The new frontier of emerging risks - Alchemy Crew?

Answer 1

This article will dive into what emerging risks are, identify the main ones on the horizon, and understand how these new risks affect established and younger businesses and decision-making processes.

Emerging Risk

An emerging risk is a new or unforeseen threat that has not yet been examined seriously. In business terms, these risks often aren’t entirely within our grasp, reality, or within our risk awareness.

We need to venture more deeply into our understanding of what constitutes an emerging risk as they can be varied and highly different. The Institute of Risk Management, in a special interest report ‘An introduction to emerging risks and how to identify them’ helps us define potential emerging risks by looking at seven elements:

• Ambiguous: Risks that are difficult to define.

• Chaotic: Risks that are constantly changing.

• Complex: Risks that affect many factors at the same time.

• Time-horizon can change: Risks may appear a long way off, but the time-horizon could change rapidly.

• Uncertain: Risks where knowledge is lacking.

• Uncontrollable: Risks where the organization isn’t in control because it is controlled by risk factors external to the organization, so the onus moves to how to adapt and respond rather than mitigate.

• Volatile: Risks where significant changes are occurring within a short time frame.

An individual risk can comprise multiple of the above elements. Emerging risks can arise very quickly or more slowly. They may be visible on the horizon with a pre-defined shape, or they may morph and change soon. Emerging risks can result in significant financial losses if not well understood and planned for.