Rethink risk – the greatest risk is doing nothing

In response to the changing risk landscape, we have collaborated with leaders from different sectors and industries to create a risk agenda for action that is based on 12 months of research.

It emphasises the importance of a collaborative and transparent response to geopolitical, environmental, social and technological challenges—such as the impact on the global landscape of climate change, cyber risk and economic inequality—so that together, we can deliver sustained outcomes that benefit us all.

With respect to risk, we found that companies must be:

• forward-looking
• transparent and trust-building
• resilient
• inclusive

Be forward-looking

Recent events have underscored the need for organisations to be more proactive in scanning the horizon for risks, from industry regulations to systemic global disruptions. A range of new threats is now emerging, many of which have no precedent. As a result, we can't always use past events to tell us what comes next. Instead, organisations should consider what they learned in the past about handling major disruption and use this to prepare a flexible response to future threats.

Key forward-looking risk actions include:

• reassessing known and new risks, combining both short-term and long-term views
• investing in critical data and insight to proactively respond to changed, new and emerging risks
• co-investing and sharing data across industries to unlock insight on emerging and unknown risks for the good of all

Be transparent and build a culture of trust

The pandemic has further demonstrated that you can earn or lose trust depending how you respond to the threats and challenges you face.

Organisations should consider how a culture that supports transparency, particularly when it comes to identifying and addressing risk, can be embedded in their organisation. This will be crucial as we all respond to major macro challenges, which will need trust and transparency to build accountability and drive positive behaviours.

Key trust and transparency risk actions include:

• being transparent about risks and the actions being taken to address risk in order to restore and build trust
• setting a collective appetite for risk and the opportunities those risks will generate and innovate

Be resilient

Many of the risks organisations face are unavoidable. This is not just true of the COVID-19 pandemic—it is also true of other systemic issues, from supply chain disruption to cyber crises. The focus, therefore, needs to be on ensuring that your organisation can weather the storm, adapt and emerge stronger.

But what does it take to be resilient? And how can you ensure that you are ready to respond to fast-moving and unpredictable risks?

Key resilience risk actions include:

• integrating and elevating risk as a core strategic priority
• being clear on the purpose of your organisation and using this to consider and mitigate risk
• retaining pandemic speed and style of decision-making and responsiveness to adapt to changing circumstances

Be inclusive

The scale and interconnectedness of the risks facing organisations and society demands a collaborative response. This comes in many forms, from being open to new ideas and seeking perspectives from different people to co-operation between industries and sectors. We can't overcome systemic challenges without asking for help and working together on shared solutions.

Key inclusive risk actions include:

• creating a safe space for risk and opportunity to be identified and shared
• retaining the pandemic spirit of collaboration and sense of common purpose

The four key actions to take now

Kick-start your rethink risk journey today by considering the following key questions.

Be forward-looking

1. Discuss how your risk management framework is forward-looking and comprehensive. Does it align with your organisation's purpose and values?
2. Is your business strategy translated into a risk strategy and risk appetite framework, as the foundation for all risk management processes?
3. How does the risk function contribute to decision-making?
4. How do you develop tangible data insights to model and quantify risk so that threats can be prioritised and measured using imaginative thinking?

Be transparent and build trust

1. How is the organisation accountable to employees and other stakeholders?
2. How does your organisation promote trust and transparency when it comes to equity and diversity?

Be resilient

1. Is your risk appetite framework understood, implemented and used to steer the day-to-day business?
2. How does risk management support agile and responsive decision-making?

Be inclusive

1. How diverse are the teams within your organisation? Discuss how risk supports a culture where people feel included and able to speak up and share their opinions.
2. How does your organisation listen to different voices that can challenge entrenched habits and viewpoints?

We are here to help you

Rethink risk emphasises the importance of being forward-looking, transparent, resilient and inclusive in order to respond to macro and micro challenges, which will deliver sustained outcomes that benefit both organisations and society as a whole. We are ready to help you as you face the next steps of your risk journey. Contact us today.