Top Emerging Risk Trends Report

To drive executive action on emerging risks, heads of enterprise risk management need to limit the number of risks presented to senior management by providing a prioritized view. This approach shifts the emerging risk conversation from information sharing to actionable decision making.

Often, senior management witnesses the consequences of unaddressed emerging risks in other organizations and demands more from their enterprise risk management (ERM) teams. Most heads of ERM believe improving the precision of their emerging risk estimates will help meet this demand. But while this approach can drive a discussion, being more precise won’t necessarily drive action. For example, senior management might be unwilling to spend resources on risks that haven’t fully shown their potential and may have an impact only in the future — such as critical infrastructure risks (roads, bridges, pipelines and power grid failures due to extreme weather).

Another common response to senior management’s increased demands is for the ERM team to present a list of emerging risks ranked by traditional metrics. However, in such cases, senior management tends to focus more on the process of identifying the risks than on the risks themselves.

To ensure senior management acts on emerging risks, ERM should provide a view that is prioritized based on specific potential consequences for the business. Specifically, heads of ERM should:

• Identify relevant business stakeholders to include in the emerging risk selection process.
• Conduct surveys, one-on-one meetings or risk workshops with the identified stakeholders to align their understanding of the risks’ impact to the organization’s bottom line.