NAVIGATING INTERCONNECTED RISKS
Today, the risks companies face, regardless of jurisdiction or industry, continue to mount. In the face of growing economic and geopolitical challenges, it is imperative that organisations dedicate sufficient resources to navigate increasingly choppy waters.
Enterprise risk management (ERM) is increasingly complex. Organisations are required to manage not just multiple areas of risk – cyber, geopolitical, third party, physical, privacy, financial and ESG, to name a few – but also unique risks that arise from their interconnectedness.
Indeed, the relationship between threats has become a hot topic in the risk management world. Individual risks do not exist in isolation; there are always multiple points of intersection. Interconnected risks can have far-reaching consequences for organisations and navigating them is a challenge.
“The level of interconnected risk facing companies has never been higher, and the upward trend is likely to continue,” notes Graeme Miller, chair of the Institute of Risk Management’s Risk & Complexity special interest group. “We are now firmly in what has been termed the Fourth Industrial Revolution, where technology is ‘merging the physical, digital and biological worlds in ways that create both huge promise and potential peril’, according to the World Economic Forum.”
The ability to illustrate how one risk can affect or amplify others across systems is occupying the attention of global risk managers. Geopolitical risk, for instance, can disrupt supply chains, increase exposure to state-sponsored cyber attacks, and result in changes to government policies and regulations. Cyber attacks, for their part, can lead to operational, financial, reputational and other risks. This interconnectedness creates a complex web of risk relationships.
Jan-Mar 2025 Issue
Richard Summerfield