What questions should you ask when setting up a framework to manage and monitor emerging risks and opportunities?
An emerging risk framework is a key tool for any organisation keen to face the future with confidence. But it’s not just for identifying negative events; it can also be used to capture the upside of change.
This is a good point to make when seeking help from the wider organisation and senior management to establish an emerging risk framework that will help you to spot and manage changes that could affect long-term strategy.
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Once buy-in is achieved, however, it can be difficult to work out how to proceed. At a recent Risk Leadership Network meeting, members outlined how they have embarked on this process. Based on their experiences so far, here are some helpful questions to ask when embarking on your journey:
1. Spotting disruptors: what are the key issues that would force your organisation to make a change to its long-term strategy?
This question should form the basis of your emerging risk framework and answers should be collected from employees throughout your organisation.
Gathering a wide range of thoughts on what these risks could be will help strengthen your framework and could promote greater buy-in from other teams.
Polling other teams on their definition of emerging risk at the outset is another useful exercise. That way you can ensure everyone is on the same page when it comes to establishing the framework.
2. Creating signals: what factors might indicate that one of your disruptors is looming on the horizon?
Identifying the signs that one of your disruptors could emerge and affect your long-term strategy will help you to effectively monitor and manage threats and opportunities. This should trigger discussions about how to address these changes.
Signals should be solid leading indicators. And it should be easy to present them to senior management to spur fast action - waiting around could increase the costs of mitigating risks or cause the organisation to miss exciting opportunities.
3. Taking fast action: which signals should you group together to create thresholds to trigger action?
Grouping sets of signals together creates thresholds that can trigger action. When a threshold is met, it is time to alert senior management and push them to decide how the company should react.
Having several pre-agreed responses already in place will ensure quick and decisive action. Some of the organisations at the meeting have created plans pegged to various risk-levels to enable fast action once a threshold is met. This should save time around discussing how to move forward when a risk emerges that could affect long-term strategy.
Do you have an emerging risk framework in place? Is it adequate?
Take a look at Risk Leadership Network's Emerging Risk Maturity Model, which gives risk leaders a complete iterative process for improving your emerging risk capability.