Research pick: Uncertainty, the only certainty - "Challenges related to emerging risk management"

Risk has always been a part of life. But, the modern world is becoming increasingly unpredictable. Organisations cannot rely on conventional approaches to risk management (RM) and mitigation strategies they must now move towards integrated risk management (IRM). This shift acknowledges the limitations of conventional approaches in addressing new and emergent risks stemming from rapid changes in climate, social dynamics, geopolitics, and technology. A team in Canada discusses the issues in the International Journal of Risk Assessment and Management.

Traditional approaches to risk management usually focus on an analysis of possible failure scenarios. They use mathematical models to work out how best to safeguard physical infrastructure. However, Luciano Morabito and Benoît Robert of the Polytechnique Montréal in Québec, Canada, suggest that these methods are out-dated and cannot keep pace with the emerging risks we see today where the so-called butterfly effect can see a seemingly insignificant and unchecked risk in one part of the world unleash worldwide upheaval. The COVID-19 pandemic is perhaps a case in point.

According to Morabito and Robert, integrated risk management offers a more complete approach to addressing various interconnected issues. As the term suggests, it integrates the principles of risk governance and social constructivism. There is an emphasis on understanding an organisation’s assets, operations, and external environment so that it can improve resilience and adaptability in the face of emerging risks. The approach rests on good communication, collaboration, and coordination across an organisation at all levels as well as with external stakeholders. Without these “three-Cs”, effective mitigation strategies may not be possible and organisations will succumb to the detrimental effects of the crises as they emerge.

The work suggests that there is a need for organisations and stakeholders to recognise that we need more than technological tools to manage risks well. Integrated risk management must use those tools but also consider the social and organizational dimensions. Collaboration is key to this where stakeholders share risk knowledge and establish common frameworks, all the while avoiding disruption to the organisation’s daily operations. Organisations that cope well with integrated risk management will position themselves to be proactive in their response to the risky business of an increasingly uncertain world.

Morabito, L. and Robert, B. (2023) ‘Challenges related to emerging risk management’, Int. J. Risk Assessment and Management, Vol. 26, No. 2, pp.175–195.