Businesses must seek a new approach to managing emerging risks, new report warns
- Published: Thursday, 06 June 2019 07:00
Organizations are not paying enough attention to emerging risks, preferring to focus on easier-to-manage visible risks, according to a report published by Airmic in association with Marsh. It argues that the challenges associated with emerging risks necessitate a new approach to how they are managed.
The world is increasingly volatile, uncertain, complex and ambiguous, the report notes. This context has triggered the need to recalibrate risk management and rebalance efforts between managing traditional risks and emerging risks. However, organizations tend to focus on material threats where they have useful data sets and control over their choice of direction.
“There is a danger that boards are spending too much of their limited time on more traditional risks, at the expense of emerging risks, which may be filed in the ‘too hard’ or ‘less important’ folder,” the ‘Emerging Risks: New World. New Solutions’ report warns.
Emerging risks are far harder to define, quantify and map than traditional risks and require a different, more imaginative approach, the report stresses. Formal assessments and heat maps should be exchanged for structured, creative discussions across business units. Boards and risk professionals need to ‘create space to think the unthinkable and speak the unspeakable’.
Read the report (PDF).