StrategicRISK’s Australia risk management survey reveals the interconnected nature of risk can be physical, geographical and even time-related
A continuing theme in this year’s StrategicRISK Australia risk management survey is the interconnectivity between risk, both across time and space. Financial risks, such as volatility around the price or supply of materials/commodities, can be connected with socioeconomic risk, as was the case during the Arab Spring. Meanwhile there are many interconnections within environmental risk, such as natural catastrophe, climate change and water crises.
“In a global sourcing world, disruption in one part of the world is rarely contained to that area. The interconnectivity of risks cannot and should not be underestimated,” says Kevin Bates at Lendlease.
“For example, simply take the link between supply chain and natural catastrophes; then add in quality issues, insolvency issues, corrupt practice issues – you end up in the same place.”
Risks are also connected through time. While today’s concern may be the competitive business landscape, tomorrow’s risk is more likely to be the failure to innovate.
Diagram 1: Which risks are most connected in your business?
Respondents were asked to choose two risks from a list of 34 that they believed were most connected. They could chose up to five pairs. Each line shows a connection between two risks. The thicker the line the greater the number of respondents who selected it.