Risk managers must be prepared for new risks in an unprecedented era of technological and societal change, argues Complexus principal and founder Warren Black
The globe is in the midst of a Fourth Industrial Revolution, says Black, a period where the workplace, employment, and knowledge, and skills are set to change fundamentally. Organisations will need to reshape their approach to changing risks, Black believes.
The World Economic Forum defines the Fourth Industrial Revolution as “an extended era of mass-scale technological, political, and social changes, which will alter not only how we humans exist, but who we are as a species”.
Amid rapid tech-driven changes in the workplace, risk managers must also adapt, said Black, speaking as part of StrategicRisk’s #ChangingRisk series.
“What will a Risk 4.0 look like? To answer this, we need to understand the forces that will shape the Fourth Industrial Revolution. In understanding how our working world is set to change, we can better understand how the risk management sector needs to position itself.”
The combination of big data and analytics will be one major area of change, according to Black.
“We are rapidly transforming into a fully-digital earth. Our entire existence will be underpinned by a fully-integrated global system of collaborating smart technologies.”
The combination of artificial intelligence and advanced robotics, and the integration of humans and technology, will also be significant developments in workplaces of the future, Black says.
In a complex and disruptive global workplace there are “obvious control areas” for risk managers to plan for, Black adds.
Risk managers can prepare through cyber-enhanced risk management, Black says.
“Risk 4.0 is undoubtedly going to have to be about seeking out the benefits of new, emerging technologies, helping to improve the risk management value chain. Real-time data, supported by sophisticated analytics, and complex information-sharing networks, has an unlimited potential to advance how we visualise, document, assess, treat, and monitor risks.
“Not only should new technologies revolutionise every aspect of the risk management value chain, they should help to create new forms of risk management. In turn, risk 4.0 is expected to be significantly more data-enriched and sophisticated than the current version.”
Risk managers can adapt through complex systems thinking as our working world becomes “more systemically complex”, Black says.
“Being educated in the broader complexity sciences, particularly systems thinking, will help future risk managers to better understand and control complex phenomena, such as disruption, emergence, vulnerability, and dependency, adaption and chaos.”
Resilience will be another important area for risk managers in the Fourth Industrial Revolution, Black says. Organisations will need to be “intelligently responsive” to disruption and change, with new technologies, market swings, customer shifts, competitor advances, political shocks, and disasters.
“Resilience is the ability to respond intelligently to environmental changes,” Black says. “As our working world transitions to 4.0, organisations should expect an increase in the volume of disruptive change. It will not be possible to predict the how, when and where of every risk scenario that could emerge. For this reason, future organisations will need to build cultural, behavioural, and characteristic resilience.”