Excellence in Risk Management: Identifying and Managing Emerging Risks
Corporate executives and boards increasingly expect their risk professionals to see identify and assess emerging risks—those threats that may be just around the corner or on the far horizon. But meeting that expectation remains a challenge for most companies, according to panelists on Marsh’s April 27 The New Reality of Risk®.
The panel looked at results from Marsh’s annual Excellence in Risk Management survey and report, which this year focused on emerging risks.
The panel looked at such questions as:
- What tools are risk professionals using to identify emerging risks?
- Why do some organizations continue to see barriers to understanding the impacts of emerging risks?
- Where are companies investing their finite resources?
“Coming up with a long list of threats isn’t hard,” said Richard Smith-Bingham a director in Marsh & McLennan Companies’ Global Risk Center, and author of the recent report, The Emerging Risk Quandary: Anticipating Threats Hidden in Plain Sight. “You can glean a lot from news articles, larger publications, interviews with experts, conversations with company leaders and front-line managers. The challenge is to recast issues that are a threat to the world as a watch list of issues that are a threat to your business.”
Smith-Bingham said that working out what is relevant requires three things:
- Developing a strong feel for a risk and how it might evolve.
- Being able to articulate where it might impact the business.
- Being able to track changes in the level of the threat.
A lack of cross-functional collaboration and other cultural issues were cited in the survey as a top barrier to understanding emerging risks.
“When C-suite executives refer to cultural barriers, they appear to be taking aim at a lack of awareness of key risk management concepts,” said Brian Elowe, leader of Marsh’s CUS Client Executive Practice.
Panelists also discussed the growing role of scenarios, various information sources, and data and analytics in identifying, assessing, and managing emerging risks.