Uncertainty management has been practiced in one form or the other for centuries. According to etymological records, the French and Italian words “risque” and “riscio” were first used in 1661. The German and English equivalents were later applied to describe uncertainty in business environments. The interpretation attached both positive and negative sides to the meaning of uncertainty. The negative side points to hazards, vulnerability, and volatility that could result in financial loss, while the positive side reveals that there are also opportunities in uncertainty that could be captured and exploited to create value. This paper investigates the positive side of uncertainty through a literature research and explains the creation of value in organizations with the help of strategic uncertainty management.

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Though, uncertainty management had been developed and practiced in many organizations, it was not until 1963 that it was established and accepted as a recognized management discipline. The acceptance was accelerated by a text book published by Robert I. Mehr and Bob Hedges in 1963. In the book, components of uncertainty management were suggested for organizations. These components included uncertainty identification, measurement, evaluation, assumption, transfer, reduction, selection and monitoring.

The author moves on to describe developments in uncertainty management that eventually led to the concept of strategic uncertainty management or enterprise uncertainty management. The new concept recognized that the traditional uncertainty management is inadequate to respond effectively to uncertainties emerging from the new global market. There is a necessity to aggregate uncertainty information from all business units into a central system, which is made available enterprise-wide. The strategic uncertainty management, including uncertainty identification, response and control tools, is aligned with the corporate strategy to achieve the organization’s goals.

Value as defined by “the triple bottom line” is adopted by the author to introduce organizations’ performance measurement in relation to value creation. The criteria for creating value for stakeholders with the help of strategic uncertainty management are explained. The paper continues with the description of different value creating models and implementation steps for the models. An organization needs to take chances, capture and exploit opportunities found in uncertainty. A practical example of how an organization can create value over time by applying principles of strategic uncertainty management is illustrated by the creation of value at Apple Inc.

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Afritopic 2011