2016: Forecasting Emerging Risks Won’t Get Any Easier
Many risk professionals believe that forecasting risk will not get any easier in the next three years and emerging risks will most likely arise in the areas of cyber attacks, regulation and human resources.
Risk professionals generally agree that while identifying emerging risks is important, there is no clearly established framework for doing so.For example, a majority — 65 percent — of the risk management respondents said they use claims-based reviews as one of the primary means to assess emerging risks, compared to 39 percent who said they use predictive analytics.
The widespread use of claims-based reviews means that a majority of organizations are relying on studying past incidents to predict how emerging risks will behave rather than using predictive analytic techniques like stochastic modeling and game theory to help inform their decision making
Tackling emerging risks often requires creative yet pragmatic approaches. It has to encompass internal cross-functional conversations — formal and informal — around the intersection of risk and strategy, senior-leadership engagement, and tapping into external information sources. Risk professionals are encouraged to broaden the scope and collaboration around emerging risk issues within their organizations.