Effective risk management requires understanding more about what we don’t know than what we do know. In particular, effective risk management must recognize when new risks are emerging. Too often, risk assessments plot the usual “known knowns” on yet another risk map, leaving executives and directors underwhelmed because the process doesn’t really tell new information and leaves little insight about what to do next.
It’s essential for boards to be able to discuss the “unthinkables”. In this issue of Board Perspectives: Risk Oversight, we introduce effective techniques for identifying emerging risks and how management can apply those techniques to update the board of director’s risk oversight process.