Emerging Operational Risks: A Short Guide to Adjusting Your Risk Framework

Ken Radigan

How to manage emerging risks is a major concern for companies. While most are pretty good at monitoring their core business risk exposures, it is often an emerging risk that could rise up and surprise them. Most companies have established risk management frameworks with formalised risk appetite statements and specific risk limits that are monitored closely to manage their core business risks. They understand the day-to-day risks that are associated with the products or services that they are providing, and have established a competency for managing these risks. However, the world is changing constantly. New risks may come into play or old risks may go through significant changes that require the company to take additional actions to protect themselves and remain competitive.

Unlike core business risks that are well-defined and managed, emerging risks by their very definition are less understood. What can a company do to ensure that emerging risks are addressed properly? How can they be confident that emerging risks will be properly analysed? How can they be sure that they have the right resources dedicated to reviewing emerging risks without building an infrastructure that is