Business risks have certainly changed a lot over the past few years, technology-related or otherwise. New opportunities and new challenges are all over the headlines, and they force business leaders to wake up every day with a response strategy on hand. So what should business leaders prepare for? A new report from Deloitte profiles 10 trends that have the potential to change the risk landscape and how organizations respond to risk:
- Cognitive technologies augment human decision-making.
- Controls become pervasive.
- Behavioral science informs risk insights.
- Vigilance and resilience complement prevention as leading practices.
- Risk transfer broadens in scope and application.
- Innovation leads, regulations follow.
- Risk becomes a performance enabler.
- The networked economy depends on collective risk management.
- Disruption dominates the executive agenda.
- Reputation risks accelerate and amplify.
The Future of Risk: New Game, New Rules
The business motivations are always to reduce costs, advance analytics, and emerge new technology, but businesses may encounter difficulties in implementing too complex tools, technology’s inability to deliver expected results, or increased cyber risks (data breaching, privacy violation, etc.). Business leaders need to thus take a proactive stance on combining automation and technology with a well-conceived strategy to make systems self-manage and prevent risks. For example, the cognitive technologies augment human decision-making trend is all about identifying use cases that are well-suited for cognitive technology solutions, and educating employees to be more cognitive technologies-savvy.
In order to reduce and prevent risks, business leaders must also understand what drives risky behaviors and adopt approaches that attempt to decrease the impact of risks. Emphasizing vigilance with risk events-detecting ability and resilience with the capacity to reduce the impact of risk events is essential to assess and prioritize the process of managing risk in available tools. Risk transfer by way of (even more) contracts can provide extra protection, but organizations need to evaluate risk transfer instruments in correlation with business continuity and business performance as a whole. Meanwhile, don’t forget that every business needs innovations to keep up with the competition, and developing a high-risk innovation strategy shouldn’t be something surprising. Business leaders can work on establishing self-regulatory frameworks and educating regulators to reduce regulatory risks.
Taking a risk may sound like something potentially damaging to a business, but risks are fundamentally beneficial if they are well-managed and controlled. Risk can enable more effective and organized performance by fostering a risk-intelligent culture with useful tools and resources, and urging leaders to be more risk-informed. It also helps to push for more collaborations and alliances with risk experts and researchers to stay on top of the latest threats and mitigation approaches. The report talks about the roles of risks in the digital era sparked by smart devices and apps today:
In today’s hyper-connected world dominated by mobile devices, social media, and evolving expectations from society, information can spread like wildfire. This convergence of mobile and social media is intensifying the impact of reputation risks for organizations and is driving them to fundamentally rethink their approaches to risk management and proactively address these accelerated, amplified risks.
For further explanation on all of these points, you can view the report here: https://www2.deloitte.com/content/dam/Deloitte/us/Documents/risk/us-aers-the-future-of-risk-new-game-new-rules.pdf