How can risk be a 'performance driver' or 'value creator'? Technology is set to change the way companies think about risks and here are six risk management trends to watch out for next year.
Risk as a 'performance driver'
Deloitte Advisory has published a report on the Future of Risk, which compiles a list of 10 trends in the realm of risk management worth watching out for in the coming year. The report's authors make the distinction between the risks that could damage our organisations and others that could actually turn out to have a positive impact on business. Some types of change can be “performance-drivers and value-creators worth embracing”, they argue.
The risks to watch out for may be of relevance to corporate treasury in various ways – from how we use new technologies, such as artificial intelligence and data analytics, to carry out certain tasks more effectively, to a rethink on how we approach insurance contracts to protect our business. Some developments – such as the Internet of Things – will change the way we monitor and view security in our supply chains, while developments in our understanding of behavioural science could change how we monitor human behaviour in the workplace and our ability to detect risky behaviour.
These are some of Deloitte's 'risk trends' that will resonate with corporate treasury:
- Artificial intelligence and data analytics are helping companies to detect, predict, manage and prevent risks.
- The Internet of Things will change risk monitoring and the tracking of products across the supply chain to prevent fraud.
- Behavioural science can be used in the workplace to detect risky behaviour and cognitive biases while also strengthening protocols.
- Using vigilance and resilience in risk management instead of prevention – some risk prevention methods can yield unwelcome side effects such as slowing innovation, while using a vigilant or resilience approach may enable the company to detect and predict a risk event or even to react to it more effectively if it occurs.
- Some events such as cyberattacks, political unrest and climate change have more widespread impacts, driving companies to re-examine insurance and contracts as business hedges.
- Reputational risks have a greater impact in the age of social media, so companies need a more risk-intelligent strategy and monitoring systems that can allow them to cope with such events.
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