expected. An event may last for minutes or hours … the effects may be felt for days, weeks or months.

• Beware of technologies that focus on one area of risk, a single event may have impact across many areas of a business and may distract or create blockers. A major situation may affect the safety of your people, your technologies, your supply chain, revenues and operations as an ongoing concern.

• Actively invest in intelligence and technologies to identify threats, deep analyse the data and calculate potential impacts. Don't wait for threats in one area to affect another area of your business and be flexible when new threats arise and rapidly pull them and their learnings into this process.

In Summary

In today's volatile business environment, where risks are increasingly tense and interconnected across complex markets, leaders must be ready to adapt swiftly and wisely. Prudent organisations should invest time and budget to continuously identify, analyse, and model threats and their potential impact across the entire business ecosystem, recognising that existing connected markets may no longer behave predictably. It is crucial to leverage intelligence and technologies to accurately clarify the truth and reality if or when situations develop, avoiding insular thinking by keeping your eyes on situations around your business, even if they do not yet seem immediately relevant. Knowing when to change or pivot business operations is essential when a situation you may have no control of is likely to persist for a significant period. Technology is going to play a key role in how you manage all of this throughout your business. While AI is changing how we can view the world and spot threats before they might occur, AI within itself can be a potential risk. Therefore, ensure your overall governance and culture is ready to handle both the value and the risks that AI introduces. Finally, look at your technology strategy … is it there purely as an afterthought, a reactionary toolset to handle incidents once they have happened … or is it more proactive, looking for potential threats and changes in the world?