Agile Business Transformations and Strategic Risk Management in Uncertainty

Riikka Uimonen

Research output: Book/ReportDoctoral thesisMonograph

Abstract

Business environments are constantly becoming more complex due to the accelerating rate of technological development, changing customer expectations, competition, regulation, and other market-shaping phenomena. At the same time, the uncertainty faced by companies is increasing, which makes strategic risk management particularly challenging. Strategic risks have a direct impact on companies' competitiveness and operating conditions, but identifying, evaluating, and responding to them becomes more and more difficult amid growing uncertainty. Although risk management methods and frameworks have evolved to better meet the requirements of the modern business environment, they still receive criticism from both researchers and representatives of the business world. Traditional risk management tools and even the most advanced ERM frameworks are seen as insufficient and sometimes detached processes in the growing uncertainty, especially in terms of strategic risk management. For this reason, strategic risk management is seen to be increasingly intertwined with strategic management rather than as a separate risk management process. Thus, several researchers and representatives of the business world are calling for new approaches beyond risk management to support companies to respond to uncertainty.

Business agility contributes to the ability of companies to recognize the effects of uncertainty on business and to proactively plan strategies that can turn uncertainty into a competitive advantage while avoiding harmful effects. Business agility is a multi-level ability that requires traditional companies to undergo significant renewal, i.e. business transformation, in order to be realized. At the same time, companies increase their abilities to change their business more quickly and more sustainably when the changing environment and business strategies demand it, which improves their chances of reacting to changes in the strategic operating environment and managing its risks. Many companies have realized this, but agile business transformations have proven difficult to implement, which often leads to a failure to build agility. This in part weakens the preservation of the business viability and competitive advantage of these companies, and it hinders reforming them in accordance with the requirements of an uncertain environment.

This dissertation examines agile business transformations with versatile qualitative methods and considers what companies should do to succeed in building business agility. The study maps what a typical agile business transformation is like and what the typical challenges associated with it are. The study finds out what kinds of measures companies should take in order for agile transformations to succeed and for companies to develop better abilities to respond to uncertainty. The work is based on descriptions of typical transformations and related challenges given by business leaders and experts, as well as on the views of an expert panel implemented using the Delphi method. The research has been carried out in the context of the Nordic financial services sector, examining the research phenomenon above all from the perspective of agile transformations in traditional banks and insurance companies.

The research results show that with business agility, companies aim for a better ability to maintain and renew their competitive advantage in an uncertain operating environment. Transformation implementations differ, but typically these transformations start in silos as development projects for separate business areas, which later expand into comprehensive business transformations. The pace of change is typically slow, which can be seen to be reflected in the typical challenges of the transformations. Typical challenges were identified in seven areas, and the importance of leadership was emphasized in several of them. According to the research results, in agile business transformations, companies should focus especially on clarifying the purpose of agility and developing leadership agility. Actions supporting the company's structural renewal were also seen as important, but they also require the success of clarifying the purpose and developing leadership.

The empirical insights of this dissertation explain what agile transformations are typically like, what kind of challenges relate to them, and what kind of measures are particularly important in agile business transformations. Actions that contribute to understanding purpose and building leadership agility are essential for companies to become agile and be able to respond to uncertainty. These kinds of actions serve also as prerequisites for actions that create structure to respond effectively and proactively to changes in the strategic environment. The dissertation also compiles the evolution of risk management, the kind of demands the increasing uncertainty places on companies' strategic risk management, and the way business agility supports strategic risk management in uncertainty. With its multidisciplinary approach, the dissertation increases understanding of strategic risk management capabilities in a broader sense compared to traditional risk management methods and frameworks.
Original languageEnglish
Place of PublicationTampere
ISBN (Electronic)978-952-03-3241-9
Publication statusPublished - 2024
Publication typeG4 Doctoral dissertation (monograph)

Publication series

NameTampere University Dissertations - Tampereen yliopiston väitöskirjat
Volume937
ISSN (Print)2489-9860
ISSN (Electronic)2490-0028

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