Emerging risk management

As a business leader developing a risk management strategy is a prerequisite to protect your organisation, assets, shareholders and people, and maintain a competitive advantage in the face of change.

Recent events like Brexit (and changing public opinion), the Covid-19 pandemic, fuel and supply chain disruptions and the crisis in the Ukraine, have all shown us that high impact, low probability events that are beyond our control, are almost certainly going to continue. The disruption they can cause to your organisation is immeasurable, especially if you are not prepared.

Often these events seem a distance away, but just like throwing a pebble in a pond, the ripples expand continuously outwards and may reach our shores.

This is certainly the case with a number of recent events that have not had an immediate impact but over weeks and months have started to filter into our day-to-day existence e.g. fuel shortages and the cost of living. These are the emerging risks that are often overlooked or catch us off guard.

Building a structure around inherent and emerging risks

Initially reflecting on and consolidating your sector, region and organisational emerging risk exposure, informed by key (leading) risk indicators positions you to manage these risks in a responsible way.

Once each aspect of your risk landscape is determined, you can put processes in place to re-align your crisis and continuity strategies and enhance your resiliency, and protect your organisation against losses or reputational harm.

Protecting the reputation of your organisation is paramount, therefore having an effective crisis and continuity framework is essential to mitigate potential risks to your organisation. The introduction of a Business Continuity Management System like ISO 22301:2019 [link] could help cultivate a proactive risk management culture within your organisation.

Business Impact Analysis:

Business Impact Analysis (BIA) is a planning tool that enables organisations to determine any critical vulnerabilities within their current processes and procedures, which a) if not improved would cause significant disruption to critical business functions, and b) inform recovery strategies when things do inevitably go wrong.

Using a BIA approach forms part of any comprehensive SMART business goals. BIA used effectively can underpin planning and strategy development to mitigate against unexpected disruptions and losses to your business, people, and functions.

Implementing a robust strategic approach to risk management by incorporating BIA planning provides an organisation with the means to review their readiness and address any operational gaps or shortcomings that need to be improved. Ultimately, continually assessing, testing, and updating risk management protocols and developing a business continuity plan is advisable.

The Strategic Business Impact Analysis:

Applying a strategic lens to the Business Impact Analysis approach helps an organisation to reflect on their current standing and adopt a “Resilience” mindset.

Undertaking a Strategic Business Impact Analysis (SBIA) and embedding the findings in your business strategy, is good practice because it:

considers the strategic direction, emerging themes, and perceived risks to your business
helps you to determine critical business functions, their existing effectiveness, and the consequences of disruption

Particularly, do you understand the characteristics and weaknesses e.g. vulnerabilities that may exist such as performance or resourcing issues and, misalignment with other functions of your business?

Have you discussed contingency planning with key external suppliers, regulators, and customers? If the worst happens will your contingency plans deal with unforeseen or disruptive events?

The SBIA can also inform a governance framework for leadership teams to proactively and dynamically reflect on their enterprise-wide performance when respective risk tolerances and performance metrics are mapped across an organisation.

How to think about planning for a disruption:

As we move from one high impact low probability event to the next, having strategic conversations about your position is imperative. Determining your priorities in this fast-moving environment, and where you will be investing your resources over the coming months is crucial.

When considering how to plan for disruption, have you identified how you will support your people and manage labour shortages? Have you tested the robustness of your business continuity capabilities? Do you have a clear understanding of your technology and do you know what your technology and security exposures are?

Understanding how the next event might impact your stakeholders e.g. national rail strikes, or staff shortages due to a new pandemic outbreak, and where the risks lie within your supply chain will ensure you can minimise the impact now and are better prepared in the future.

While it may be a daunting task to predict the next big event that will impact your organisation and/or society at large, there is much you can do to be prepared and better equipped to cope with any disruption to your organisation.

Our team

Our team of management consultants include technology specialists and subject matter experts across the breadth of an organisation’s functions at every level. We leverage a wide range of industry best practice business planning methodologies which allow us to assist organisations to prepare for, manage and evolve from disruptive events.