Finding your blind spots: Recognising emerging risks and opportunities has been saved
Finding your blind spots: Recognising emerging risks and opportunities
Practical steps to identify, prioritise and respond to emerging risks and opportunities.
Emerging risks are often poorly understood, and the impact, likelihood or onset of the risk may be uncertain at best and/or even unknown. Waiting for complete information or a consensus is not a prudent course of action; the passage of time may well limit mitigation options or effectiveness, or even the potential to realise the emerging risk as an opportunity.
If unmanaged, emerging risks can disproportionately threaten an organisation’s strategic objectives and close opportunities to create competitive advantage. Today’s ‘landscape of uncertainty’ with rapid technological change, political instability and evolving stakeholder expectations, reinforces the need for effective management of emerging risks.
We have developed key principals and practical guidance to support Enterprise Risk Management teams to evolve their approach to emerging risks.
Emerging risk identification, prioritisation and response, must be systematic. Roles, responsibilities, information sources and thematic consideration should be defined in the approach.
The aim of the process is not to identify every plausible emerging risk, but to ensure it is a defined and repeatable process.
Our practical guidance considers:
- Horizon scanning; where to look and how to look
- Approaches to consolidating, recognising and evaluating risks and opportunities
- Considerations for priortisation and agreeing actions
Whilst the concept of emerging risk may initially appear daunting especially for risk management professionals with a less robust understanding of likelihood, impact or onse, the good news is that on some level this risk will be ‘known’ to stakeholders in your organisation. The key is then ensuring this insight is captured and systematically evaluated.
The systematic approach laid out in this paper provides the basis for building a comprehensive framework to identify, prioritise and take action on emerging risks and opportunities. Please get in touch if you have any questions on how this paper may apply to your organisation.
Deloitte expert viewpoint
The Corporate Governance code rightly recognises the importance of capturing emerging risks in stipulating that the board should carry out a robust assessment of the company’s emerging risks.
Despite this we see even sophisticated risk management functions challenged to establish processes for identifying and managing emerging risks.