The events of 2020 made it clear that the businesses most likely to succeed - whatever competitors, regulators, customers and the wider world might throw at them - are those that are the best prepared to manage risk.
If this has moved up your list of priorities in the wake of the COVID-19 pandemic, you might want to consider how you can go further than fundamental risk management and start to focus on risk intelligence.
According to Deloitte, the risk-intelligent enterprise "views risk management not only as loss prevention but as value creation" and "acknowledges that risk management must evolve as risks evolve". The firm said companies that succeed in taking this approach are more likely to achieve their strategic goals, build resilience and deliver better financial results.
So what steps can you take to boost your risk intelligence and ensure you're adequately prepared for the various challenges and threats your business could face?
The modern risk landscape
It's always beneficial to have a strong understanding of the environment you're operating in and the current trends defining your industry and the economy as a whole.
According to the World Economic Forum (WEF), all organizations have to be prepared for the fact that the business landscape will be more uncertain in the years following COVID-19.
The WEF advised companies to be aware of three key drivers of risk: political, technological and societal. It also highlighted the following global risks in order of likelihood:
- Extreme weather
- Climate action failure
- Human environmental damage
- Infectious diseases
- Biodiversity loss
- Digital power concentration
- Digital inequality
COVID-19 is just one example of an unforeseen event - albeit an unusual and extreme one - that can pose a serious threat to businesses, industries and entire economies. As the WEF highlighted, there are many other potential challenges that could shape the commercial landscape on a global level.
As far as individual organizations are concerned, there will always be factors you need to take into account to shield the business from risk, such as:
Faced with an increasingly diverse, dynamic and interconnected threat landscape, it's important to ask how you can put your business in the strongest position to succeed by constantly reviewing your approach to risk.
That could mean taking the step up from risk management to risk intelligence. But what exactly does that involve?
An enterprise-level approach
A key element of risk intelligence is moving away from department-level perspectives and looking at the full range of threats facing the entire business. This helps you to build a common understanding of risk and aids management in creating a comprehensive picture of the company's current position and exposure to various dangers.
A reactive approach to managing risk isn't enough to protect your company. To be truly risk-intelligent and ready to respond to threats before they have a serious impact on the business, you need to promote a proactive philosophy across the organization as a whole.
That means taking a broad view of the evolving risk landscape to anticipate potential developments and emerging trends before they start to affect you. You can then get a head start on putting measures in place to protect the business, and your workforce will be better prepared to deal with challenging situations when they arise.
The right skills and resources
Like many aspects of business, risk intelligence becomes truly effective when it's based on a combination of human expertise and technology. You can use dedicated software, artificial intelligence and other cutting-edge tools to analyze data and track trends in the risk landscape, but you need human talent to pinpoint what this means for your business and how you should act on your findings.
If your workforce is lacking the necessary capabilities and experience to achieve a high level of risk intelligence, consider what training and bespoke development opportunities you could offer to broaden people's skill sets. This could protect your business from evolving threats and ultimately position you for long-term success, making it a wise investment.