Organizations have been facing a low-probability, high-impact risk storm for quite some time now. In the past 20 years, the world had to go through 9/11, the 2008 recession, and the recent pandemic. These cause an economic meltdown, which takes years to recover. How do you assure business continuity when you are right in the middle of the risk storm? In this article at Risk Magazine, Neil Hodge shares how you can survive a low-probability, high-impact risk scenario.
Facing a Risk Storm
The low-probability, high-impact risks are ‘once-in-a-lifetime global shocks’ that are not supposed to happen multiple times. However, these events occur more than businesses or leaders would want to admit. Nonetheless, since 2007, the Global Risks Perception Survey report has always made pandemic or infectious diseases spread the top five global risks. Here’s how you should prepare for such a risk storm:
Predict the Unpredictable
Planning for the future of your business and risk tolerance are the two factors based on which organizations survive. Some rely on historical data to plan and prepare to handle risks. The majority of them were ready to tackle a management reshuffle, but the pandemic was never on their risk horizon. Several businesses had to firefight to survive their business amidst the global crisis. So, also take into account these ‘once-in-a-lifetime’ events while framing business strategies.
To maneuver through the high-impact risk landscape, you must find out what is happening around you—market conditions, client demands, resource shortage, emerging technologies, etc. Discover the risks you might be exposed to should these events occur in the future and plan an escape or confrontation roadmap.
Win Maximum Buy-ins
Risk professionals must be transparent with stakeholders to get maximum buy-ins. Sending daily updates or reports and discussing the same over meetings should become a regular ritual. Clarify why the board members must consider those risks as necessary so that you can make swift decisions during a crisis.
To view the original article in full, visit the following link: http://www.rmmagazine.com/2021/02/01/how-to-address-low-probability-high-impact-risks/