The headline finding of WTW’s Emerging and Interconnected Risks Survey was the uncertainty organizations are feeling about their emerging risk strategy. 80% of risk leaders were concerned about their organizations’ emerging-risk resilience in the next decade, and only one in two respondents (50%) feel confident their organization’s approach enables it to respond to today’s risk environment.
80% of risk leaders were concerned about their organizations’ emerging-risk resilience in the next decade
50% feel confident their organization’s approach enables it to respond to today’s risk environment.
The complex risk landscape has left them feeling vulnerable to a range of potentially damaging scenarios with financial consequences — failure to meet strategic targets, loss of revenue, shareholder value, bankruptcy, reputational damage — constraining the capital expenditures needed to tackle the complex risk landscape.
As we close out the first quarter and look to 2025 and beyond, aligning risk and strategy should be a key focus. The top action organizations were looking to put in place was to develop an emerging risk framework. For that framework to be effective, we suggest four actions to proactively address emerging and interconnected risks within your organization:
01
Organisations need an approach that supports value and not just giving stakeholders comfort through annual reporting that they are secure. To effectively manage emerging risks, it is crucial to go beyond merely identifying them and to thoroughly analyze their causes and consequences. Answers to those questions will be essential to respond the growing list of questions on emerging risks from regulators, investors, and colleagues, and an increasingly complex risk landscape that is still leaving leaders surprised by events they never imagined would come to life.
That starts with revisiting your understanding and definition of emerging risks, using global best practice such as ISO 31000 and the new companion guidance on emerging risks — ISO 31050 — to provide a challenge to your current approach. Eighty-six percent of the 333 respondents were unable to recall the emerging risk definition their organization is using, yet 50% shared a view of their organizations top five emerging risks, highlighting an understanding gap that needs to be revisited. Is there a clear view on the risks and opportunities that matter? Our findings suggest not, and that needs to change if leaders are to trust their risk lists and prioritize the right actions.
How your definition of risk influences decision making – and what to do about it will be the first of our risk deep-dives into the story behind the findings.
02
The importance of building an emerging risk process linked to your business model cannot be emphasised enough. A robust risk framework is the foundation of a company’s approach to identifying, assessing and preparing your priority enterprise risks to align with your strategic objectives and improve long-term profitability. It promotes a systematic, unified approach to risk management, crucial to avoiding fragmented or inconsistent responses to threats. Understanding where your organization is on its maturity journey, and how you benchmark against industry standards and peers can support decision making.
“Reviewing emerging risks is also about considering opportunities and your competitive advantage.”
Lucy Stanbrough | Head of Emerging Risks
Involve a broad range of internal and external sta-keholders in risk identification and management processes, with an emphasis on cross-sectoral communication and identifying improvements at an operational and strategic level. Ensure that these stakeholders are engaged early and regularly in the risk management process.
Reviewing emerging risks is also about considering opportunities and your competitive advantage. Changing markets, designing new products and prioritizing strategic growth are all activities taking advantage of emerging risks. The framework needs to connect these parts of the business model together.
03
Adapting to fast-paced and interconnected changes means planning and preparing for a range of possibilities. By integrating your risk management strategy with your strategic planning and business goals, you get more than just a safety net—you get a powerful tool for uncovering opportunities in the face of uncertainty. Design a framework with built-in repeatability and continuous review as new risks and interdependencies emerge.
This could be managed by a steering group who are responsible for keeping on top of interconnected risks and developing an adaptive risk management strategy.
Through proactive risk assessment and collaboration with other business functions, organizations can drive positive financial impact and enable different business areas to plan with increased confidence.
04
Untapped thinking may be waiting for you, and building a risk-responsive culture can support these connections. 40% of the wider employees who responded to our survey feel they’ve never been consulted on their organization’s emerging risks. To move emerging risks out of the ivory tower, action is needed to promote a culture that is both risk-aware and proactive. This requires robust communication channels to ensure emerging risks are reported and addressed promptly. Expanding emerging risks thinking across the business is key.
By having internal stakeholders throughout the company provide insights and challenges for your risk definitions and registers, you can combat the inaccuracies of data found in siloed companies and equip your company with a wider, more complete view, for a more effectual knowledge base.
Connecting to your employee engagement survey is a way to harness pre-existing resources and diverse perspectives from colleagues at the frontlines of risk. This is particularly the case for large and complex organizations, where this type of analysis can identify interconnected risks that have the potential to impact strategic objectives.
Are views from across the business being fed into your organizational view on an ongoing basis? If not, you have an opportunity to decide what to prioritize and build that from the ground up. Discover overlooked risk connections and their influence on other risks by capturing ‘bottom-up’ perspectives to complement top-down risk perspectives, bolstering organizational resilience. Connecting to your employee engagement survey is a way to harness pre-existing resources and diverse perspectives from colleagues at the frontlines of risk.
In the face of global change, there has never been a better time to challenge your emerging risk approach. Are you prepared against the risks and opportunities coming your way and ready to seize the advantage? There’s still time to take action.
